ACA replacement bill clouds future of Children's Health Insurance Program

Passage of the House Republicans' healthcare overhaul bill may have created political and policy complications for the popular Children's Health Insurance Program, whose funding will end in September unless Congress reauthorizes it.

The Senate Finance Committee postponed a planned hearing on CHIP reauthorization scheduled for Tuesday, reportedly at the request of committee Democrats who didn't want work on the House GOP's American Health Care Act to overshadow efforts to extend the children's program.

In addition, Republicans may seek to delay consideration of renewed funding for CHIP to use it as leverage to get Democrats and moderate Republicans to support their broad healthcare reform legislation, said Joe Antos, a conservative health policy expert at the American Enterprise Institute. Others predict funding for federally qualified community health centers also may become part of the negotiations.

That worries children's healthcare advocates, who argue CHIP — which has enjoyed bipartisan support since its creation 20 years ago — is so important to the 8.4 million low- and moderate-income children it covers that it should be kept out of the looming partisan war over the AHCA. An estimated two million CHIP enrollees have serious chronic conditions.

"Rolling CHIP into the broader debate would be very unfortunate," said Joan Alker, executive director of the Center for Children and Families at Georgetown University.

Advocates also fear that the House GOP bill's Medicaid cuts and restructuring would squeeze CHIP coverage because eligibility and financing for Medicaid and CHIP are intertwined. About 37 million low-income children are covered by Medicaid.

The House bill would cap the growth of federal Medicaid payments to the states, reducing per-beneficiary contributions for children and other groups below actual Medicaid costs. The Congressional Budget Office projected it would cut federal Medicaid spending by $839 billion, or 25%, over 10 years.

"If you do mortal damage to Medicaid, which the AHCA does, it would spill over to CHIP, which is joined at the hip with Medicaid," said Sara Rosenbaum, a George Washington University law professor who served until recently as chair of the Medicaid and CHIP Payment and Access Commission (MACPAC).

MACPAC recommended in December that Congress extend CHIP funding for five years, through September 2022 to assure stability and continuity of coverage or low- and moderate-income children "at a time of tremendous uncertainty in health insurance markets."

It also asked lawmakers to continue enhanced federal CHIP contributions to the states authorized by the Affordable Care Act. That bumped up federal matching rates by 23% through September 2019. As a result of that increase, the feds have picked up 88% to 100% of states' costs for the program.

The CHIP program cost the federal government about $15 billion in 2017.

In addition, the commission urged Congress to extend through 2022 an ACA provision barring states from reducing CHIP eligibility below the levels in place before the ACA took effect.

Some states, such as West Virginia, have signaled they will end their CHIP programs if they don't have certainty that federal funding will continue. Thirty-four states will have spent their remaining federal CHIP allotments by next March. MACPAC said Congress should extend CHIP "as soon as possible" to mitigate budget uncertainty for the states.

But congressional Republicans may resist some of MACPAC's recommendations. In 2015, House Republicans released a discussion draft that proposed ending the enhanced federal match and the state maintenance-of-effort provisions.

Some policymakers want to phase out CHIP and move these children and their families into subsidized commercial coverage in the individual market. But research has shown that shifting CHIP beneficiaries into marketplace plans would sharply increase out-of-pocket costs and reduce access to care, particularly for children with chronic conditions.

Advocates are particularly nervous about moving CHIP enrollees into marketplace plans under the new system proposed by House Republicans, which would feature smaller subsidies and fewer consumer protections than those offered by the Affordable Care Act.

"As a pediatrician, I'd be concerned if those changes led to decreases in services that children with chronic conditions would receive or increases in how much parents would pay out of pocket," said Dr. Alon Peltz, who co-authored a recent Health Affairs article showing CHIP offers lower out-of-pocket costs than marketplace plans.

He'd like to see Congress stop treating CHIP as a political football, with the program facing an uncertain reauthorization process every few years. "We'd all love to see a long-term solution to providing affordable, high-quality coverage for this group of children," he said.