HomeWashington Letter2018 ▶ Administration Proposes Reductions in Children’s Health Insurance Program Funding
Administration Proposes Reductions in Children’s Health Insurance Program Funding

This week, the Trump administration released a proposal of $15 billion in funding reductions, called “rescissions,” in previously approved funding for certain federal programs that has not been spent. Almost half of the funding rescissions, about $7 billion, would be cut from the Children’s Health Insurance Program (CHIP). Approximately $2 billion would be cut from CHIP’s Child Enrollment Contingency Fund, which guarantees increased federal payments to state CHIP programs if they experience an unexpected enrollment surge due to factors such as an economic recession, public health crisis or natural disaster. The remaining $5 billion would be cut from previously allocated CHIP funds that have not been utilized.  The Trump Administration put the rescissions package together following criticism from conservatives over the recently-enacted fiscal year 2018 omnibus spending package that increased federal deficit spending.

The Administration contends that the reductions to CHIP would not impact any state programs because the funds have technically expired and can’t be used. But the reductions could affect CHIP’s long-term stability, particularly if some states do experience such unexpected surges in enrollment. The ATS joined a letter to Congress this week authored by the American Academy of Pediatrics (AAP) that expresses strong concern in regards to the proposed CHIP rescissions. Earlier this year, a law authorizing CHIP funding until 2028 was enacted. The AAP letter states, “The bills signed by President Trump that extend CHIP for 10 years protect coverage for children, give families peace of mind and enable states to make investments that strengthen and improve their CHIP programs.” The letter continues, “Rescinding such a substantial sum from CHIP as is contemplated in the rescissions package would undermine the very program Congress intended to strengthen.”

The rescissions package would also cut $800 million from the Center for Medicare and Medicaid Innovation, which was created by the Affordable Care Act to test innovative payment and service delivery models. Congress has forty-five days to vote on the rescissions proposal, which can be passed through simple majorities in each chamber, or the proposal will die. The outlook for the package is unclear. Senate Majority Leader McConnell indicated that its passage may violate the two-year bipartisan budget deal struck by Republican and Democrats earlier this year, and some Republicans have also expressed concern with cutting CHIP funding. The Administration has indicated that it intends to release another rescissions proposal, aimed at cutting funding from the FY2018 omnibus within the next few months.

Last Reviewed: May 11, 2018