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New CBO report suggests reauthorizing CHIP is less expensive than alternatives

The bi-partisan Congressional Budget Office and Joint Committee on Taxation has issued a report that seemed to suggest extending the Children’s Health Insurance Program with certain components — reauthorizing the program through fiscal year 2022, extending the requirement that states keep eligibility levels that existed in 2010 and making the federal matching rate for the program the same as in 2010 — would not add to the federal deficit and could potentially improve it.

“The agencies estimate that enacting such legislation would decrease the deficit by $6.0 billion over the 2018-2027 period,” the Jan. 11 Congressional Budget Office (CBO) letter to Representative Frank Pallone, Jr. (D-New Jersey), ranking member of the House Committee on Energy and Commerce, stated.

This is potentially significant because The New York Times reported in December that despite bipartisan support for Children’s Health Insurance Program, or CHIP, the two sides cannot agree on how to fund the program, with the majority of Democrats refusing to support a plan that cut funding to other public health programs and stopped insurance coverage to many who had received it under the Affordable Care Act. CHIP provides health insurance to approximately 9 million children and 370,000 women who earn too much to qualify for Medicaid, but not enough to afford insurance.

“Extending funding for CHIP for 10 years yields net savings to the federal government because the federal costs of the alternatives to providing coverage through CHIP (primarily Medicaid, subsidized coverage in the marketplaces, and employment-based insurance) are larger than the costs of providing coverage through CHIP during that period,” the letter to Pallone continued.

“The extension would increase the deficit in each year between 2018 and 2020 and reduce the deficit each year thereafter. The change from annual increases in the deficit to decreases over the 2021-2027 period primarily occurs because the federal matching rate for CHIP would decline relative to its level in prior years — from an average of 93% in 2019 to 81.5% in 2020 and 70% in 2021 and subsequent years — lowering the federal costs of coverage through CHIP as states become responsible for more of the program’s costs.”

The latest CBO report was issued the day after the AAFP, AAP, the American College of Physicians, American Psychiatric Association and other medical societies jointly sent a letter to Congressional leaders urging lawmakers to pass a spending plan for federal programs, including CHIP.

“We are writing to urge Congress to take immediate action to enact a five-year extension of funding for CHIP and to extend other critical health programs [Community Health Centers; Medicaid disproportionate share hospital payments; the National Health Service Corps; Maternal Infant, and Early Childhood Home Visiting Program; and the Teaching Health Center Graduate Medical Education Program] in order to ensure that our patients have ongoing access to crucial affordable and comprehensive coverage options and services,” the letter, which was also signed by the American Osteopathic Association and American College of Obstetricians and Gynecologists, read in part.

“A continued delay in passing legislation to fund these programs for the long term is unacceptable — the negative consequences of Congressional inaction already are being felt and will be compounded in the coming weeks. While Congress expresses support for these programs, the failure to provide long-term funding sends a very different message to states and families. Confidence in the future of these vital programs cannot be restored with short-term funding measures, and congressional delays jeopardize the long-term health and wellbeing of patients, providers, states, stakeholders, and our country at large.”

The last stopgap budget passed in late December was said to provide funding for CHIP through March. That budget agreement is scheduled to expire this Friday, Jan. 19.

Immediately prior to a Senate Finance Committee hearing last week regarding HHS nominee Alex Azar II, lawmakers from both sides of the aisle indicated support for CHIP.

“It’s one of the most important programs that I worked on and got through... We have a bipartisan agreement that was reported out of committee that I believe improves CHIP for the long term,” Senate Finance Committee Chairman Orrin Hatch (R-Utah) said. “Congress has passed patches and fixes, but the time for short-term solutions is over. CHIP needs to be extended by January 19 and I’m going to do all that I can to get it done. Children, their families and their states are counting on us.”

“We got virtual unanimity in this committee with respect to CHIP and getting this across the finish line and ensuring that families across this country don’t go to bed at night in near panic about the prospect of an emergency illness the next day is critical,” Senator Ron Wyden (D-Oregon), said. – by Janel Miller

Disclosure: Healio Family Medicine was unable to determine relevant financial disclosures prior to publication.