States rush to preserve children's health coverage
States are scrambling to shore up the government health insurance program that covers 9 million low-income kids after Congress failed to meet the deadline to renew its funding over the weekend.

While states won’t run out of money immediately, at least 10 will deplete funds by the end of the year, according to the nonpartisan Kaiser Family Foundation. If Congress doesn’t approve funding by then, some state officials say they expect to terminate enrollment in the beginning of next year or shift eligible kids to other government insurance programs with potentially less federal support.

“This is a terrible situation for everyone who relies on CHIP to be a functioning program,” said Minnesota Department of Human Services Commissioner Emily Piper.

Without getting new funding from Congress soon, Minnesota is considering tapping into its unspent federal allotment for 2017, which would fund the program for about nine months. Doing so, however, would come with a federal penalty of $10 million to the state.

“It would carry us forward, but it would be a financial strain to the state’s budget,” Piper said.

CHIP, now in its 20th year, is jointly funded by the federal government and the states. Historically, the federal government has provided an average of 71 percent of the funding, but a provision in the Affordable Care Act boosted federal funding to the states by 23 percentage points over the past two years.

Lawmakers say they are still planning to fund CHIP this year, though they haven’t acted with urgency so far. The Senate last month unveiled a bipartisan measure, S. 1827 (115), that funded the program for five years and preserves Obamacare’s funding raise for two years before it’s gradually phased out. The bill was overshadowed by the GOP’s last-ditch failed effort to dismantle Obamacare, but lawmakers are expected to mark it up in committee this week.

The House, meanwhile, is also expected to hold a markup on a CHIP measure this week but has not yet released a bill, which is expected to be drastically different than the Senate’s. Sources say the House is unlikely to keep the enhanced Obamacare funding for more than one year. Its bill is also expected to include funding for community health centers and other health programs, which could make it hard to pay for.

State officials say the funding uncertainty is already causing logistical headaches.

“Even if Congress comes back and gives them all the money in the world, it’s very distracting and destabilizing,” said Matt Salo, executive director of the National Association of Medicaid Directors.

Like Minnesota, Utah is considering moving eligible children to Medicaid if the money runs out, said Utah Medicaid Director Nate Checketts. The state is also considering moving some kids to the Obamacare insurance marketplaces, where they can get subsidized coverage. However, officials are still working through the logistics.

Colorado is also looking at Obamacare’s marketplaces as a fallback option. The state’s CHIP program, which is expected to run out of money by the end of January without action from Congress, plans to notify families in mid-December that coverage may be terminated, triggering a qualifying event that allows them to purchase Obamacare coverage through the state’s exchange. More than 75,000 children and nearly 800 pregnant women are currently enrolled in Colorado’s program.

“Families want to know as soon as their coverage is potentially threatened,” said Colorado Medicaid Director Gretchen Hammer. “Families know that they have coverage through January, and they want to know what their options are.”

California’s Department of Health Care Services said it’s still business as usual for the state’s CHIP program, which receives more than $2 billion a year and covers about 1.3 million children and pregnant women. The program is expected to run out of funding in December.

“Right now, it is a tough balance between the reality of a true urgency facing state CHIP programs and not wanting to create panic for families whose children depend on CHIP coverage,” said Kristen Golden Testa, director of the California health program at The Children’s Partnership.

In Texas, funding is expecting to dry up in January or February for a program covering nearly 400,000 children and 36,000 pregnant women in the state. Texas budget writers estimated Texas would receive $3.2 billion in federal funding for CHIP over 2018 and 2019.

“With so many families across the coast impacted by Hurricane Harvey, CHIP and Medicaid help families maintain coverage,” said Lou Fragoso, president of Texas Children’s Health Plan, which covers 430,000 people in Texas, about 15 percent of whom receive CHIP. “This is critical, especially for those in communities devastated by the recent storm and flooding.”

The Texas health department has warned that it would begin winding down the CHIP program after funding runs out early next year. But close observers say the state hasn’t made serious preparations because Congress is widely expected to continue funding the program.

Victoria Colliver, Rachana Pradhan, Renuka Rayasam and Joanne Kenen contributed to this report.

