Health Care

CBO slashes cost estimate for CHIP financing: report

Greg Nash

The Congressional Budget Office (CBO) drastically lowered its estimate of the cost to renew a health insurance program for low-income children, likely making it easier for lawmakers to agree on a plan for extending the program.

In a letter sent Friday to Senate Finance Committee Chairman Orrin Hatch (R-Utah), the CBO said that financing the Children’s Health Insurance Program (CHIP) would cost $800 million over the next 10 years — far lower than analysts’ original estimate of $8.2 billion.

Funding for the program, which provides insurance to nearly 9 million low-income children, expired in the fall, but lawmakers have temporarily extended funding.


That funding was supposed to last through March, but states could run out of money for the program well before then.

Democrats and Republicans are divided on how to fund the program. The lower cost estimate by the CBO, however, is likely to make it easier for lawmakers to strike a deal.

One reason why the program’s budget impact has shrunk, CBO Director Keith Hall said in the letter to Hatch, is because of a provision in the recently signed tax bill eliminating the Affordable Care Act’s individual mandate requiring people to purchase health insurance.

Hall said that because eliminating the mandate is expected to raise the government’s cost to subsidize people purchasing exchange insurance plans, extending CHIP funding could encourage parents to get insurance for their children through that program instead of through exchanges.

“In light of the latest analysis from CBO, nothing should prevent enactment of a five-year KIDS Act reauthorization before January 19 — regardless of a budgetary caps agreement,” a spokesperson for the Senate Finance Committee said in a statement.

“Chairman Hatch believes it is time to stop holding CHIP hostage to a caps deal, and will continue to push to get this done to ensure families who rely on CHIP get the care they need.”

– Updated 9:54 a.m.

Tags CBO Children's Health Insurance Program CHIP Congressional Budget Office Insurance Orrin Hatch Orrin Hatch Senate Finance Committee

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