CHIP rescission proposal: Much ado about nothing or a threat?

The Children's Health Insurance Program has triggered another political fight, this time over billions in unused funds.

As part of a broader $15 billion rescission package aimed at curbing the deficit, the Trump administration last week asked Congress to pare back $5 billion of expired CHIP funds from 2017, as well as another $1.9 billion cut from a contingency fund. States can request money from this fund in case of a health emergency or unforeseen event that might drain their program's coffers.

Not surprisingly, there's a split opinion on how the rescission would affect providers and patients.

The administration, supportive congressional Republicans, and the nonpartisan Congressional Budget Office say it won't affect the program at all. Children's health advocates and children's hospitals say it would make state recipients vulnerable to unforeseen emergencies.

Matt Salo, executive director of the National Association of Medicaid Directors, said he worries about taking away Congress' ability to use the $5 billion to pay for other programs.

"In the complicated issue of government, any time Congress wants to go in and make changes to entitlement programs—say you want to increase the federal match for something, doing something that causes the federal government to spend more money, you can offset it with something else," Salo said. "Now you're letting the administration take away money that could be used as a pay-for to fund something that Congress wants to do. The more you take away, the harder it is for Congress to do other things."

Bruce Lesley, of the children's advocacy organization First Focus, blasted the cut to the contingency fund. He said the fund is needed because CHIP is structured as a set block grant, and the funding doesn't respond to a state's actual need. The contingency fund is set at 20% of total state allotments. The rescission would reduce it from $2.4 billion to $500 million, or about 3% of total state allotments, Lesley said.

While he acknowledged that the contingency fund has rarely been needed, he said things have changed since the program went five months without new funding before Congress finally reauthorized it earlier this year.

"Due to the five-month delay, CMS played all kinds of games with the unspent money, so we worry there is little there—and surprised they could say there is $5 billion that expired—so the contingency fund might be more at risk than in past years," Lesley said.

The Congressional Budget Office in a letter to Majority Leader Kevin McCarthy (R-Calif.) said the CHIP rescission would reduce the deficit but "would not affect outlays, or the number of individuals with insurance coverage."

Marc Goldwein, who's with the independent not-for-profit Committee for a Responsible Federal Budget, called the case against the CHIP rescission "silly."

"The people attacking rescissions now were not only supporting them but were actively using them in the last appropriations bill when it served their purposes," Goldwein said.

Senate Minority Leader Chuck Schumer (D-N.Y.) issued a statement almost immediately after the president's announcement chastising the administration for trying to "tear apart" CHIP and "appease the most conservative special interests." Democrats, however, joined Republicans in March to approve a similar rescission as part of the omnibus budget deal.

And that's what concerns Republicans like Rep. Tom Cole (R-Okla.), chair of the House Appropriations Committee's Subcommittee on Labor, Health and Human Services, Education and Related Agencies, who worried that Democrats "will exploit it politically."

The proposal is marching forward in the House, although House Rules Committee Chair Pete Sessions (R-Texas) conceded that some Republicans are concerned over the CHIP rescission in particular.

Senate Majority Leader Mitch McConnell (R-Ky.) hasn't yet weighed in on the proposal, so the path forward in the Senate isn't yet clear. However, only a simple 51-member majority is needed to pass a rescissions package in the upper chamber.

Senate Appropriations Committee Chair Sen. Richard Shelby (R-Ala.) told reporters on Thursday he wanted to wait and evaluate the package before commenting.