10-Year CHIP extension would save $6B

The Congressional Budget Office (CBO) estimated that a 10-year extension of the Children’s Health Insurance Program would cut $6 billion from the deficit, since the program allows the federal government to avoid paying higher costs for alternate insurance obtained through federally-subsidized marketplaces (CBO Report, January 11, 2018).

The CBO and Joint Committee on Taxation had previously estimated that a five-year renewal for CHIP would add $0.8 billion to the deficit, down from its previous estimate of $8.2 billion. The change stems from Congress’s repeal of the Patient Protection and Affordable Care Act’s (ACA) (P.L. 111-148) individual mandate. Without CHIP, parents would be more likely to seek federally-subsidized coverage offered through health insurance marketplaces set up by the ACA, and CBO expects that the individual mandate’s repeal will lead to lower enrollment and higher costs in those marketplaces (see Eliminating individual mandate lowers cost of CHIP funding, Health Law Daily, January 8, 2018).

A longer CHIP extension, through S. 1827 the Keep Kids’ Insurance Dependable and Secure Act of 2017, would yield even higher net savings, the CBO said in response to a question by Rep. Frank Pallone Jr. (D-NJ). The KIDS Act would increase the deficit from 2018 to 2020, and decrease the deficit every year thereafter, because the federal matching rate for CHIP would decline from an average of 93 percent in 2019 to 70 percent in 2021 and subsequent years. Under the KIDS Act, the federal costs of insuring children through CHIP would decline as states pick up more of the costs, and would allow the government to avoid paying higher costs for alternative coverage through the marketplaces, Medicaid, and employment-based insurance.

Dem leaders push for quick Graham-Cassidy CBO assessment; hearing scheduled

Democrats in both the House and Senate reacted quickly to the Graham-Cassidy legislation in requesting a full assessment from the Congressional Budget Office (CBO). The office stated that it is working on a preliminary assessment for the week of September 25, 2017, as early as possible. However, the CBO warned that point estimates on several matters will be unavailable for at least a number of weeks.

Graham-Cassidy legislation

Offered as an amendment to the American Health Care Act (AHCA) (H.R. 1628), the proposal would give more control to states over meeting their residents’ health care needs. The legislation would repeal the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) and fund a block grant program through the Children’s Health Insurance Program (CHIP) instead (see Sanders’ Medicare-for-all, Graham-Cassidy’s block grant legislation introduced in Senate, September 14, 2017).

Finance hearing

The Senate Finance Committee will conduct a hearing on the Graham-Cassidy amendment on September 25, 2017. Committee Chair Orrin Hatch (R-Utah) announced the hearing, stating that it would allow members on both sides of the issue to better understand policy. In light of the Finance Committee’s hearing announcement, Sen. Ron Johnson (R-Wis), chair of the Senate Homeland Security and Governmental Affairs Committee, has chosen to cancel his committee hearing.

CBO request and response

According to Rep. Nancy Pelosi (D-Calif), “Republicans are reportedly hoping to rush to a vote with only a scant budget assessment.” The letter to the CBO requested information on loss of coverage, premium and out-of-pocket cost increases, effect on those with pre-existing conditions, Medicaid cuts, marketplace stability, and state reform timelines. The CBO will be unable to provide estimates on the effects on the deficit, coverage, or costs in its preliminary assessment.

AMA chimes in 

Ahead of a CBO report, the American Medical Association (AMA) believes that the bill would destabilize markets and cause millions to lose coverage. The association reached out to Senate Majority Leader Mitch McConnell (R-Ky) and Minority Leader Chuck Schumer (D-NY) to oppose the amendment and all legislation that would jeopardize coverage. The AMA holds the position that any health reform proposals should ensure that those currently insured are able to maintain their coverage, and expressed its concerned that the conversion of the Medicaid program would limit federal support for needy patients.