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In the Nation's Interest

The Future of CHIP

CHIP, or the State Children’s Health Insurance Program, is in limbo. The latest proposed temporary appropriations bill (“continuing resolution”) from Congress has added a six-year extension of the program. This continuing resolution (CR) passed the House in a vote of 230 to 197. The Administration, however, expressed its disapproval of CHIP as part of this effort to keep the government open. As the legislative and executive branches sort out their differences, CED urges Congress to extend CHIP and to make needed follow-on reforms.

CHIP Background

In 1997, shortly after the failure of the more sweeping Health Security Act, Senators Ted Kennedy (D-MA) and Orrin Hatch (R-UT) put forward a bipartisan effort to provide all low-income American children with health insurance. Within Section 4901 of the Balanced Budget Act of 1997, Congress officially established CHIP, the State Children’s Health Insurance Program. According to the text, the federal government provides “funds to States to enable them to initiate and expand the provision of child health assistance to uninsured, low-income children.” Today, CHIP resembles Medicaid in its implementation and maintenance; like Medicaid, the programs are funded largely by the federal government, but are run by individual states according to those requirements established by the Center for Medicare and Medicaid Services (CMS).

CHIP has been successful overall and, throughout much of its tenure, has maintained bipartisan support—for example in its last renewal in 2015 the reauthorization was passed in the Senate 92 to 8 and in the House 392 to 37.  As of 2016, there have been nearly 9 million children enrolled in CHIP since its inaugural year. And, CHIP has decreased the percentage of uninsured children from 13.9 percent in 1997 to 4.5 percent in 2015.

2017/2018 Controversy

In late 2017, House Republicans passed a bill that would continue CHIP funding but simultaneously charge higher premiums to wealthier Medicare beneficiaries, cut money from the ACA’s public health fund, and shorten the grace period for ACA enrollees who do not make premium payments. Many Democrats criticized the bill, labeling it a political ploy to gut ObamaCare.

Across the Capitol, Senator Hatch wrote his own bill that garnered bipartisan support: the “Keep Kids’ Insurance Dependable and Secure Act of 2017,” known as the KIDS Act. This legislation would extend CHIP funding through 2022 while keeping CHIP little changed. Unfortunately, the KIDS Act has yet to reach the Senate Floor.

Finally, to avoid a government shutdown, Congressional Republicans looked to use CHIP as collateral, hoping that a six-year extension to the program would be enough to garner the necessary Democratic votes to keep the US government operational for another month. Instead, with less than 48 hours to go before a possible shutdown, the administration voiced its opposition to merging CHIP to a short-term spending bill. With many opponents in the Senate and just a few hours to go, the future of CHIP and the CR looks bleak.


As CHIP is threatened by Congressional inactivity, partisanship, and the dispute between the President and Congress, American lawmakers must consider solutions for the program that could ensure its long-term health and solvency. Organizations like the Medicaid and CHIP payment and Access Commission, Georgetown University Health Policy Institute’s Center for Children and Families, and the Committee on Child Health Financing have contemplated the issues and drafted solutions for CHIP. CED’s recommendations (below) echo and build on the pre-existing literature.

1. Extend the CHIP program funding through 2022.

Though CHIP is not perfect, we believe that the program should be reauthorized for at least another six years. With a long-term extension, states could budget appropriately for the program, and the federal government would have ample time to make necessary improvements. This extension is necessary whether in a short-term spending bill or a separate piece of legislation.

2. Congress should provide that children with family incomes below 150 percent of the poverty level should not be subject to CHIP premiums.

For the sake of consistency and parity, Congress should require of the states that children of families with incomes below 150 percent of the federal poverty line are exempt from premium payments. Current CHIP law allows for states to impose a combined total of premiums and cost sharing of at most 5 percent of family income. As of January 2016, 26 states require premiums and 25 required cost sharing—with some states demanding both. While premiums and cost sharing allow for more flexibility to the state and can help states offset the cost of coverage, they serve as barriers to the CHIP program and to insurance generally for the children of families most in need. The Congressional Budget Office (CBO) estimates that this would increase federal spending by less than $50 million per year.

3. Congress should eliminate waiting periods for CHIP.

Currently, some state CHIP programs stipulate that a child must be without private health insurance for a certain amount of time before enrolling in the state-funded CHIP. Though the period may not exceed 90 days and there are several federal exemptions, 15 states, per the most recent data from just over a year ago, still enforce a waiting period.

The waiting periods were intended to deter crowd-out of private coverage, but the data have been inconclusive regarding its effectiveness due to competing data sources. Ultimately, waiting periods likely do more harm than good, as they disrupt care for children—making them oscillate between CHIP, no insurance, and other coverage—and create vastly different CHIP experiences depending on the child’s home state.  The elimination of waiting periods would cost the federal government between $50 million and $250 million in FY 2019.

4. Congress should permanently extend the authority for states to use Express Lane Eligibility (ELE) for children in CHIP.

Streamlining the CHIP process would benefit those requesting coverage and lead to administrative/regulatory savings. CHIP provides an opportunity to use Express Lane Eligibility, in which states can streamline the application processes. ELE would allow states to rely on findings from programs that have similar eligibility requirements and can use those findings to determine CHIP eligibility. Some Express Lane agencies include Head Start, the National School Lunch Program, and Supplemental Nutrition Assistance Program. We already have evidence of ELE’s success: Louisiana saved an estimated $12.9 million in the first year of implementation. CED would support such administrative efficiency. CBO estimates that this recommendation would result in net federal spending of approximately $100 million a year.


The future of CHIP is threatened.  Congress should guarantee that children of all circumstances have health insurance for the next six years. From there, perhaps Members of Congress can begin a productive dialogue on ways to improve the program and guarantee its viability for years to come. The improvements we cite above do cost money when the budget is already unsustainable. Clearly, these costs, and much more, must be saved from elsewhere in the budget. We add only that the health of the nation’s children should rank high among our collective priorities.