Government Shutdown Looms Once Again, CBO Releases Updated CHIP Reauthorization Analysis

Negotiations continue among Congress and the White House as another federal government shutdown looms. Recall late last month, Congress passed a short-term government funding measure that extended current federal funding levels through next Friday, January 19.

Bipartisan discussions over immigration, fixes to the Affordable Care Act (ACA), national security, and defense spending, among other items, have thus far failed to result in an agreement. While Republicans hold the majority in both the House and Senate, they do not have a Senate supermajority to secure 60 votes needed to secure passage of a budget bill. As such, Republicans will need to gain the support of at least nine Democrats.

Recent reports suggest Congressional Republicans are considering not passing a GOP budget altogether this year; instead, they may be forced to continue adoption of short-term continuing resolutions to keep the government running throughout 2018, largely due to intra-party conflict and concerns about how such budget-related actions would impact this year’s mid-term elections.

The Children’s Health Insurance Program (CHIP), which received a short-term reauthorization through March 2018 in last month’s government funding measure, may or may not be included in the next continuing resolution or budget deal. A CHIP reauthorization measure may instead be taken up at a later date.

It has been indicated that the short-term funding made available through last month’s continuing resolution, however, will not be sufficient for several states to continue operation of their CHIP programs. The U.S. Centers for Medicare & Medicaid Services (CMS) announced recently that states may run out of funding after January 19, though it did not identify which states may be impacted first.

Late last week, the Congressional Budget Office (CBO) sent a letter to Congressional leaders updating their recent CHIP analysis projections. The CBO reports that reauthorizing CHIP for ten years would net the federal government $6 billion in savings. Current debate has instead been centered on a five-year extension of CHIP. The projected reason for the additional budgetary savings over a longer reauthorization period is detailed by the CBO:

  • The recent tax reform measure signed into law late last month repealed the ACA individual health insurance coverage mandate tax penalty. With the tax penalty now removed, fewer people are expected to enroll in the ACA marketplaces. As such, fewer low-income enrollees will receive federal subsidies.
  • Some of the parents deciding not to enroll in ACA marketplace family health insurance plans will decide to remain uninsured and instead enroll their children in CHIP. From the federal government’s perspective, paying for CHIP coverage is less expensive overall than funding subsidies for private ACA marketplace family health insurance plans.

It is unclear how this updated projection from the CBO will influence ongoing negotiations and conversations around a longer-term CHIP reauthorization measure. Congressional Democrats continue to maintain that CHIP must be reauthorized for the long-term without using any other health-related programs, such as the Prevention and Public Health Fund (PPHF), as a budgetary offset. Congressional Republicans, on the other hand, have proposed cuts to the PPHF and modifications to programs, such as Medicare. Recall in the latest short-term government funding measure passed last month, Congressional Republicans succeeded in including a $750 million cut to the PPHF that will occur between FY 2019 and FY 2022.

With the January 19 continuing resolution deadline imminent, Congressional leaders and the White House will need to strike a funding agreement to avoid a government shutdown.