CBO: Extending CHIP for 10 years would decrease deficit by $6 billion | Arkansas Blog

Friday, January 12, 2018

CBO: Extending CHIP for 10 years would decrease deficit by $6 billion

Posted By on Fri, Jan 12, 2018 at 11:21 AM

The Congressional Budget Office this week released a new budget score for a ten-year extension of the Children's Health Insurance Program (CHIP) — which provides health coverage for 9 million lower-income children, including 400,000 kids who are covered by ARKids — and found that it would actually save the federal government $6 billion versus letting it lapse.

This follows news last week that the net budget impact of CHIP had been revised dramatically downward because of the elimination of the individual mandate in the tax bill recently passed by Congress. That doesn't change the cost of CHIP, but it makes it more expensive if CHIP is defunded — eliminating the individual mandate makes costs higher on the exchange, where many kids would wind up for federally subsidized coverage (it would also increase the number of uninsured people, some of whom would wind up on the exchanges for subsidized family coverage if they were shopping their for kids who lost CHIP). The CBO looked at a five-year extension last week — a longer extension would end up being a net savings for the federal government.

It has now been more than three months since the federal government allowed funding for CHIP to lapse. Thus far, no state has had to stop services thanks to stopgap funding. Alabama was set to freeze enrollment on Jan. 1 because of the funding lapse, but the temporary funds authorized in December bought the state a few more weeks. Other states are preparing to notify families that their children could be in danger of losing CHIP coverage.

Re-authorization of long-term funding (unlike Medicaid, Congress must periodically extend funding for CHIP) has been at a standstill because Republicans insist the nation can't afford to fund CHIP unless other social services are cut. “The reason CHIP is having trouble is because we don’t have money anymore,” Sen. Orrin Hatch, chair of the Senate Finance Committee, said. This rationale became hard to swallow when Republicans devoted all of their energies last month to ramming through a tax cut that will add at least a trillion dollars to the national debt. Ironically enough, Republicans' excuse for holding off on permanent funding for CHIP is now out the window because of the quirks of that very tax bill.

Here's Sarah Kliff at Vox on GOP priorities (this was written before the latest CBO score, focusing on the small cost of a five-year extension):
But just days after Hatch said this, Republicans passed tax cuts worth $1.5 trillion that aren’t paid for at all. Instead, they piled the cost onto the federal deficit by more than a trillion dollars. The price of extending CHIP is 0.1 percent of the cost of the tax bill.

When it comes to extending tax cuts to wealthy Americans and corporations, there’s apparently no need to find a way to pay for it. The money is just there, even if it means going into debt. When it comes to giving kids health insurance, the calculus is the opposite.
"States are having very real discussions about the possibility that the 20-year-old program will shut down," Kliff writes. "If it does, the kids on CHIP don’t have a safety net. The CHIP program is their safety net. Time is running out, and Congress is doing nothing."

Vox has a handy graphic on the tiny cost of extending CHIP for five years versus the massive cost of the tax cuts — less than a rounding error in the context of massive $1.5 trillion GOP tax cuts for the rich. And again, extending CHIP for longer actually projects to be a net reducer of the deficit.

click to enlarge vox_chip.jpg

Vox also points out that Trump's proposal for a beautiful wall on the Mexican border would cost $18 billion, 22 times what it would cost for a five-year extension of health insurance for low-income kids. Heh.

The rumor is that, thanks in part to the new scores, Congress is finally slated to act next week, and will approve a six-year extension of funding, one year longer than originally proposed (although Democrats and some Republicans are now clamoring for a longer extension given the new score). We'll see — most thought an extension would happen last month. Congress has exhibited shameful malpractice and disgraceful priorities in putting families in limbo for three months and counting. They are out of excuses and hopefully will finally do the right thing next week.

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