Congress Must Now End the “CHIP Cliff”

Health

Congressional passage of the latest Continuing Resolution (CR) includes a six-year extension of the Children’s Health Insurance Program (CHIP), which is a huge and welcome relief for the nine million children and families that rely upon CHIP for their health coverage.

This ends the chaos and increasing concern that was created by Congress’s failure to extend funding for CHIP that had expired 114 days previously. CHIP’s funding expiration had caused states all across the country to increasingly run out of money and caused a number of them to began sending out disenrollment notices to families.

As Myra Gregory, a mother whose 11-year-old son Roland relies on CHIP to treat her son’s cancer, wrote in the St. Louis Post-Dispatch back on November 2, 2017:

I understand that our society is divided right now. I understand that Republicans and Democrats can have honest differences of opinion. What I cannot understand is how the U.S. Congress could make the health security of kids like Roland a guessing game, and their lives bargaining chips. Watching my baby fight for his life this past year has been agonizing. I’ve held him in my arms while he cries in pain, I’ve experienced anxiety and stress I thought I would never overcome, and I have had to have conversations with Roland’s younger brothers that no child should have to have. I have always known that our situation could get worse, but I never imagined that Congress would be an obstacle in my son’s battle with cancer.

The crisis in CHIP’s expiration has been a disaster for children and families. Fortunately, yesterday’s CR puts a short-term end to this crisis with a six-year extension of funding.

Unfortunately, our work on CHIP is not done. The reason we have more work to do is that the CR includes a potentially program-ending “CHIP funding cliff” in 2024.

As the following chart highlights, the CR included language that causes funding for CHIP to drop from $25.9 billion in 2023 to just $5.7 billion in 2024 — an astounding 78 percent cut.

Just as Congress failed to extend CHIP more than three months ago over the need to reach an agreement on $8 billion in funding offsets, it is hard to imagine how CHIP will be successfully reauthorized in 2023 if the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) estimate that an extension of the program due to the “CHIP cliff” in 2024 and beyond will be even more costly.

Although the CR has provided CHIP with some important short-term relief, there remains enormous uncertainty over CHIP’s long-term stability. In fact, due to the CR’s inclusion of a “CHIP cliff,” it is increasingly likely that CHIP will be underfunded in 2024 and beyond.

In light of this year’s failure to extend CHIP in a timely manner, Congress should take action to ensure that the health coverage for nine million children and pregnant women is never threatened like this again.

The biggest cause for future uncertainty with CHIP’s financing is due to the fact that the CBO and JCT score for the program is influenced immensely by the costs associated with coverage in Medicaid and the Affordable Care Act (ACA) marketplaces. Due to the “CHIP cliff,” the CBO and JCT score on a future extension of CHIP could be as high as $20 billion per year or much less if, as CBO explains, “the federal costs of the alternatives to providing coverage through CHIP (primarily Medicaid, subsidized coverage in the marketplaces, and employment-based insurance) are larger than the costs of providing coverage through CHIP during that period.”

In other words, any actions that Congress and President Trump takes to increase or reduce the costs of either Medicaid or the ACA during the intervening six years will have an enormous impact on whether we will be able to successfully extend CHIP in 2024 and beyond.

Repeal of the individual mandate for health coverage in the recently tax bill, in fact, was scored by CBO and JCT to substantially increase the cost of coverage in the ACA marketplaces and made CHIP relatively cheaper. Future legislative actions by Congress or administrative changes by the Trump Administration or a future president could have the opposite effect. For example, if Congress had passed the House “repeal and replace” bill or Graham-Cassidy in 2017, it is likely that a CHIP extension would have been scored by CBO and JCT to cost tens of billions more.

This is untenable. CHIP is the only federal health coverage program that is subjected to temporary extensions and enormous funding cliffs. It is unimaginable that Congress would purposely legislate a 78 percent funding cliff in the future of either Medicare or its own health coverage like it just did to CHIP. This must end.

CHIP is not some sort of temporary demonstration or waiver program. Since its inception more than 20 years ago, CHIP has successfully cut the uninsured rate for children by two-thirds. Why would we put the future of this bipartisan successful program at risk and dependent on a future CBO and JCT score that likely has more to do with the costs of Medicaid and ACA marketplaces than CHIP? Unfortunately, for all we know, yesterday’s CR and the inclusion of the “CHIP cliff” could make an extension of CHIP virtually impossible in the future.

There is no legitimate counter argument for why Congress should continue to subject CHIP to temporary and uncertain extensions. One argument that some have attempted to make is that Congress wants to continue to have the opportunity to make changes to CHIP. However, even if CHIP were made permanent or extended for 10 years, the Senate Finance Committee and the House Energy and Commerce Committee would still have legislative and oversight authority over it.

For instance, at its inception, Congress authorized CHIP for a full 10 years and that did not preclude Congress from making numerous changes to the program. In fact, between 1997 and CHIP’s reauthorization date in 2017, Congress made numerous changes to CHIP in 18 separate laws.

Congress has an obvious solution to fix the “CHIP cliff” that is staring it squarely in the face. According to a cost estimate by CBO and JCT issued on January 11, 2018, “The agencies estimate that enacting [a 10-year extension of CHIP] would decrease the deficit by $6.0 billion over the 2018- 2027 period.”

In other words, by simply extending CHIP for 10 years, Congress could simultaneously: (1) eliminate the “CHIP cliff”; (2) reduce the federal deficit by $6 billion; and, (3) provide CHIP with a far more stable, secure, and long-term extension.

Kelly Whitener at Georgetown’s Center for Children and Families explains:

. . .this new score — 10 years of CHIP saving $6 billion — presents an opportunity that should not be missed. Congress now has the chance to provide children, their families, and states with stable coverage while saving the government money. This is a rare win-win situation.

Given the win-win situation here, I was surprised to see that the proposal for the next continuing resolution would fund CHIP for just 6 years. Why 6 years? Why give up the opportunity to stabilize children’s coverage and continue to make progress covering more and more children? We know that having coverage as a child leads to healthier, more productive teenage and adult years, and we know that CHIP has helped reduce the number of uninsured children to historic lows.

In coming weeks, there are a series of “health care extenders” that desperately need funding offsets in order to be extended. Fortunately, a permanent or 10-year CHIP extension could create billions of dollars in federal budget savings that could be used to help provide necessary funding to extend the Maternal, Infant and Early Childhood Home Visiting (MIECHV) program, Community Health Centers, or the Parent to Parent Initiative, which all expired 115 days ago and are important to children.

Congress could also use the billions of dollars in savings from a long-term CHIP extension to help resolve the FY 2018 budget impasse between Congress and President Trump that has necessitated the use of repeated CRs as “stopgap” measures to keep the federal government operating. Resolving the federal budget crisis is also important to children, as the CR only extends funding for the government until February 8, 2018. Both Congress and President Trump must do better than funding and operating the government three weeks at a time.

As my colleague Rachel Merker explains, the recent series of CRs that keep the government functioning on a short-term basis actually result in a “cut for many already underfunded children’s programs” because the CRs do not adjust for either inflation or need, they leave agencies overseeing children’s programs unable to plan for the future, and they facilitate the use of children’s programs, such as CHIP, to be used as “bargaining chips” in the spending negotiations. This must end.

Merker concludes:

If Congress is serious about investing in kids, it will stop relying on stopgap measures and start focusing on good faith efforts to fully fund the government on time, and with robust support to programs supporting families and kids.

Finally and sadly, the CR also failed to complete a deal to protect DREAMers from the threat of deportation caused by President Trump’s order to end protections provided to the estimated 800,000 DREAMers in March under the Deferred Action for Childhood Arrivals (DACA) program put in place by President Obama in 2012.

DACA recipients and their families, including 200,000 U.S. citizen children, are facing a great deal of uncertainty and fear, heightened by each passing day that a deal is not made. Congress much address DACA as soon as possible to end the needless trauma and fear that has been inflicted upon these young people who know only the United States as their home.

Congress and President Trump have a great deal of work to do to address the needs of the American people and our children, which includes: (1) enacting a permanent or 10-year extension of CHIP; (2) funding the health extenders; (3) reaching a budget deal for the current fiscal year; and, (4) protecting the lives of DREAMers.

Rather than arguing about who is winning the debate over the recent government shutdown, Congress and President Trump should spend that time actually talking to each other and negotiating to complete the people’s business. It is not hyperbole to say that lives are still hanging in the balance.