By Rebecca Adams, CQ HealthBeat Associate Editor
December 3, 2014 -- Members of the House Energy and Commerce Health Subcommittee voiced bipartisan support last week for extending funding for the Children's Health Insurance Program (CHIP) past its expiration of Sept. 30, 2015. But questions posed at a panel hearing indicated that some Republicans are exploring whether to pass on more of the costs to states or to consumers.
The hearing was held the same day that the panel released letters from governors in 39 states calling for an extension of the funding for children's health coverage. About 8.4 million people were covered by CHIP last year.
The health care law allowed the program to continue through 2019 but only authorized funding for it through Sept. 30, 2015. States would probably exhaust that money in fiscal 2016. Lawmakers are weighing how to update the program next year.
The Medicaid and CHIP Payment and Access Commission, known as MACPAC, recommended at least a two-year extension of the program. Many patient advocates want a four-year reauthorization.
When the funding expires next fall, the health law provides legislative authority for the federal matching rate for CHIP to spike by 23 percentage points. If Congress allows that to stand, the average federal matching rate to states would jump to 93 percent of costs under the health care law. But Republicans appeared unlikely to provide funding for an increase that large.
"Like many of my colleagues, I believe we need to extend funding for this program in some fashion," said Subcommittee Chairman Joseph R. Pitts, R-Pa. "At the same time, we should ensure the program complements—rather than crowds-out—private health coverage. We should also ensure CHIP is a benefit that is targeted to those who are most vulnerable—rather than one that effectively subsidizes coverage for upper-middle-class families."
Pitts at one point asked representatives from the Government Accountability Office, MACPAC and the Congressional Research Service if lottery winners were able to get coverage under CHIP. He said that he'd heard of such cases in Medicaid, the federal and state program for the low-income, including one person who won $25 million and who Pitts said received coverage through the program.
MACPAC Executive Director Anne Schwartz and GAO Director of Health Care Carolyn Yocom appeared puzzled by his statement.
Schwartz said she was not familiar with those situations and that any lottery winnings that are taxable earnings would be considered in calculations to determine whether someone is low-income enough to qualify for CHIP. Yocom echoed her comments.
Rep. Morgan Griffith, R-Va., asked whether CHIP is currently subsidizing the upper-middle class.
CRS Health Financing Analyst Evelyne Baumrucker said that the 2009 reauthorization of the program encouraged states to focus on covering low-income people and discouraged states from covering families with income that is more than three times the federal poverty level. Congress said that the matching rates to states for families with income above that threshold would fall to the Medicaid matching rate, which is an average of 57 percent instead of the average CHIP matching rate of 70 percent.
About 90 percent of the families that receive coverage through CHIP have incomes that are less than twice the poverty level, said Schwartz.
Rep. Renee Ellmers, R-N.C., expressed concerns about very sick children, then asked if a potential compromise could lie in asking families to pay higher costs for their care. The current program caps patients' costs at 5 percent of the family's income.
Schwartz noted that the children that Ellmers said she is most concerned about have the highest cost-sharing.
If Congress raised the limit on out-of-pocket spending for consumers, the families with children who are particularly ill would probably be affected most.
Joe L. Barton, R-Texas, asked whether it would make sense to include a CHIP reauthorization in more partisan legislation next year to repeal or change the health care law.
That idea was discouraged by Leonard Lance, R-N.J., who said that CHIP predates the health care law and many CHIP supporters are vigorously opposed to the health care law.
"I hope we can not confuse the two," he said.
If Congress lets funding lapse entirely, states would still face requirements in the health law to continue covering children under the same eligibility guidelines until 2019. But the states that use a particular model of CHIP, in which the state expanded Medicaid to create the program, would get fewer federal dollars because the matching rate would fall to the Medicaid level. About 30 percent of children are in that type of CHIP program now, but roughly half will be in it in fiscal 2015.
Other children currently in CHIP live in states that created a separate CHIP program from scratch. If CHIP funding were to expire, those states are supposed to shift children into any plans offered through the health law's new marketplaces that HHS certifies as being comparable to CHIP. But it isn't clear how many marketplace plans HHS officials would consider to offer comparable coverage to the benefits in CHIP.
Many marketplace plans ask families to pay higher out-of-pocket costs and offer fewer benefits than CHIP coverage, said Yocom.
Separately, an analysis released by the Georgetown Center for Children and Families on Florida's CHIP coverage found that the state would be one of the hardest hit if funding for CHIP ended. The center's report suggested that Florida would lose between $495 million and $560 million in federal funds annually. About 400,000 children over the course of a year would lose CHIP coverage.
In the hearing, the witnesses said that some children who could lose CHIP coverage would remain uninsured.
"An abrupt end to CHIP would be a step backward from the progress that has been made," said Schwartz.
Rebecca Adams can be reached at [email protected].
