The next big battle over CHIP funding: adding four more years

On Jan. 22, as Senate leaders negotiated a deal to re-open the federal government, Virginia health official Linda Nablo spent the morning preparing to brief the state’s new governor, Dr. Ralph Northam, on the precarious state of the Children’s Health Insurance Program.

Northam would have to make the call to trigger the termination of the program that covers 66,000 Virginia kids—a costly move since the federal government’s outlay to the state is nearly $264 million—or to trust Congress and authorize a loan of state funds to patch the program. If the federal government didn’t come through, that would mean a sizable hole in the state budget.

Last week’s uneasy spending pact between Republicans and Democrats finally secured six years of CHIP funding. States are grateful, but the exhaustion of officials like Nablo who dealt with the crisis on the front lines is palpable. “This whole saga has been one disappointment after another, so it’s almost been surreal watching this evolve,” she said.

But the fight over CHIP’s future hasn’t ended. Children’s healthcare advocates are still leery of a Congress that all too easily used a program that insures nearly 9 million kids as political leverage.

The division now centers on whether the reauthorization should be for 10 years, rather than six. The drama started earlier this month when the Congressional Budget Office projected that the government would actually save $6 billion if the program were extended for 10 years. The CBO made that determination after tax reform was enacted. The reason: Repealing the penalty for people who fail to buy insurance is projected to raise premiums and thus government outlays for subsidies for kids who would have to move off CHIP coverage and into the exchanges.

The CBO report prompted lawmakers on both sides of the aisle—particularly in the Senate—to push for a 10-year authorization.

“I don’t think it’s likely, because most feel that six years is enough time to get it going and that lets you make any improvements you need to make at the end of that time,” said Sen. Orrin Hatch (R-Utah), the original GOP co-author of CHIP who said he would like to make the funding permanent if possible. Hatch’s Democratic counterpart in the Finance Committee leadership, Oregon Sen. Ron Wyden, said he and Hatch are talking about a pathway to a 10-year authorization, but declined to give specifics of their private conversations.

By the time the CBO released its findings, funds for many states were dwin- dling dangerously low. Then, almost immediately, House GOP’s leadership took 10 years off the table. Instead, House leaders landed on six years and professed the need for broader program reforms.

The remaining four years are “pay-fors” to fund other things, said House Energy and Commerce Committee Chairman Greg Walden (R-Ore.). “I don’t want to lose those pay-fors.” In other words, both Republicans and Democrats could start the fight over how to use CHIP savings.

But Bruce Lesley, from the Washington-based child healthcare advocacy group First Focus, warned that the six-year extension only sets up the program for a bigger fight next time. To make an extension seem less costly, lawmakers employ a budget gimmick that creates a spending cliff in the last year of any given authorization. In this case, the final year allocates just $5.7 billion when in reality CHIP costs about $20 billion annually.

As Congress hurtles to its next stopgap spending agreement, Hatch took his CHIP advocacy to the Senate floor. “I’m definitely open to having a conversation with my colleagues on how we might move forward to support an additional four years of funding for CHIP,” he said. “In my view, if we can work together to pass a bill adding four years to the six already in place, that would be simply fantastic.”

Nablo said that could help states expand the program further and make long-term plans. Also, crucially, it could do something to restore families’ faith in the government. “We have families now who mostly think of CHIP as something very vulnerable,” Nablo said. “Now that’s stuck in people’s minds.”

“In my view, if we can work together to pass a bill adding four years to the six already in place, that would be simply fantastic.”

Sen. Orrin Hatch (R-Utah)