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.

Eliminating individual mandate lowers cost of CHIP funding

The Congressional Budget Office (CBO) lowered its estimate of the deficit impact of legislation that would fund the Children’s Health Insurance Program (CHIP) for five years, finding that CHIP had become less expensive relative to the rising costs of providing alternative coverage through the federally-subsidized health insurance marketplaces (CBO Report, January 5, 2018).

Prior estimate

The CBO and the Joint Committee on Taxation previously reviewed S. 1827, the Keep Kids’ Insurance Dependable and Secure Act of 2017, in October, finding then that it would add $8.2bn to the deficit. The new estimate finds that the bill, which would also change the federal matching rate for the program and state eligibility requirements, would only increase the deficit by $0.8 billion over the next ten years.

Individual mandate

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 have to seek alternative coverage, including federally-subsidized coverage offered through health insurance marketplaces set up by the ACA. Without the individual mandate, the CBO expects lower enrollment and higher costs for the insurance marketplaces, which increases the federal cost of enrolling a child in coverage through the marketplaces. The rising marketplace costs make CHIP a more cost-effective alternative to funding children’s health costs, the CBO found.

Primary care physicians favor ACA over repeal

In a survey conducted between January and March 2015, only 15 percent of primary care physicians supported a complete repeal of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). With the Republican party intent on changing the healthcare landscape dramatically over the next year, researchers from Johns Hopkins University School of Medicine, the University of Pennsylvania Perelman School of Medicine, and Massachusetts General Hospital found that primary care physicians were split on their views towards the ACA, with approximately 48 percent favorable and 52 percent unfavorable. The survey, published in the New England Journal of Medicine, also found that a majority of the physicians reported that they had seen an increase in the number of Medicaid or newly insured patients, without a decrease in their ability to provide high-quality care.

About 95 percent of all respondents said they did not believe insurers should be allowed to deny coverage to those with pre-existing conditions or charge these patients more; 88 percent favored children kept on parents’ plans until age 26; 91 percent supported tax credits for small businesses that offered employees health insurance; 75 percent supported tax subsidies for individuals to buy insurance; 72 percent supported the Medicaid expansion; and 50 percent supported tax penalties for people who did not buy insurance.

These numbers are substantially less than the 26 percent of the general public who say they want Obamacare gone, as reported by the Kaiser Family Foundation. In the NEJM published survey, no physicians who self-identified Democrats reported being in favor of ACA repeal. But the survey also demonstrated a dissonance between physicians beliefs about patients’ healthcare entitlements and what a healthcare system can cover. For instance, as noted, 95 percent of physicians believed the prohibition on denying coverage for those with pre-existing conditions should continue, but only 50 percent supported the individual mandate despite the difficulties of covering as many individuals as possible without the penalty in place.

Overall, 426 physicians responded to the survey and the response rate was 45.1 percent. The researches noted that nonresponses limited their ability to generalize findings and that primary care physicians could have different views from other physicians.