Federal funding for the Children’s Health Insurance Program (CHIP) expired on September 30th, and there is still no clear plan in motion to extend its funding. This means that states only have the remaining federal CHIP funds from this previous fiscal year, and will not receive CHIP funds for next year until a bill is passed. This strikes a blow to state budgets and will likely result in a reduction of CHIP coverage or removal of it altogether.
CHIP provides health insurance coverage to children from families that earn too much to qualify for Medicaid but do not have access to or cannot afford private insurance (helping out incomes up to 200% of the federal poverty level). It was initiated for the 1998 fiscal year, and allowed states to use the funds to expand Medicaid eligibility, develop new insurance programs, and increase outreach for eligible children. States were able to design CHIP to be an extension of existing Medicaid programs, a new stand-alone program, or a combination of both. This flexibility allowed states to establish programs that would be the most effective for their states. The federal government provides funding by matching what each state spends on their program.
CHIP helped reduce the rates of uninsured children in the United States, which continued to decrease even when the rates for adults were increasing.
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Without the extension of this program, states can continue to use the remaining federal funds from their 2017 allotment, but until Congress acts, no additional funds will be available. This creates a problem since states included CHIP into their budgets under the assumption that they would continue to receive federal funds in the 2018 fiscal year, and so now many states must decide how to address this budget shortfall.
Some states such as Utah, New York, and Arizona have considered ending enrollment or ending coverage. This would limit parents to employer-sponsored or marketplace insurance plans for their children, but the higher out-of-pocket costs and limited benefits may leave children uninsured. Without access to coverage, children’s health will be negatively impacted and family finances will be strained.
While bills to extend CHIP funding are in the works, there are still many barriers to its final enactment, including action by the House and Senate, resolution of any differences between the bills, and the signature of the President. The process takes a lot of time, and unfortunately, even after the extension gets final approval, states still have to make the appropriate changes in coverage, eligibility, training, and third party contracts. Until the final approval of the bills, Centers for Medicare and Medicaid Services (CMS) will assist states that are close to running out of funds.
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