October 10, 2017

Lapsed funding for children’s insurance initiative snared in federal healthcare flap

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The current CHIP funding arrangement is especially beneficial to Massachusetts and other states, since the federal government provides 88 percent of the program’s dollars compared to the usual 50-50 split for other jointly funded state-federal healthcare programs.

BOSTON — Healthcare industry insiders, including Gov. Charlie Baker and elected officials on Beacon Hill, are beginning to fret over the future of a program that provides insurance coverage to about a quarter of children in Massachusetts, mostly on the federal government’s dime.

“Developments over the next several months could have strong repercussions for Massachusetts children,” the Massachusetts Medicaid Policy Institute, a program of the Blue Cross Blue Shield of Massachusetts Foundation, wrote in June in a 14-page report on the Children’s Health Insurance Program (CHIP).

The report concludes Massachusetts and other states would exhaust their current CHIP allocations by March 2018 unless Congress took action.

Congress is beginning to explore the issue but has not taken action, and federal authorization for the 20-year-old program expired Sept. 30. Last week, Gov. Baker outlined his views on the evolving situation in a letter to members of the Massachusetts Congressional delegation.

Massachusetts will see a $295 million reduction in funding if the program is not reauthorized, according to Baker, causing “significant uncertainty” for 160,000 children who rely on the program for health services.

“Though CHIP funding may not immediately run out in Massachusetts parents are already afraid that their children’s insurance may be lost in the near future,” Baker wrote in his letter, which was obtained by State House News Service. “With each passing week their fears continue to grow.”

The program covers 8.4 million children across the nation and the likelihood of its reauthorization appears good, especially given bipartisan support for it in the past. However, Republican efforts to drastically overhaul health care this year have elevated levels of uncertainty about the program’s future and increased the likelihood that it will be altered if and when it is reauthorized.

The current CHIP funding arrangement is especially beneficial to Massachusetts and other states, since the federal government provides 88 percent of the program’s dollars compared to the usual 50-50 split for other jointly funded state-federal healthcare programs.

In fiscal 2017, MassHealth spent $720 million on the CHIP program, of which $633 million was reimbursed by the federal government.

The program “may become a point of negotiation in the broader disputes around replacing the ACA,” or Affordable Care Act, according to the Medicaid Policy Institute. If CHIP is not reauthorized, the institute said, most of its enrollees in Massachusetts could be converted to Medicaid and remain in MassHealth, though at the lower federal match rate, with a difference in federal funding of about $1,400 per child.

Under a reauthorization bill sponsored by Sens. Orrin Hatch, R-Utah, and Ron Wyden, D-Oregon, Massachusetts would face the loss of $473 million in federal funds over five years as the federal share of CHIP funding would fall to 65 percent.

If CHIP is reauthorized at pre-ACA reimbursement rates, the state would lose about $160 million per year, the policy institute estimated, adding that Massachusetts would “not likely” reduce eligibility to compensate for the change “given its longstanding commitment to health insurance coverage.”

State Sen. Barbara L’Italien, a candidate for Congress in 2018, says the situation highlights the need to advance legislation (S 647/H 598) on Beacon Hill she filed at the beginning of 2017 that “I hoped would never be necessary.” The bill aims to protect CHIP coverage in the event the feds stop funding the program.

“Unfortunately, that worst-case scenario has come to pass: at the end of September, Congress failed to reauthorize CHIP, leaving millions of American children – including 160,000 right here in Massachusetts – set to lose their healthcare coverage,” L’Italien said. “Without Congressional or state action these children in Massachusetts will be out of luck come the spring. In ordinary times this would be a major news story, but these are not ordinary times.”

CHIP serves low- and moderate-income families who are not eligible for Medicaid and provides coverage for more services, and at less cost to those families, than alternative insurance, according to L’Italien.

L’Italien’s bill remains before the Legislature’s Health Care Financing Committee, which held a public hearing on it in May.

With Republicans pressing to overhaul healthcare laws, Baker, who is also a Republican, has often found common ground this year with Democrats. He has written several letters to federal officials urging them not to disturb the flow of health funds to the state from Washington.

“I request that on behalf of the Commonwealth that Congress take action to provide fiscal support for these health services,” Baker wrote in his Oct. 3 letter to Sen. Elizabeth Warren, echoing his support for community health center spending and other federal health care subsidies. “Please let me know if I can provide any additional information on the importance of these programs to the people of Massachusetts.”

The U.S. House Energy and Commerce Committee last week held a lengthy markup session on an omnibus bill that includes language to extend funding for the CHIP program.

During the markup, Congressman Joseph Kennedy III said the CHIP program and endangered federal community health center funding enjoyed bipartisan support, but said Congress under Republican control faced “very tough tradeoffs” to pay for the programs. The bill advanced out of committee on a 28-23 vote.

One thought on “Lapsed funding for children’s insurance initiative snared in federal healthcare flap

  1. The federal government isn’t always the be all end all. Healthcare should be left in the power of each state, which can manage things much better than the feds ever will. Massachusetts was set up just fine under Gov. Romney until ACA was introduced. Return healthcare to the power of the states.

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