What Might the Future Hold for CHIP?

As we have done for many years, with support from the David and Lucile Packard Foundation, NASHP convened the nation’s Children’s Health Insurance Program (CHIP) directors in conjunction with our recent 27th Annual State Health Policy Conference. This year the CHIP Directors’ meeting included discussions aimed at surfacing policy issues and questions that states are facing related to the future of the CHIP program and other coverage options for children. A policy café on children’s coverage during the conference also provided an opportunity for discussion on the future of CHIP among a broader range of stakeholders, including CHIP and Medicaid officials, children’s health experts, researchers, and advocates.

These discussions highlighted that uncertainty about future federal funding for CHIP looms large for state CHIP officials, particularly those who administer separate, stand alone CHIP programs. Federal CHIP funding will end September 30, 2015 unless Congress acts to extend it. And while federal law clearly requires that children covered through Medicaid expansion CHIP programs will continue to be covered through Medicaid even if federal funding ends, the path is not as clear for children in separate CHIP programs.

If federal CHIP funding is not extended, families currently served by separate CHIP programs may seek marketplace coverage for their children. Although marketplace coverage is an important opportunity for the uninsured adults it was largely designed for, it has not been tailored to low-income children in the same way as CHIP. As noted previously, CHIP has a 17-year track record of success in reducing uninsurance and improving access to quality care for children, additionally there are a number of concerns about the coverage options for children if CHIP should end. Recently published research from Wakely Consulting Group and the U. S. Government Accountability Office (GAO) suggests children will not fare as well in the marketplace compared to CHIP considering the differences in benefits and cost sharing. Due to the increased cost sharing in the marketplace and the “family glitch” – the term used to denote that the ACA’s affordability standard is based on individual rather than family coverage – millions of American children will likely become uninsured if CHIP ends.

In the months prior to the NASHP conference there had been some activity at the national level related to CHIP. The Medicaid and CHIP Payment and Access Commission (MACPAC) issued a recommendation for extending federal CHIP funding for at least two years in its June report to Congress. Legislation to extend the CHIP program was introduced in both the U.S. House of Representatives and in the U.S. Senate, although to date there has been no action on either bill. Also in late July, Congressional committee leaders reached out to Governors through a letter requesting information about state CHIP programs and input on the program’s future. Discussions among the state CHIP directors in October, before responses to the letter were due, suggested that many Governors might be indicating support for continued CHIP funding.

Now the clock is ticking. Without Congressional action to extend funding for CHIP, most states will exhaust their federal CHIP allotments at some point in FFY 2016, which starts in less than a year. It is unclear if and when Congress will act, but from discussions at NASHP’s conference, there appears to be a growing consensus among stakeholders that CHIP funding does need to continue, at least until alternative policy solutions can be worked through to ensure there is continued appropriate coverage for children. Differing from MACPAC’s recommendation of two years, we heard most CHIP officials and stakeholders recommending that federal CHIP funding be extended for four years. Extending CHIP through 2019 coincides with the ACA’s maintenance of effort (MOE) provision for children. Stakeholders also suggest that extending CHIP for four years provides a more realistic time frame for Congressional action needed to address identified policy issues for children in relation to health insurance marketplaces.

Meanwhile, states will soon need to make decisions on how to budget for children’s coverage in the future. And if there is not clarity soon on CHIP’s fate, states will need to make plans for shutting down their programs. Given the success of CHIP in increasing coverage that has improved access and outcomes, this would be an unfortunate reversal in progress for low-income children. Many state officials and stakeholders see the need for national policy action to assure children continue to have affordable coverage of services that support their health and development.

For more information on CHIP, including state-by-state fact sheets, check out NASHP’s children’s health insurance resources page.