What Are the Consequences of Congressional Delay on CHIP?

Funding for the Children’s Health Insurance Program (CHIP) expired nearly a month ago and Congress still has not passed legislation to extend funding. Researchers at Georgetown University’s Center for Children and Families took a look at the consequences of the delay in CHIP funding.

“This delay in funding CHIP is really unchartered territory and puts at risk the nation’s success in covering children,” said Joan Alker, executive director of the Georgetown University center.

The researchers conducted a survey of selected states to assess which states would run out funding the soonest and which children were most at risk of losing CHIP coverage. At least six states – Arizona, California, the District of Columbia, Minnesota, Ohio and Oregon – are predicting they will run out of CHIP funding by the end of the year or early in January. At least six others – Colorado, Pennsylvania, Texas, Utah, Virginia and Washington – are planning to take action before the end of the year, even if their funding is not expected to run out by then. While the federal government has paid out emergency funds to keep coverage funded in some states, the money available for redistribution won’t last more than a couple of months.

CHIP is financed as a block grant, providing a defined allotment that states draw down and match with their own funding. The report pointed to the difficulty states face in projecting precisely when they will run out of federal CHIP funding as spending fluctuates month to month. Texas officials recently moved up the month they expect to deplete their CHIP allotments as they respond to a greater need for CHIP in the aftermath of the hurricane. Increased enrollment as the result of a successful back-to-school outreach initiative is another factor that could speed up how quickly a state depletes its allotment.

States cannot wait until they totally exhaust federal CHIP funds to take action as program changes, such as notifying families and other stakeholders, require time and money. In addition, many states operate CHIP programs through a managed care delivery system and must make per-child monthly payments to health plans one month in advance.

The delay in funding could not only cost states money as they are forced to restructure programs, but could also discourage families from signing up due to what’s known as the “unwelcome mat” effect, which discourages families from signing up eligible children.

While the federal government has paid out emergency funds to keep programs operating in some states, the money available for redistribution cannot sustain coverage in those states for more than a couple of months.

Read Joan Alker’s blog to learn more about this report.