There are thousands of programs across over 430 departments, agencies, and sub-agencies in the federal government, but when the Trump administration proposed a rescission package of $15 billion to Congress, $7 billion or nearly half of the entire package came from just the Children’s Health Insurance Program (CHIP).
CHIP funding allotments to states in fiscal year 2017 were $15.8 billion, so a rescission of $7 billion to CHIP is nearly equivalent to half the program’s funding in a year. That is unacceptable. These are dollars that were dedicated by Congress for children’s health and should be used to improve the health and well-being of children.
{mosads}When CHIP was created 21 years ago, there was much debate around the inherent problems associated with financing health coverage in the form of a block grant. Unfortunately, block grants do not adjust well to health care inflation, economic downturns, health care epidemics (e.g., AIDS, opioids, Zika, etc.), investments in quality or access to care, or natural disasters (e.g., hurricanes, tornados, earthquakes, fires, flooding, blizzards, and now even volcanoes). As need or costs rise, block grant funding fails to adjust and, in CHIP, led to waiting lists and enrollment freezes that denied children health coverage based on their zip code and an arbitrary funding formula.
This is why there is such strong opposition to block granting the Medicaid program and why Puerto Rico serves as a tragic reminder of how block grants are such a poor financing mechanism of health coverage.
Consequently, during the early years of CHIP, states experienced major shortfalls and numerous bipartisan adjustments were made to the state allotments, funding formulas, and the Child Enrollment Contingency Fund was established to protect states and, more importantly, children from the serious flaws inherent in block grant financing. The CHIP Contingency Fund has been set at 20 percent of overall spending and serves as a backstop to protect children and states from harm when unexpected circumstances arise, such as an erupting volcano in Hawaii.
This fragile patchwork financing system has worked. By allowing states to spend unused dollars from prior years, redistributing unspent dollars from surplus to shortfall states, and creating a backstop with the contingency fund, CHIP’s tenuous financing system is difficult to understand but has helped serve 9 million children with health care across this country. CHIP, in tandem with Medicaid, has cut the uninsured rate by more than two-thirds since the program’s inception over 20 years ago. In short, CHIP is a bipartisan success story.
Sadly, when the administration proposed the $7 billion in CHIP rescission dollars, federal officials missed the entire point of a contingency fund by saying that they do not anticipate that states would tap into the contingency fund. However, the very purpose of a contingency fund is to protect against a ‘future event or circumstance that is possible but cannot be predicted with certainty.” The Centers for Medicare and Medicaid Services (CMS) cannot guarantee there will be no economic downturns, no threats from the Zika virus, no hurricanes, and no further volcano eruptions for the reminder of the year.
The timing of this is particularly awful. Despite overwhelming public support, CHIP just went through a difficult and bruising reauthorization process in which the program’s funding expired for over four months or 132 days. Families across the country worried about the health of their children when Congress and the president failed to act – highlighting another problem with block grants.
By threatening to gut the contingency fund in the middle of the year, the federal government would, once again, put the health of children at risk. Without that backstop, states may restrict coverage to ensure that they do not face shortfalls. Therefore, it could have harmful consequences that actually can be anticipated.
Sadly, beyond threatening cuts to children’s health in the rescission package, this week the administration openly threatened to separate migrant children from their parents that are fleeing violence in other countries, considered the gutting of child labor standards, supported cuts to child nutrition, undermined public schools, gutted protections for students with college loans, failed to take action on gun violence, and deported a DREAMer (despite saying they would not).
Congress should put an end to these attacks on children and should start by rejecting the proposed CHIP rescissions. If unforeseen events do not occur and states do not tap into the contingency fund, then Congress can decide, as it always does, what to do with those dollars. That is, after all, how contingency funds are supposed to work.
Bruce Lesley is President of First Focus, a non-partisan organization dedicated to improving the health and well-being of our nation’s children.