Unless Congress comes to an agreement fast, federal funding for a program that provides health insurance to 2 million California children and pregnant women will run out around the end of the year.
After that, California could be on the hook for hundreds of millions of dollars because the state is required to offer the insurance even if the federal funds don’t show up.
Despite decades of bipartisan support, Congress didn’t renew its authorization to spend money on the Children’s Healthcare Insurance Program, which provides coverage for about 9 million poor children and pregnant women nationwide, before it expired at the end of September. Since then, states have relied on their reserves, or unspent money from previous years, as short-term fixes.
California gets about $2.7 billion a year in federal money for the program, which the state says will likely run out in late December or early January.
Gov. Jerry Brown and state lawmakers put aside nearly $400 million in extra funding for the program in the current state budget as a backstop for potential federal cuts. But if the program isn’t renewed, there could still be an estimated $280-million hole to fill in the budget, and state lawmakers say they don’t know where they’ll get it.
“Ultimately we would have to go back and take a look at a budget and see if there’s a way that we can backfill that,” state Assembly Health Committee Chairman Jim Wood (D-Healdsburg) said. “We’re very concerned."
Letting the program expire has put the children and women who use it in a tenuous position, said California Budget and Policy Center fellow Esi Hutchful. The nonprofit advocates for programs that help low-income Californians.
“[It’s a] program that’s long been popular, successful and long received bipartisan support. It’s striking that it’s almost December … and we’re still in this holding pattern,” Hutchful said.
The House voted largely along party lines this month to authorize five more years of funding for the insurance program. The Republican bill included higher premiums for some Medicare users and other cuts to social programs to offset the program’s costs, provisions the GOP hasn’t previously insisted on including.
Republicans said the provisions would weed out people who take advantage of loopholes in the Affordable Care Act or use Medicare even when they can afford other insurance. Democrats objected to the bill because they said it would would take away healthcare from some people to pay for other people’s healthcare.
The House bill is unlikely to get a vote on the Senate floor because of the potentially unpopular cuts to social programs. Senate leaders haven’t scheduled a vote on their version of the measure either, which does not include cuts to offset the insurance program’s costs.
Congress is scheduled to work fewer than a dozen more days before the end of the year, and it has a crowded to-do list that includes tax reform, funding disaster relief and keeping the government open. But the authorization for the insurance program funding could be inserted into one of those bills.
California Sens. Dianne Feinstein and Kamala Harris have urged Senate leaders to hurry.
“As days go on without the program reauthorized, more and more states will be faced with difficult budget decisions and vulnerable children and pregnant women could lose their coverage,” they wrote in a letter to Senate leaders last month.
Though the federal government and states both fund the insurance program, each state can tailor how the program works. Colorado and Virginia, for example, can end the program when federal funding runs out.
But a few years ago, California rolled its children’s insurance program into Medi-Cal — the state’s version of Medicaid — through the Affordable Care Act. That meant the federal government would cover 88% of the cost, but it came with a caveat: California cannot freeze enrollment or end the program for most families until October 2019, even if federal funding ends.
If the program’s money runs out, nearly all of the recipients would continue to get insurance through Medi-Cal, said California Department of Health Care Services spokesman Anthony Cava. But the federal government would pay only 50% of the cost, as it does for adult Medicaid recipients.
California would have to make up the difference, which the independent California Legislative Analyst’s Office estimates would be $280 million this fiscal year and up to $600 million next fiscal year.
When it set aside the nearly $400 million in backstop funds, the Legislature assumed Congress might lower the percentage it pays this year, not fail to fund the insurance program entirely, Hutchful said.
“They were sort of trying to hedge their bets and give us sort of a cushion,” Hutchful said. “We still did plan that [the program] would be renewed, so we’re at this awkward space now.”
If Congress doesn’t act, the governor is considering adding funding for this year’s program in next year’s budget, according to the California Department of Finance.
But Wood said there’s not “pots of money just sitting around,” and when the Legislature returns in January, it’ll have to work on figuring out where to find the money in the budget.
State Senate Health Committee Chairman Ed Hernandez (D-Azusa) said Congress declining to fund the insurance program is the “worst-case scenario.”
“Covering these children is probably the most important thing that we have to do…. It's a shame," he said. “I hope that they reconsider. I hope they do renew it and that they fund it at the current level.”
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