The Balanced Budget Act of 1997 created the Children’s Health Insurance Program to cover uninsured, low-income children who are not eligible for Medicaid and all states, including Kansas, have expanded children’s coverage through the program. Congress last reauthorized CHIP in 2015, but funding was approved only through September 30, 2017.

On September 12, 2017, Senate Finance Committee leadership announced a bipartisan plan to extend CHIP for five more years and agreed to phase down, starting in 2020, the enhanced federal match rate for CHIP that the Affordable Care Act (ACA) authorized. If the deal becomes law, it would secure the immediate future of the program. However, Congress seems far from settled in on an agreement and there’s still discussions of tieing the programs continuation to the repeal and replace of the Affordable Care Act. Will millions of American children still have insurance in just over a week? We hope so.

“Kids could actually lose coverage if the feds do not extend the program,” said Jim Kaufman, vice president of public policy at the Children’s Hospital Association.

CHIP currently covers millions of young Americans, whose families make too much for Medicaid, but can’t use private or employer insurance. The Senate is crafting legislation to extend funding for the program, possibly up to five years.

“Governors and state legislatures strongly support this because it allows them to invest in kids that produce healthier adults,” said Kaufman.

Sen. Sherrod Brown (D-OH) is sponsoring a bill that would extend CHIP for five years. He says it is something he expects Congress will continue to support.

“It matters for preventive care, it matters for keeping those kids healthy, it matters so they don’t miss those school days, it matters so they’re not sent to school when they’re sick and infecting other children. So it’s something this Congress needs to do,” said Brown.

Brown introduced a bipartisan proposal to extend the program, but some say changes are needed before it passes. One of the complaints is that states are not sharing enough of the payment burden.

“If the states want to cover families at a higher level, at close to $100,000 a year, as is the case in the state of New York, well then New York should pick up that tab,” said Bob Moffit, a senior fellow at the conservative Heritage Foundation.

Moffit says CHIP was meant for lower income families. But, he says, in some states, a family can make up to 300% of the poverty limit and still benefit from the program.

“If we’re going to spend these monies, we should spend these monies on those children and those families who are most vulnerable,” said Moffit.

CHIP in Kansas

Kansas children in households with incomes too high for Medicaid but no more than 241% of the federal poverty level ($59,292 for a family of four in 2017) are eligible for CHIP. In state fiscal year 2017, nearly 38,000 children per month were enrolled in CHIP in Kansas.

As with Medicaid, the state receives matching funds from the federal government for the program. Even before the ACA, the state’s required match for CHIP was much lower than it was for Medicaid. Up until 2015, the state paid approximately 30% of the cost for CHIP participants (the federal government paid 70%) but the state paid 57% of the cost for Medicaid. In 2016, as part of the Affordable Care Act, the Kansas’ share of the CHIP program costs was reduced to just 8%.

The proposed five-year extension includes a gradual reduction in the enhanced federal matching funds beginning in 2020. Republicans have objected to that enhanced funding, which means that 12 states don’t contribute anything to what is supposed to be a joint state-federal program.

The gradual phase out will give states time to adjust their budgets.

According to the proposed bill, in 2020 that enhanced rate of matching funds from the Feds would be cut in half, and the matching funds rate from the Feds would return to pre 2016 rates in 2021.

But questions still remain about whether the legislation will pass as a stand-alone bill, or if additional provisions, such as a bipartisan ObamaCare stabilization bill, will be attached. A two-year CHIP reauthorization passed in April 2015, months before the program was set to expire, and the provision was included in a larger Medicare reform package.

Lawmakers have an extremely narrow window to get the deal passed and sent to President Trump.

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