Pressure builds on state CHIP programs

By the CDHP team

It has been over two weeks since Congress allowed federal funding for the Children’s Health Insurance Program (CHIP) to expire. Without this integral federal support, we are beginning to see some very real ramifications at the state level. So let’s review what states are reporting, sources of confusion and contention, and why Congress remains at a standstill.

CHIP functions as a partnership between states and the federal government, providing coverage to children (and pregnant women in 18 states) whose families do not qualify for Medicaid but would struggle to afford private insurance. Nearly 9 million children were covered by CHIP. This program is a bipartisan success story that numerous organizations and leaders agree is good policy.

Children covered by CHIP have access to the services that they need to thrive, including dental care, at rates nearly equivalent to their privately insured peers. CHIP’s limits on out-of-pocket spending protect families from bearing the brunt of health care costs, and the program is far more affordable than private insurance options, including those offered on the health insurance marketplaces.

States Feel the Pressure

Unfortunately, states are now struggling to find funding to continue their programs. If states have left over funds from the previous year, they can use a portion of those funds to continue programs (they are required to return one-third of their unused funding to the federal government). As Pew reported this week, the Centers for Medicare and Medicaid Services (CMS) has distributed some of these funds to Arizona, California, Minnesota, Washington and Oregon as well as U.S. territories. While this additional money is helpful, it is not a long-term solution but rather a band-aid on a bigger wound.

For states, initiating a CHIP shutdown is not just a minor program disruption but a complicated process that draws resources away from children’s health and dental care. 

Yet some elected officials seem unclear on the urgency of this problem. Misunderstandings started earlier this year with a report from the Medicaid and CHIP Payment and Access Commission (MACPAC) that said states would only start running into trouble in December. MACPAC has since clarified that its report was based on estimates and was meant to serve as a warning. The MACPAC findings are meant to indicate general timing of when states would exhaust federal funding. Furthermore, state CHIP programs have obligations to patients and families that would require taking necessary administrative steps, like freezing enrollment, transferring children to other coverage, and even shutting down, before these dates.

For states, initiating such a shutdown is not just a minor program disruption but a complicated process that draws resources away from children’s health and dental care. Moreover, a shutdown — even if it’s temporary — damages CHIP’s reputation as a stable program that families can count on.

Despite this confusion, many states are facing difficult choices right now:

  • In Minnesota, state administrators predict they will run out of CHIP funds by the end of October (that’s about 2 weeks away). After that point, children enrolled in CHIP through Medicaid expansion will likely retain coverage but about 1,700 low-income pregnant women may lose coverage.
  • In Arizona, redistributed funds are predicted to keep coverage for the state’s 88,000 CHIP enrolled children through November, and even with federal reauthorization, if support rates comes in too low they will still freeze enrollment in the program
  • Officials in Utah have filed federal paperwork to authorize a shut down and predict they can only continue through December
  • New York Governor Andrew Cuomo has announced the possibility of a special state legislative session to make plans on how to proceed with the coverage for the 350,000 children in the balance
  • In addition, mayors of 29 U.S. cities came together to sign a letter urging Congress to extend CHIP funding

While two bills were introduced to Congress, the HEALTHY KIDS Act  in the House and the KIDS Act in the Senate, it seems that talks have stalled. Critics have pointed to disturbing offsets in the House bill, including changes to Medicaid payments for children, regulations to remove lottery winners from public benefits, and increased Medicare premiums for higher-income seniors. These disputes, along with other competing deadlines, have left children a low priority.

These developments, along with recent decisions that threaten to disrupt health insurance marketplaces and make oral health care even less accessible, leave us concerned for the millions of CHIP-enrolled children.

We urge you to contact your members of Congress. Tell your elected officials to put politics aside and pass a bipartisan, long-term funding package for CHIP as soon as possible. For resources on contacting elected officials, sharing this information on social media, or talking points on CHIP, visit our “Why Dental Coverage Matters” Toolkit.

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