Keeping the enhanced match that was added to CHIP as part of the Affordable Care Act is unlikely to be the sticking point for a bipartisan deal, a senior House Republican aide said.
The enhanced match of 23 percentage points, which means the federal government pays the full cost of the Children's Health Insurance Program in 12 states, was passed as part of the Affordable Care Act, and is scheduled to expire Oct. 1, 2019.
While Republicans don't like the enhanced match—which means 12 states have no cost-sharing for CHIP—they recognize states need time to adjust.
Dr. Michael Burgess, chairman of the Health Subcommittee in the House of Representatives, noted at a hearing in June that Texas has already passed a biennial budget, which means even changing funding in fiscal 2019 could hurt the state. About 40% of states have biennial budget processes.
"Any changes we make now would have a significant effect on the state budget that has already been passed and I believe signed into law. Is that correct?" Burgess asked witness Jami Snyder, associate Medicaid commissioner in Texas, his home state. "Exactly, an $800 million impact over the biennium," she replied.
A senior Republican aide in the House said he doesn't expect the enhanced match to be a sticking point in the bipartisan discussions, because Republicans recognize it would be "a significant disruption if you change funding midstream on a biennial (state) budget."
Republicans on the House Health Subcommittee explored how much it would cost to do a two-year reauthorization at that level, as well as keeping the enhanced match in the coming fiscal year, scaling it back to 11 percentage points in fiscal 2019, and returning to traditional funding levels for 2020 through 2022. The short-term reauthorization actually needs more pay-fors than a five-year plan with a ramp down.
While the Congressional Budget Office baseline assumes the federal government will continue to spend $5.7 billion a year on the Children's Health Insurance Program, this year's spending is estimated at $14.5 billion, to cover about 6.3 million children at any given time, and 8.9 million across the course of a year.
Kelly Whitener, an associate professor at the Georgetown University Center for Children and Families, said states would prefer a five-year reauthorization, even if there is lower federal funding after the first or second fiscal year. States sign contracts with managed-care companies for two or three years, she said, so they need more certainty than a two-year extension.
Even though the House of Representatives has just 12 legislative days in September, Whitener believes it's still possible the reauthorization bill could be passed by the Sept. 30 deadline.
"If the Senate Finance hearing goes well, that will be a really good sign for swift action," she said. That hearing is expected in the first week of September. "What I will be looking for to see is if there's bipartisan engagement on needing to do CHIP, not just from (Chairman Orrin) Hatch and (Ranking Member Ron) Wyden. If a lot of members show up and actually talk about CHIP and wanting to do it, that sends a really clear message to (Minority Leader Chuck) Schumer and (Majority Leader Mitch) McConnell."
But, she added, "If they can do something, a short term patch, that's better than nothing. If they can actually get it done in September that's the best."
Sara Rosenbaum, a former chairwoman of the Medicaid and CHIP Payment and Access Commission and law professor at George Washington University, said: "The common rumor is that it's going to take the fall to make these decisions, and also the [federally qualified] health center fund that travels on the same pathway. I think everybody's been told not to expect final legislation by the end of September."
"I think everyone wants to get CHIP [reauthorization] done in a timely manner," a senior House Republican aide said. Conversations between Democrats and Republicans about added revenue or cuts to offset the spending over the $5.7 billion annual threshold have been productive, he said.
Maureen Hensley-Quinn, senior program director at the National Academy for State Health Policy, said her group surveyed 39 CHIP directors around the country in July, and 36 said their states' budgets assumed the enhanced match would continue through Sept. 30, 2019. Three have contingency funds, but Hensley-Quinn said the states are offered anonymity for participating in the survey, so she couldn't say which ones.
"They'd absolutely prefer a longer time period of federal funds, even if that meant their enhanced federal match would ramp down, over just a two-year extension at the enhanced match level," she said.
The Congressional Budget Office says that returning to historical CHIP funding rates will not result in fewer children being insured.
Whitener said that's probably broadly true, though there were about 17,000 immigrant children in Florida who gained coverage because that state lifted its five-year waiting policy for CHIP because of the additional funding.
Would states cut rates to providers when they have to come up with more money to cover CHIP? "It would really vary. For the most part states are trying not to cut provider rates. They are recognizing they need to keep rates where they are or even increase them," Whitener said. But, she added: "If you're a state with a budget crisis, you only have so many places to go to generate savings."