October 5, 2017

House, Senate lawmakers grapple with how to pay for CHIP reauthorization

Daily Briefing

Senate and House panels on Wednesday advanced separate bills to fund CHIP for another five years, but funding proposals being pushed by House Republicans are facing opposition from Democrats.

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Federal funding for CHIP—which covers about 9.2 million low-income U.S. children and pregnant women—expired at the end of fiscal year (FY) 2017 on Sept. 30. According to the New York Times, state officials said they would soon begin notifying families that enrollees could lose coverage if Congress does not pass a bill.

Senate committee advances KIDS Act

The Senate Finance Committee via voice vote quickly passed their bill (SB 1827) with bipartisan support. The bill, called the Keep Kids' Insurance Dependable and Secure (KIDS) Act of 2017, would provide roughly $100 billion for states over five years, but after two years it would gradually phase out the 23 percentage point funding increase states received under the Affordable Care Act (ACA), Modern Healthcare reports.

Under the Senate bill, the additional funding provided under the ACA would decline to an 11.5 percentage point increase in 2020 and would be completely eliminated by 2021.

Senators voted to advance the bill without any proposed amendments. However, several committee members said they would introduce amendments on the Senate floor. For instance, Sen. Pat Toomey (R-Pa.) would like to introduce a provision in the bill that would prevent members of Congress from redirecting funding authorized for CHIP, Modern Healthcare reports. Sen. Debbie Stabenow (D-Mich.) said she would like to amend the bill to extend federal funding for community health centers, which also expired on Sept. 30.

The Senate bill does not contain any provisions to pay for the CHIP extension. However, according to the Times, Republicans and Democrats on the committee are working to reach an agreement before the bill goes to the Senate floor.

House committee advances Healthy Kids Act

Meanwhile, the House Energy and Commerce Committee spent about six hours debating their bill (HR 3921), with Democrats voicing concerns over the proposed funding mechanism.  

Similar to the Senate's legislation, the House bill, called the Healthy Kids Act, would provide nearly $120 billion for states over five years, and after two years would gradually phase out the ACA's funding bump. House lawmakers proposed several funding mechanisms in the bill, such as:

  • Allowing states to remove lottery winners from Medicaid;
  • Bolstering Medicaid's third-party liability policy to make it easier for state Medicaid programs to not cover certain medical costs if they could be covered by another private plan or government program; and
  • Increasing Medicare premiums for beneficiaries with incomes over $500,000.

Committee Chair Greg Walden (R-Ore.) said the bill would increase premiums for those Medicare beneficiaries by about $135 per month. According to the Times, beneficiaries with higher incomes currently pay about $400 a month. "While some have called these offsets partisan, we call them reasonable," Walden said.

The House bill also includes a few provisions not currently in the Senate proposal, such as an additional $1 billion in Medicaid funds over two years to Puerto Rico and altering the implementation timeline for scheduled cuts to disproportionate share payments for hospitals. Currently, $43 billion in DSH payment cuts from fiscal year 2018 through fiscal year 2025 were scheduled to take effect on Oct. 1. The cuts grow gradually from $2 billion in FY 2018 to $8 billion in FY 2025. However, the House bill would eliminate the FY 2018 payment cut and offset the cost of the delays by extending DSH reductions through FY 2027.

Rep. Frank Pallone Jr. (D-N.J.), senior Democrat on the committee, suggested the CHIP funding proposals could delay the bill's passage, saying the proposals "will likely mean more delay and possibly no action in Congress until the end of the year as part of an omnibus appropriations bill."

Ultimately, the House committee voted 28 to 23 to approve its bill. All Democrats voted against the bill. The House committee voted separately to approve legislation (HR 3922) to extend by two years funding for community health centers.

Next steps

According to the Wall Street Journal, timing will be tight for the House and Senate to pass their respective bills and reconcile them with enough support to pass in the Senate. The Senate begins a week-long recess Oct. 9, and the House is scheduled to recess the following week.

While Kaiser Family Foundation data show most states have enough funding to last through March 2018, 10 states said anticipated they would run out of funds by the end of December. As a result, some states are taking action to shore up funding, the Journal reports.

HHS on Monday granted Minnesota an emergency infusion of $3.6 million to keep the state's program open through the end of October. Utah has sought federal permission to amend its CHIP plan to restrict eligibility or benefits if it runs out of funding.

Cathy Caldwell, who oversees Alabama's CHIP program, said her state could exhaust funding by early November if Congress does not reauthorize the program. Without additional funding, Caldwell said they would need to begin changing eligibility requirements and scaling back the number of enrollees (Dickson, Modern Healthcare, 10/4; Lockhart, Deseret News, 10/4; Baker, Axios, 10/4; Pear, New York Times, 10/4; Hackman, Wall Street Journal, 10/4; Dickson, Modern Healthcare, 10/4; Diamond, "Pulse," Politico, 10/5).

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