Extending the Children's Health Insurance Program (CHIP) will cost the federal government $7.5 billion less than previously estimated because other options have become more expensive after the repeal of the Affordable Care Act's individual mandate.
The new estimate from the Congressional Budget Office (CBO) came from a latter to Senate Finance Committee chairman Orrin Hatch, R-Utah, putting the price tag of a five-year CHIP renewal at $800 million.
Without CHIP coverage, children may be added to their parents' plans on the ACA exchanges. Premiums on those plans are projected to become more expensive as a result of the mandate repeal passed as part of Republicans' tax cut legislation. For families with CHIP-eligible kids, they're likely to qualify for the ACA's premium support subsidies, meaning the burden of premium hikes for their plans falls on the federal government.
"Thus, funding CHIP for five additional years—reducing the number of children covered through the marketplaces—would result in a larger reduction in spending related to the marketplaces than in the prior estimate," the CBO said.
CHIP has gone unrenewed since its prior authorization expired Sept. 30, 2017. States have warned that without congressional action, the nine million children covered by CHIP will begin losing their benefits this month as matched federal funds run out.
The main debate over renewal has been how to pay for it. The House plan, opposed by Democrats, would divert money away from the ACA's public health fund and hikes Medicare premiums for some higher earners. Hatch's committee had reached an agreement on a five-year extension without uniting on a specific mechanism to fund it.