Over 1 million children and pregnant women are on the brink of losing health insurance

Susan Walsh/AP

  • If Congress doesn’t reauthorize funding for the Children’s Health Insurance Program (CHIP), at least 1.2 million children could lose healthcare coverage.
  • A handful of states are expected to run out of money by early next year.
  • Medical officials in those states are beginning to send termination notices to families as they prepare for the worst.
  • Even if Congress does restore CHIP money, the delay in funding will have already cost taxpayers hundreds of thousands of dollars.

For the first time in the history of the Children’s Health Insurance Program (CHIP) — which has provided healthcare to millions of Americans and helped to drastically reduce the uninsured rate of children since its implementation in 1997 — states may run out of funding.

A lack of funding could result in 1.2 million children losing coverage and becoming uninsured, according to an analysis by the Urban Institute.

“These are families making $8, $10, or $12 an hour that don’t have insurance. And they’re going to get letters saying ‘your insurance is canceled,'” Ohio Sen. Sherrod Brown said during a debate on the Senate floor November 30. “How can we let that happen?”

The reauthorization deadline for CHIP passed over two months ago without Congress agreeing to an extension, making it the longest lapse in funding since the program was first introduced.

“The politics are ugly. This should not be a Republican or Democratic issue,” Colorado Lt. Gov. Donna Lynne told Business Insider. “There’s never been any talk of it not making sense.”

“I feel like there’s a little hostage taking with kids and pregnant women in the middle,” she added.

The only other time Congress failed to reauthorize it was in 2007, when then-President George W. Bush vetoed reauthorization because he believed the Democrats’ proposal to spend billions more on the program would encourage families to leave the private insurance market. After just five days, lawmakers compromised and funding was quickly reissued.

Jim Young/Reuters

Today’s gap in funding has forced states around the country to rely on leftover funds and emergency government grants to maintain coverage for the millions of people who might otherwise be uninsured. But those temporary funds are quickly disappearing.

“We’re concerned about the cost to the people and the magnitude of the anxiety it is producing,” Lynne said. “Imagine if you’re a pregnant woman and you’re going to lose your insurance?”

CHIP proponents are holding out hope that something can be done by Christmas. Theoretically, Congress could address the problem by lumping money for CHIP in with an overall funding measure that must be in place by December 22 to avoid a government shutdown.

Such a move would be the quickest way to end concerns families may have about the future of their coverage, says Tricia Brooks, a healthcare policy expert and former CHIP director for New Hampshire.

“We are guardedly hopeful because unlike all of the other health policy initiatives Congress has tackled this year, CHIP actually has bipartisan agreement in the House and Senate,” Brooks told Business Insider.

“The fact that states had leftover funds and that there was emergency money distributed to states gave Congress the feeling that were wasn’t as much urgency. But that cushion is getting extremely thin. Congress needs to act,” she added.

‘We don’t have any money anymore’

CHIP itself is not controversial. It has wide bipartisan support as Brooks says. But exactly how the annual $15.6 billion program should be paid for is the issue under dispute. Republicans have proposed cutting back the Affordable Care Act to pay for CHIP while Democrats have proposed tying the program’s reauthorization in with measures to stabilize Obamacare.

“We’re going to do CHIP. There’s no doubt about it in my mind, ” said Sen. Orin Hatch of Utah, who helped craft the program with Sen. Ed Kennedy of Massachusetts in the 1990s. “But the reason CHIP is having trouble is because we don’t have any money anymore.”

CHIP currently provides health insurance for roughly 9 million children nationwide who come from families with incomes just above Medicaid eligibility levels.

Kaiser Family Foundation

The program also includes coverage for more than 327,000 pregnant women through the “unborn child option.” Technically, these recipients are classified as children even though the women are the ones who are actually being treated.

How states can respond to a loss of federal funds depends on how they implemented CHIP in the first place.

For states that used the money to expand Medicaid to insure more children, they will still have to cover those recipients, albeit with some other source of funding, even if the government no longer helps.

For states that created separate CHIP programs, those recipients are likely to completely lose coverage, or at best, receive more expensive coverage through employer-sponsored or marketplace exchange alternatives if their families can afford those options.

Some states have a combination of CHIP-funded Medicaid expansion and separate CHIP programs, complicating the situation.

States plan emergency measures

A handful of states are on the brink of running out of money, some as soon as next month.

Carrie Williams, a spokesperson for Texas’ Health and Human Services Commission, told Business Insider that without Congressional action, the Lone Star State will be forced to end CHIP coverage by February 1 for more than 450,000 children.

Under state law, HHSC must notify families that their plans are being canceled at least 30 days before termination. In the meantime, HHSC has requested an additional $90 million from the government’s Centers for Medicare & Medicaid Services, which administers CHIP.

Texas’ situation is especially dire because of the damage caused by Hurricane Harvey. After the disaster struck, the government waived co-pays and enrollment fees for CHIP recipients. That meant the state would be collecting less money, which is why they’re relying on the federal government for an additional grant.

“Based on our conversations with CMS this week, we are confident that a redistribution of funds will happen, which will allow the program to continue through February for Texas,” Williams said.

Texas has the most CHIP recipients in the country after California, but 16 other states could run out of money by February.

West Virginia’s Children’s Health Insurance Board has gone so far as to already approve a plan to close its program — which currently covers 21, 321 children — by February 28. The state’s Department of Health and Human Resources plans to start sending termination notices to families by early January, according to communications director Allison Adler.

‘We’ve never had to do this before’

Michael Conroy/AP

The longer Congress delays funding, the more states must prepare contingency plans in the event that money is not restored.

But it’s hard for medical officials to gauge exactly when they should take action — such as sending out notice letters to families and doubling up on call center staffing for the inevitable barrage of inquiries — since they are reliant on Congress to make the next move.

“They [states] are trying to hold off on taking action as long as possible because they don’t want to cause concern among families,” Samantha Artigo, an analyst at the Kaiser Family Foundation, told Business Insider. “But as we get farther along, they are really going to be bumping up against difficult deadlines where they will need to begin taking action. It cannot be done overnight.”

Medical officials in Colorado, which is preparing to run out of money by January 31, have already sent notice letters to the families of the roughly 75,000 children and 800 pregnant women who might lose coverage.

Florida has enough funding to last through January. The healthcare of 198,605 children is on the line in that state, according to Shelisha Coleman, a spokesperson for Florida’s Agency for Health Care Administration.

On December 1, Nevada received a nearly $5.6 million grant to provide coverage through this month and into January. Utah has also warned recipients that it will exhaust funds by the end of January.

Officials in Connecticut and Virginia said they are planning to send out letters by mid-December.

“We’ve never had to do this before,” Linda Nablo, an official with Virginia’s Department of Medical Assistant Services, told Kaiser Health News. “How do you write the very best letter saying, ‘Your child might lose coverage, but it’s not certain yet. But in the meantime, these are some things you need to think about’?”

Families are preparing, too.

Myra Gregory is the mother of 11-year-old Roland, who has a rare form of lung cancer. Last month, Gregory wrote an op-ed in the St. Louis Post-Dispatch pleading Congress to get its act together.

“If Congress forces Missouri to drop Roland’s coverage, our family will be in an impossible situation. I don’t have the savings to pay for Roland’s care out of pocket,” Gregory said. “I don’t have family and friends — much less a bank — who will loan us tens of thousands of dollars for Roland’s treatment.

Gregory created a GoFundMe page to raise money for her son’s treatment.

A lose-lose for the taxpayer

William Philpott/Reuters

The kicker is that states will still lose money even if Congress restores funding.

Writing, printing, and mailing termination notices to families requires time and money. So does notifying insurance providers and other stakeholders, submitting paperwork to the CMS, and paying call center staff overtime for helping concerned parents figure out how to proceed in the absence of CHIP.

A Georgetown University study estimated that ending CHIP will cost Colorado, for example, at least $300,000.

“Inaction by Congress costs states time and money as officials grapple with various ‘what if’ scenarios,” the study authors wrote.

In early November, the House passed a bill that would provide funding for CHIP for five years. The bill stalled in the Senate.

“There’s no question that if CHIP isn’t refunded, we’re going to do a turn on the success in covering children that we’ve had,” said Brooks, the healthcare expert. “Where are the values in this country?”

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