Home Editor's Picks CHIP Funding Remains Uncertain, GOP Demands Medicare and ACA Cuts as Ransom

CHIP Funding Remains Uncertain, GOP Demands Medicare and ACA Cuts as Ransom

Picture: Open Source from James Gathany
Picture: Open Source from James Gathany

If you aren’t familiar with the Children’s Health Insurance Program (CHIP) and how it has been defunded, you can follow this link to my last article explaining the situation.

If time is an issue, here is a very short recap: CHIP is a vital health insurance program that covers 8.9 million children in families that fall into the coverage gap between Medicaid and private insurance. It was signed into law in 1997 and has historically enjoyed bipartisan support, as it helps children and pregnant mothers access healthcare in all 50 states and has more than cut the number of uninsured children in half since it was enacted. On September 30th, 2017, the GOP-controlled Congress failed to re-authorize funding for CHIP, putting each state CHIP fund on a clock to run out of funding as early as this month.

Numerous states have announced this week that they are taking steps to prepare to scale back or freeze their state CHIP programs due to the lack of federal action on this issue. For example, Connecticut has announced its intent to close the CHIP program if funding is not restored by January 31, 2018; Alabama is preparing a similar plan, and will freeze enrollment to the program on January 1st, then end it on February 1st, if funding is not restored. Other states, like Iowa, are scrambling to create plans that would partially fund or scale back the state CHIP program without ending it, but this is only a short-term stopgap in the absence of state funds.

A Hobbesian Bargain for CHIP Funding

Rather than simply reauthorize the funding for CHIP in a clean bill, protecting this vital and proven health insurance program, the Republican leadership of the Congress is demanding that the Democrats strike a deal to restore funding. While the details of this deal are still up in the air—it is currently being negotiated behind closed doors in the House Energy and Commerce Committee—those involved have discussed its basic structure.

In exchange for a two-year reauthorization of CHIP funding, the GOP demands that the Democrats accept three concessions: 1) Significant cuts to disease prevention programs included in Obamacare; 2) Means-testing Medicare so that wealthy seniors pay higher cost-sharing; and 3) Reducing the time a person can lapse their premiums for ACA plans before they lose coverage.

Put simply, the GOP leadership in the House is using the plight of CHIP children as a political lever to force Democrats to accept policies that damage Obamacare and Medicaid. Not only this, these policies are, in and of themselves, damaging to the overall health of the American people.

First, the cuts to disease prevention programs in the ACA are an extremely bad idea that will result in more people getting sick, thus will cause worse health outcomes and higher long-term costs. Preventative care is one of the most efficient ways to reduce the prevalence of costly and debilitating chronic conditions that we, as a society, must pay for. While the exact cuts the GOP is demanding are currently unknown, the ACA funds a wide variety of prevention programs, including ones aimed at promoting immunization, preventing lead poisoning, combatting type II diabetes, and preventing youth suicides.

Using cuts in disease prevention to pay for the healthcare of children is simply bad policy and an unnecessary jab at the ACA. Both prevention and CHIP are vital and there is no justification for requiring these cuts, particularly given the large and unfunded increase to the military that the GOP just authorized.  

Second, means-testing Medicare and forcing higher income recipients ($500,000) to pay higher premiums may sound like a good idea, but it creates a fundamental political trap in Medicaid in the long-term. Medicaid is a universal program that you pay into while working and get back once you reach the eligibility age—this contrasts it with a welfare program, which are means-tested, and makes it extremely hard to attack politically, as every American knows that they will one day receive benefits. Inserting means-testing into Medicare makes it easier to attack, as many Americans have the mistaken assumption that they will be wealthy enough to be affected when they retire, thus they have less of a stake in protecting the program.

Third, making it easier for insurers to kick people off of their health plans if they are unable to pay premiums runs counter to the ideal of universal health coverage. It will increase the number of Americans who are uninsured, and thus unable to access healthcare or forced to rely on uncompensated care at emergency rooms. It will increase the profits of the insurers by letting them deny care to people who are behind on their premiums, but will increase costs borne by hospitals and the public, who have to pick up the slack.

If the insurance industry were struggling and at risk of failure due to unpaid premiums, this proposal would arguably be justified. However, in reality, the major insurance companies are astonishingly profitable—with the top 6 insurers earning $6 billion in PROFIT during the last financial quarter alone—and can easily absorb the minimal losses that come from late premium payments.

The current obstruction in CHIP funding is an unnecessary crisis precipitated by extreme elements in the Congressional GOP. The Senate Finance Committee reached bipartisan agreement on a 5-year extension of CHIP funding in September, thus calling this a fully partisan fight is unfair to the GOP Senators who have already agreed on a deal.

Here is a list of the GOP representatives on the House Energy and Commerce Committee’s Subcommittee on Health, with a color-coded chart of when their state runs out of funding (red = 2017; orange = first quarter of 2018; green = second quarter of 2018) and how many children are covered by CHIP in their state:

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  1. Josha, I really appreciate your article (as a matter of fact i have already shared it), but I want to point out what i think may be a set of typos or a momentarily misuse of wording:

    In the paragraph that begins: “Second, means-testing Medicare…” you start to say medicaid, whereas I’m pretty sure you meant to continue to use “medicare”.

    Thank you for your work with TATM, I’m a fan of the outlet.

    • I caught the same thing, I hope they fix it because this is a great article otherwise.

      Personally, I support higher Medicare taxes about $500,000 in income, but not premiums.


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