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Congress Faces Complex Fight Over Children's Insurance Program

By Erin Mershon, CQ Roll Call

October 31, 2016 -- Renewal of the Children's Health Insurance Program (CHIP) could be among the first major pieces of health care legislation to come before Congress next year, and advocates are already concerned that the traditionally popular program's funding extension could become bogged down with more partisan health proposals.

Funding for the CHIP program expires at the end of the 2017 fiscal year, but state officials and governors are preparing to push Congress to reauthorize the program earlier to give state legislatures, many of which adjourn in the spring or summer, time to incorporate funding into their budgets for the year.

Children's health advocates and state officials have already begun meeting with relevant congressional committees and one another to discuss the pending funding extension, they said in interviews. A coalition of more than 50 groups sent a letter to congressional leaders calling for "swift congressional action" earlier this month.

That optimistic timeline, however, would put the CHIP program on the legislative agenda during the new presidential administration's first 100 days—a time when the new administration is likely to push for campaign agenda items. Lawmakers may seek legislative "fixes" to the struggling 2010 health law or efforts to address financial shortfalls in Puerto Rico's struggling Medicaid program—and advocates are already concerned that a must-pass health care bill could become a vehicle for those efforts.

"We're not excited that CHIP could become the train. That does worry us, that people will try to Christmas tree this package," said Bruce Lesley, president of the children's health group First Focus, referring to efforts to hang other legislation on CHIP. "The policy is just complicated enough that it's not going to be simple" even without the addition of other partisan policies, he said.

"We're always concerned that something could bog down a bipartisan program like CHIP. . . . That's in the back of my head for sure," said Peter Eckrich, legislative director for the health and human services committee at the National Governors Association.

Congressional staffers for key committees in both chambers said it was too early to describe the outlines of the CHIP reauthorization package, but several lobbyists told CQ that Republicans on the Hill hoped to pass a relatively "clean" CHIP package.

"What can't happen is to have kids kind of caught in the grinder of healthcare political dysfunction we've had for the past couple years," said Larry McNeely, policy director for the National Coalition on Health Care.

Key CHIP Provisions

Even without controversial additions, the CHIP reauthorization itself could be complex. The easiest path would be a clean extension of the program's funding for two years. That would sidestep the need to reevaluate its funding levels, which were set by the health law and expire in 2019.

But many children's health advocates plan to push for at least a four-year extension, in part because the other options for children seeking health insurance, such as the public exchange plans created by the health law, typically provide coverage that is more expensive and less comprehensive for children. Officials for the exchanges are also struggling to build competitive insurance markets and constrain costs.

The Medicaid and CHIP Payment and Access Commission is set to consider its own recommendations to Congress on this issue later this week, and could vote on an official recommendation by December, staff said. Several advocates expect the commission will vote this year for an extension longer than two years, in part because of the troubles the exchanges currently face.

"CHIP was designed with kids in mind. That's the key to this," said Jim Kaufman, vice president of public policy at the Children's Hospital Association. "When you look at some of these other potential coverage options, there's big gaps in networks, benefits, affordability. That's why we've got to keep CHIP in place while you look at improving these other potential coverage options for kids."

A longer extension, however, would need to be paired with a full reauthorization of the program that will force lawmakers to consider whether they want to extend the 23 percentage point increase in CHIP funding that was in the 2010 health law—a provision popular with states, but one that will increase the package's price tag.

A longer extension would also open up a controversial debate over so-called maintenance of eligibility requirements, a part of the health law that will also expire when the CHIP authorization does. That provision prevents states from imposing any new eligibility requirements or enrollment limits on their Medicaid or CHIP populations.

Some states, especially those facing budget shortfalls, would like to see more flexibility on their eligibility requirements. Consumer advocates, however, warn that such changes could limit access to care.

Last year, Republicans offered a draft measure that would have eliminated both the enhanced funding levels and the health law eligibility requirement provisions. Democrats, meanwhile, offered bills in both chambers that would have extended both (HR 919, S 522).

The availability of offsets will also play a large role in determining what Congress does and does not add to the package. The last CHIP funding extension, which permitted the enhanced matching rates for two years, cost $7 billion, according to the Congressional Budget Office. Estimating the 2017 extension, however, could be much more complicated, since the CBO director would be relying on assumptions about whether changes to the maintenance-of-effort requirements or the enhanced funding rates would cause some states to push more children onto the exchanges, which offer more expensive coverage.

Other Expiring Provisions

Even if the package isn't bogged down with partisan health law changes, it may nevertheless act as a vehicle for other popular—but costly—health care provisions often referred to as "health care extenders." That list of provisions includes funding for community health centers and rural hospitals, as well as a repeal of the so-called Medicare therapy caps.

Until now, many of those provisions were repeatedly addressed when Congress tackled the so-called "doc fix" to repeal the much-maligned sustainable growth rate (SGR). But Congress passed its permanent repeal of the SGR last year—without making permanent all of the extender provisions at the same time. Instead, many of the provisions are set to expire at the end of the 2017 calendar year.

That doesn't make their inclusion on the CHIP package inevitable, especially since the expirations are several months apart. But advocates for the various provisions are nonetheless beginning to meet and discuss their strategies for next year, several told CQ Roll Call. All said they want to make sure Congress doesn't feel it has to choose between the popular programs. 

Regardless of the full scope of the eventual package, advocates said they remain confident Congress will act on CHIP before it expires.

"There's a lot of strong, bipartisan support for CHIP," Kaufmann said. "Some of the details like what's going to play out with whether MOE is extended, is [the enhanced funding rate] fully funded—I think some of those things still need to be discussed. But 'yes, we have to do CHIP next year' is the overarching comment we're hearing."

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