6 states could be out of CHIP funds by January

Federal funding for the Children’s Health Insurance Program (CHIP) expired at the end of September, and with no quick renewal expected from Congress, states are on their own to keep the program afloat. According to a report from the Georgetown University Center for Children and Families, six states won’t be able to do so past early January.

Those six states—Arizona, California, the District of Columbia, Minnesota, Ohio and Oregon—have predicted they’ll be out of CHIP money by the end of 2017 or early in January 2018, potentially affecting nearly 2.5 million enrollees, the vast majority of them in California. Three other states—Connecticut, Florida and Texas—projected they will run out of funds later in January. Texas, along with Pennsylvania, Utah, Virginia and Washington, said they intend to take some action before the end of the year, even if some of those states can make it through February on existing funds.

The report said CMS can redistribute “unused funds from prior fiscal years on a proportional basis.” Five have received some redistributed funds: Arizona received $21.8 million, California $176.9 million, Minnesota $3.6 million, Washington $10.4 million and Oregon $14.2 million.

Complicating matters are unexpected expenses in Florida and Texas due to hurricane damage making children newly eligible for CHIP or when states don’t have enough to cover a full month of CHIP, since most operate in managed care programs which have to make full capitation payments to health plans in advance to meet their contractual obligations.

“Just as you don’t want to wait until your car’s gas gauge hits empty to pull into the gas station, states cannot wait until they totally exhaust federal CHIP funds to take action,” wrote the center’s executive director, Joan Akler, in an accompanying blog post. “Inaction by Congress is costing states time and money as officials grapple with various ‘what if’ scenarios and develop contingency plans to meet their responsibilities to notify families, managed care plans, providers and other stakeholders of any changes to their state CHIP programs.”

Those scenarios varied greatly between states based on their own laws and the structure of their version of CHIP. States with some children covered by programs independent of Medicaid, like California, may have to cut off coverage for those enrollees. Arizona state law requires closing CHIP if federal funding falls below current match rates. It did so before, in Dec. 2009, and enrollment fell by 60 percent by July 2011. Closing enrollment doesn’t come cheap, either—Colorado estimated closing and reopening CHIP enrollment would cost $300,000.

The report estimated 1.2 million children “would likely become uninsured, increasing the uninsured rate among children by 37 percent” if CHIP funding isn’t renewed.

According to Vox, the partisan fights over the Affordable Care Act are holding up congressional action. Reauthorizing CHIP will require finding $8 billion in offsetting spending cuts. Republicans’ proposals involved ACA provisions, like cutting the law’s public health fund, as well as smaller cuts to Medicare and Medicaid which Democrats have said they couldn’t support.

“Only yesterday I was told Democrats said they don't want to do anything and we should just go forward,” House Majority Leader Kevin McCarthy, R-California, said to Vox. “That is not the way this place should work.”