Some House and Senate Democrats are pushing for a permanent reauthorization to the Children’s Health Insurance Program after a new estimate finds it would save the federal government money.
The nonpartisan Congressional Budget Office found that a 10-year reauthorization would save the federal government $6 billion over the next decade. The development has led to some Democrats to call for more than a five-year reauthorization of the program, which some Republicans are eyeing.
“I would like this to be as long as possible,” said Sen. Ron Wyden, D-Ore., on Thursday, referring to the duration of CHIP.
Wyden said that he hasn’t heard of any Democrats that would vote against a much longer or permanent reauthorization.
Sen. Bill Nelson, D-Fla., said he prefers a permanent reauthorization and doesn’t think that goal would complicate a deal to reauthorize the traditionally bipartisan program. Others said Thursday they would also like to get a permanent reauthorization, but would accept a shorter reauthorization.
“It would be smarter to do a permanent deal, but I think we need to be realistic on what we can get done in the next couple of weeks,” said Sen. Chris Murphy, D-Conn.
Republicans are already eyeing at least a five-year reauthorization package for CHIP to be included in a short-term spending bill to fund the government after current funding expires on Jan. 19.
Rep. Frank Pallone, D-N.J., is among those pushing for a permanent reauthorization, but he doesn’t want CHIP to be taken care of in the spending bill because he said it may not pass.
“We don’t know if the [continuing resolution to fund the government] is gonna pass,” he said. CHIP would get “subsumed in this whole [continuing resolution] spending debate.”
Pallone also slammed a five-year CHIP reauthorization bill that passed the House a few months ago but stalled in the Senate. Democrats largely opposed the bill due to funding offsets that include charging wealthy seniors higher Medicare premiums, raiding an Obamacare disease prevention fund, and shortening the grace period between when a person doesn’t pay their premium and their Obamacare coverage gets cut off.
“We want to get rid of these bad pay-fors that sabotage the [Affordable Care Act],” Pallone said.
But CBO may have made the funding offset issue moot. Wyden asked CBO to examine the impact on government spending if CHIP is reauthorized for 10 years. The agency looked at a Senate bill that reauthorizes the program for five years and estimated what happened if the reauthorization period extended for twice as long.
The CBO found that it would save the federal government $6 billion over the next decade if CHIP were reauthorized for a decade. The reason is costs for CHIP alternatives such as Obamacare coverage subsidies or Medicaid would be higher.
Another key reason was a lower federal matching rate for CHIP, which provides matching federal block grants to states to fund health insurance for low-income children, starting in 2021. That would create $6 billion in savings from 2021 to 2027.
The matching rate would decline from an average 93 percent in 2019 to 70 percent in 2021, CBO said. This means states would start paying more for the program in 2021.
CBO said in an estimate last week that CHIP would also cost less because fewer people would sign their children up for the program now that Obamacare’s individual mandate penalty has been repealed due to tax reform. The repeal of the mandate penalty, which creates an incentive for everyone to get insurance, goes into effect in 2019.
Wyden said that he was surprised by the CBO’s findings.
“Even I didn’t think it would be this eye-popping development where you could have permanent reauthorizations,” he said.
CHIP expired on Sept. 30, but states have been using leftover funding to continue coverage. The program insures nearly 9 million low-income children.
The Dec. 22 short-term spending bill included nearly $3 billion in short-term CHIP funding to keep the program afloat until the end of March. However, a new report found that 11 states would run out of funding by the end of February.
