What Does the Continuing Resolution Mean for CHIP?

I wish I could say that the Continuing Resolution (CR) passed yesterday by the House and Senate extended CHIP funding for five more years as both parties in both chambers have agreed to do, but sadly, it does not. The main mission of the CR is to avoid a government shutdown, at least for the next two weeks. But there is a narrow CHIP fix included that readers of SayAhhh! may be wondering about.

Federal CHIP funding ended with the last fiscal year (September 30, 2017) and no new funds have been appropriated for this fiscal year which started October 1, 2017. States have been squeaking by using what’s referred to as carryover funds because CHIP law allows states to use each year’s allotment for a two-year period. Some states had very little carryover funds and started tapping into the next pool of money in October – redistribution funds.

CMS collects any unspent funds left after the two-year period that states have to spend their allotment and saves them for redistribution. As of this week, nine states have received redistribution funds. The redistribution funds are allocated proportionally – each state’s share of redistribution funds is based on the state’s prior spending compared to CHIP spending overall. CMS sends monthly installments to fill the gap in federal funding until a state exhausts its share. This is intended to ensure that all states benefit from redistribution funds equally, even if some states run out of money earlier and start tapping into the pool sooner.

The CR passed yesterday changes the formula for redistribution funds but only for a limited time – just through the end of December. The change essentially allows CMS to continue to give states redistribution dollars even if they have already received their full, proportional amount. Though it is not totally clear which states will benefit from this change, our hunch is that Minnesota is the most likely beneficiary, along with possibly Oregon and Arizona. States that do not benefit from this narrow change in the formula are in the same boat they were in before the CR passed – only now the pool of money they have to draw from is shrinking.

The CR buys, at most, a handful of states a couple of extra weeks of time to keep CHIP going, but it does nothing to ease the pressure to act on the five-year, bipartisan CHIP funding extension this year. Congress has just a few more weeks to get this done – nine million kids are watching and waiting.

Kelly Whitener is an Associate Professor of the Practice at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.