States shift healthcare dollars; activists cry foul

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States are shifting dollars they once spent on children’s health into roadways and tax cuts, raising fears for advocates that important healthcare programs could lose their funding.

Kansas, Indiana and California are among the states looking to relocate money away from their Children’s Health Insurance Programs (CHIP) as the federal government begins picking up more of the tab this year.

A little known ObamaCare provision, which goes into effect this year, means that dozens of states will soon pay little to none of their own CHIP costs.

The federal funding bump frees up as much as $6 billion over two years – money that is now being used to backfill state budget holes instead of expanding the kid’s health programs.

“What you’re seeing is that the states went.. ‘Whoop dee doo. Awesome, I’ll give a tax cut, I’ll build a road,’ said Bruce Lesley, president of a family and child advocacy group First Focus.

“In the name of children, money is being spent on things that have nothing to do with kids on the state level. And to us, that stinks,” said Lesley, a former Democratic staffer.

Even in California, Democratic Gov. Jerry Brown pulled out about $381 million from the kid’s healthcare program in his upcoming budget – which children’s advocates compared to “stealing from a child’s piggy bank."

The extra funding comes from a 23 percent increase in reimbursement rates for CHIP. The bump had been included in the healthcare law to keep states from dropping their kids health program for the ObamaCare exchanges, which typically offer fewer protections for kids.

During the ObamaCare debate, the increase in federal CHIP dollars was hailed as a victory for children’s health. Families USA described the federal bump as “significant new funding.”

Five years later, many kids health programs could see stagnant funding, or even decreases – which one child health advocate in Kansas described as a major “unintended consequence.”

“I can’t imagine that this was the intent – that [Congress] was just going to give states money to fill budget holes or backfill other programs,” said Shannon Cotsoradis, who leads Kansas Action for Children.

Cotsoradis said she’s afraid states that defund CHIP will face an uphill battle to add it in later, after the two-year federal bump expires.

“It’s hard to get that money back,” she said. “At the end of the day, what it might mean is a reduction in children’s health coverage. And I suspect we’re not the only state in that boat,” she said.

The Children’s Health Insurance Program was created by Congress in 1997 and has consistently won bipartisan support.

After ObamaCare, however, the program’s future is uncertain. While advocates have warned against putting children on the less-protective ObamaCare exchanges, members of Congress say they hope to eventually integrate the programs.

Congress approved a two-year funding package for CHIP this year as part of a multi-billion dollar bipartisan bill repealing Medicare’s “doc fix.” That deal meant that ObamaCare’s new reimbursement formula would go into effect for the first time.

All states will now pay no more than 12 percent of their CHIP costs, and 11 states and D.C. will contribute nothing. Before this year, the federal government contributed between 65 and 83 percent of states’ CHIP costs.

The fate of CHIP funding has come into focus in the last several weeks as state legislators plan their upcoming budgets.

Kansas Republican Gov. Sam Brownback announced this week the CHIP funds will go toward filling budget holes after an unprecedented economic crisis in his state.

Indiana, which will receive an extra $25 million, also isn’t planning to expand CHIP. Officials will instead make up for the state’s declining pool of money from the state’s deal with tobacco companies.

Some states are under even more pressure to keep funding CHIP because they weren’t counting on the extra federal dollars.

In a survey of CHIP directors this year, only 18 states said they included the increase in their budgetary projections, according to the National Academy for State Health Policy.

That includes Ohio, which is using its federal bump to prevent a nearly $100 million cut in Medicaid spending.

In other states, children’s health advocates are now lobbying to keep those funds in healthcare.

“I do think it’s a missed opportunity if they don’t reinvest it in kids,” said Elisabeth Wright Burak, who studies CHIP policy for the Georgetown University Center for Children and Families (CCF).

“A lot of state advocates are saying we need to keep this money in the system for kids,” added Burak, who spent several years expanding CHIP in Arkansas. “State advocates are absolutely making this case, especially for states that didn’t initially budget for it.”