Extending funding for the Children’s Health Insurance Program over the next decade will save the federal government $6 billion, according to the nonpartisan Congressional Budget Office.
A new estimate was released Thursday as lawmakers are attempting to add a five-year CHIP funding bill to a must-pass spending bill next week.
CBO estimated last week that CHIP would only increase the deficit by approximately $800 million over the next decade, about $7.3 billion less than a prior estimate. The reason was that fewer parents would sign their children up for CHIP due to repeal in tax reform of Obamacare’s individual mandate that everyone get health insurance.
However, the new estimate found a 10-year extension would actually save the government $6 billion through 2027.
The estimate looked at a Senate bill that would reauthorize CHIP for five years, and allow states to adopt stricter standards on who gets coverage starting in 2020.
CHIP is a block grant program that provides funding for states to give low-income children insurance. It provides health coverage to nearly 9 million low-income children.
Senate staff requested that CBO looked at the budgetary effects of extending CHIP for 10 years instead of five under the bill.
CBO found that extending CHIP funding for 10 years yields net savings to the federal government because the costs for CHIP alternatives — primarily Medicaid, subsidized Obamacare coverage and employer coverage — are pricier.
The agency estimated that a 10-year extension would increase the deficit from 2018 to 2020 but reduce it each year after that through 2027.
The change from 2021 to 2027 is due to a lower federal matching rate for CHIP. The rate would decline from an average of 93 percent in 2019 to 81.5 percent in 2020 to 70 percent in 2021, CBO said. This would lower the federal responsibility for CHIP because states shoulder more of the burden of paying for it.
Lawmakers say it is increasingly likely that CHIP will be addressed in the next continuing resolution to fund the government. The latest spending deal expires on Jan. 19.
Rep. Fred Upton, R-Mich., said he is meeting with Republicans to get a five-year reauthorization for CHIP included. He added that he hasn’t gotten a go-ahead from leadership though.
The House passed its own version of CHIP a few months ago, but it has stalled in the Senate due to Democratic objections to funding offsets. House Republicans wanted to charge wealthy seniors higher Medicare premiums and raid an Obamacare disease prevention fund for the program.
However, the repeal of Obamacare’s individual mandate in tax reform that was signed into law last year may have taken away such obstacles over funding.