As part of our ongoing engagement on issues that impact the vulnerable in the public square and areas of common concern for churches, Kingdom Mission Society is providing this background and commentary on the Children’s Health Insurance Program (CHIP).
So What’s CHIP?
CHIP is designed to help families who could otherwise not afford healthcare for themselves and don’t qualify for Medicaid get health insurance for their children 18 years and younger. At the state level CHIP programs can be an add on to existing Medicaid program, a stand alone program, or a combination program. Passed in 1997 to reduce the number of uninsured children, CHIP covers 9 million or so.
CHIP is administered as a block grant program between the federal government and the states. States often set limits, including capping enrollment with block grant funding.
The Medicare and CHIP Reauthorization Act of 2015 included an enhanced rate of federal funding for a period of two years.
On September 30th of 2017 Congress let funding for CHIP expire. The House of Representatives did vote in early November to extend CHIP for five years, but added provisions unrelated to CHIP, which would increase premiums for higher income Medicare beneficiaries, and change the rules on private plans by shortening the grace window of when health insurers could drop individuals for lack of payment. These provisions made passage in the Senate unlikely.
While the administration has allowed for some interventions and kicked in some short term stop gap funding states are struggling to keep CHIP funded. Given that states administer their funds differently, different states are set to run out of funding at different periods of time.
CHIP Inaction is Costing States
Here’s a snapshot of what this gap in funding has meant for five states.
In Alabama, CHIP funding is used through a stand alone program named ALL KIDS. Alabama had planned to freeze enrollment on January 1st and terminate coverage for existing families starting February 1st. A short term funding patch that Congress passed at the end of the year, allowed the administration some ability to reallocate funds, and gives Alabama about a month’s worth of additional time.
Colorado runs a combination program for its CHIP funding named Child Health Plan Plus. Colorado sent letters in November warning families that funding for their healthcare might run out at the end of January 2018. The short term funding patch that Congress passed at the end of the year, which allows the administration to reallocate some of its funds, gives Colorado about a month’s worth of additional time. Colorado might consider spending more of state funds if CHIP funding does run out for the state, but the process would likely be slow and likely families would get caught in the meantime with insurance gaps.
Minnesota was one of the first states to exhaust its CHIP funding at the end of September 2017. Minnesota uses their Medicaid program to administer CHIP dollars. The state is picking up the extra cost of CHIP which is contributing to the state’s deficit. In order to deal with the funding shortfall, Minnesota has also decided to carryover funding from FY 2017 into 2018 by not claiming any CHIP funds for the 4th quarter of 2017. According to Minnesota these moves should stabilize those using CHIP through May 2018 but will likely result in a penalty of $11.2 million dollars for not using the funds within their fiscal year.1
North Carolina administers a combination program for CHIP named North Carolina Health Choice. North Carolina seems to be running about two months ahead of the funding shortfall through its own reserves. The stop gap funding, which allows the administration to redistribute funds gives North Carolina additional time.
Ohio administers its CHIP program through Medicaid. Governor Kasich has extended the life of Ohio Healthy Start by taking funds from other programs. This funding would last through March of 2018. The stop gap funding, which allows the administration to redistribute funds gives Ohio additional time.
Uncertainties on CHIP are already costing states additional funding to administer their programs. Like a lot of social safety net programming, some states are in a good position to absorb uncertainty from Congress. Though always costly, a state with some flexibility can often ensure that its most vulnerable are provided some measure of support, while other states with frequent shortfalls and smaller budgets are just unable to handle the uncertainty.
One thing is very clear, inaction in Congress is costing states funding and robbing too many families of peace of mind.
Congress should act quickly at the start of January for a five year extension of CHIP.
1 Minnesota Department of Human Services, The Children’s Health Insurance Program in Minnesota, December 1 2017
Click to access chip-fact-sheet_tcm1053-311322.pdf