WASHINGTON — When Rep. Kim Schrier, MD (D-Wash.), a pediatrician, was asked at the Families USA virtual conference in January about the important healthcare provisions in the Build Back Better Act, there was one item she made sure to mention: permanent funding for the Children’s Health Insurance Program (CHIP).
“Every year the Children’s Health Insurance Program was used as a negotiating tool, which is so unfair to do to children and to families — to make them a pawn in these arguments,” Schrier said. “To have permanent funding and authorization for CHIP, that gives a sigh of relief to all the families out there who are depending on CHIP for coverage.”
CHIP, which was created in 1997, serves families that are low-income but make too much money to qualify for Medicaid. It is funded by both the federal government — in the form of a block grant — as well as matching grants from states, and currently serves nearly 7 million children nationwide. But the funding for CHIP is not a permanent part of the federal budget, so Congress has to reauthorize the money every few years.
Currently Authorized Through 2027
CHIP funding is currently authorized until Sept. 30, 2027, but many children’s health advocates would prefer that it get permanent funding authorization. And although a provision to do just that is included in the Build Back Better Act passed by the House, the act’s future in the Senate is thought to be on shaky ground.
“Let’s say you have a child who has asthma and they’re covered by CHIP, and the funding [is] up in the air and they need medicines every month — and it’s not cheap if you’re not insured, obviously, to get an inhaler or even medication like an antibiotic,” said Pam Shaw, MD, a pediatrician in Kansas City, Kansas, who is chair of the American Academy of Pediatrics Committee on State Government Affairs. “If we had permanent funding for it, it would be so much easier because just having that as peace of mind for providers to not have to worry about where [kids are] going to be able to get care, and also making sure that kids with chronic disease especially are covered without gaps.”
Usually CHIP funding is renewed without a problem, but in 2017, a several-month gap in funding occurred when Congress failed to reauthorize the program by September 30, when the fiscal year ended. “The lapse wasn’t because there wasn’t support for program, it was because of the broader political dynamics at the time,” said Anne Dwyer, JD, MPH, associate research professor at Georgetown University’s Center for Children and Families.
“At the time, there was a bill out there in 2017 to do a 6-year extension, but that did not get across the finish line before the end of that fiscal year,” she said in a phone interview. “So there was a period of funding uncertainty in 2017, which caused a lot of heartburn for states and a lot of heartburn, obviously, for families. Ultimately, Congress was able to enact funding extensions” — at first a 6-year funding extension, which eventually became a 10-year extension.
‘Really Frightening for Many People’
The 2017 gap in funding “was really frightening for many people,” including immigrants whose children were covered by CHIP, Shaw said in a phone interview. “Then you have the language barrier and they don’t understand why their insurance doesn’t cover them anymore … Many of these folks have jobs, but they may not be able to afford family coverage offered at their jobs. And so for them, this is a nice lifeline to make sure that their children are always covered.”
During the funding gap, “a number of states had to start issuing notices to families to let them know the state no longer had sufficient funding to operate its program,” explained Ben Anderson, director of health and economic mobility policy at the Children’s Defense Fund, an advocacy group. “We were somewhat lucky that states were in a financial condition where they had sufficient reserves to keep things going, but I believe Connecticut had to freeze enrollments for the program for a brief period until Congress extended funding.”
Taking such steps “is disruptive to state government that needs clarity on its budget. And it’s extremely disruptive and confusing to the children and families. Many of them received notices in the mail telling them that their health coverage might not be there, and families weren’t sure — ‘Can we re-enroll for this coverage? Do we need to find coverage elsewhere?’ We don’t know how many families were confused by that and how many children maybe didn’t re enroll for coverage or missed doctor’s appointments because of the bureaucratic nightmare that created.”
Why Nothing Yet?
CHIP is considered very successful and is known to have support from both Republicans and Democrats, so why hasn’t it been permanently funded? Dwyer agreed that no one appears to be opposed to the idea of making CHIP funding permanent, but “it’s just more the vehicle and the political will.” Of the two standalone bills in the House to make it happen, one, the Caring for Kids Act, is sponsored by a Republican, Rep. Vern Buchanan of Florida, while the other, the CHIPP Act, is sponsored by Nanette Barragán (D-Calif.).
CHIP currently costs the federal government about $17 billion annually, and although figuring out where to get funding for a bill is often a problem, the Congressional Budget Office has found that making funding for CHIP permanent would actually save the government money, Anderson said.
“The primary driver there is the cost of covering children through the [Affordable Care Act] marketplace as an alternative,” he said. “The expectation is that if funding expires, that some children will be moved on to marketplace coverage, resulting in increased costs to the federal government.”
On the other hand, if the funding is made permanent, that movement wouldn’t need to happen.
Advocates of making CHIP funding permanent say they are hopeful that it will happen, although it might not occur through any of the bills currently being offered. “My expectation is that if we were to see action on funding this year, that it would likely have to happen in a budget reconciliation process,” Anderson said. “We simply haven’t seen Congress take up a standalone CHIP extension bill before. It’s something you typically don’t see them do until the deadline is about to arrive.”
Joyce Frieden oversees MedPage Today’s Washington coverage, including stories about Congress, the White House, the Supreme Court, healthcare trade associations, and federal agencies. She has 35 years of experience covering health policy. Follow