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Second Opinion

Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Washington Highlights

House Subcommittee Examines Future of CHIP

December 5, 2014—The House Energy and Commerce Subcommittee on Health Dec. 3 held a hearing on the future of the Children’s Health Insurance Program (CHIP). The Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152) reauthorized CHIP through fiscal year (FY) 2019, but only provided federal funding for the program through FY 2015. Under current law, states will run out of CHIP funding at various points during FY 2016.

In his opening remarks, Subcommittee Chair Joe Pitts (R-Pa.) stated his support for extending CHIP funding “in some fashion.” He warned, “If we don’t, current enrollees will lose their CHIP coverage and many will end up in Medicaid and on the exchanges – programs which may offer poorer access to care or higher cost-sharing for lower-income families. Some will lose access to insurance altogether.” Chairman Pitts also noted that any CHIP extension should complement private health coverage and that the program should be “targeted to those who are most vulnerable – rather than one that effectively subsidizes coverage for upper-middle-class families.”

Subcommittee Ranking Member Frank Pallone (D-N.J.), referring to CHIP as a “vital program” that has “traditionally enjoyed bipartisan support,” urged his colleagues to support and pass his CHIP Extension and Improvement Act of 2014 (H.R. 5634) during the lame duck session. This legislation would extend CHIP funding through 2019 and “institute reforms that would enable states to eliminate administrative burdens and increase quality of care.” Rep. Pallone stressed that state governments depend on CHIP funding to “provide affordable and comprehensive coverage for those families who depend on the program.”

In his comments, Full Committee Ranking Member Henry Waxman (D-Calif.) supported Rep. Pallone’s bill and strongly urged the subcommittee to extend CHIP funding for an additional four years. Rep. Waxman, along with Full Committee Chair Fred Upton (R-Mich.) and Senate Finance Committee Chair Ron Wyden (D-Ore.) and Ranking Member Orrin Hatch (R-Utah), sent a July 29 letter to all governors asking for their input to inform Congress’s action on CHIP. Prior to the Dec. 3 hearing, the full committee released formal responses from governors of 39 states expressing support for CHIP and urging Congress to extend funding for the program.

The subcommittee heard testimony from Congressional Research Service Health Care Financing Analysts Evelyne Baumrucker and Alison Mitchell, Government Accountability Office (GAO) Health Care Director Carolyn Yocom, and Medicaid and CHIP Payment and Access Commission (MACPAC) Executive Director Anne Schwartz, Ph.D.

Baumrucker provided an overview of the CHIP program, which enrolled 8.4 million children and had federal and state expenditures totaling $13.2 billion in FY 2013. She highlighted that there is significant variation across CHIP programs and that almost 90 percent of CHIP child enrollees were in families with an annual income at or below 200 percent of the federal poverty level. Mitchell focused on CHIP expenditures, explaining the federal government and the states jointly finance CHIP, with the federal government paying about 70 percent of CHIP expenditures.

Dr. Schwartz shared with the subcommittee MACPAC’s recommendation from its June 2014 Report to the Congress to “extend federal CHIP funding for a transition period of two additional years during which time the key issues regarding the affordability and adequacy of children’s coverage can be addressed.” When asked by Chairman Pitts about the cost of this recommendation, Dr. Schwartz said the Congressional Budget Office (CBO) estimates it would increase net federal spending by “zero to five billion dollars” above the agency’s current law baseline.

Several members of the subcommittee asked the panelists about the impact on current CHIP enrollees if funding for the program is not extended. Yocom explained that children enrolled in CHIP-funded Medicaid expansions (about 2.5 million children) will remain in Medicaid. The 5.3 million children in states with a separate CHIP program will be screened for Medicaid eligibility and then considered for coverage under the exchange. The GAO estimates that 1.9 million children will not qualify for coverage under the exchange due to having a parent who has employer-sponsored coverage.

Dr. Schwartz further noted that MACPAC found that if CHIP funding was not extended, “many children now served by the program would not have a smooth transition to another source of coverage offering comparable benefits and cost sharing. The number of uninsured children would likely rise, and the cost sharing for children obtaining other coverage would often be significantly higher…it is not clear that exchange plans are ready to serve as an adequate alternative for children now insured by CHIP in terms of covered benefits and provider networks.”

Contact:

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org