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What a Bipartisan Health Care Law Means for Colorado's Children

Congress has passed a bipartisan health care law. Yes, you read that correctly.

The Medicare Access and CHIP Reauthorization Act of 2015 was crafted in the House, where it passed 392-37. The Senate approved the bill with a vote of 92-8 just hours before a 21 percent cut in payments to doctors for Medicare services would have gone into effect.

Interestingly, Congress managed to reach this compromise on programs that impact the health care of our oldest and our youngest.  Broad consensus on policies that are more likely to impact working age adults, like those included in the Affordable Care Act, remains virtually unattainable.      

Let’s start with the part of the law that affects children – CHIP reauthorization. The Children’s Health Insurance Plan (CHIP) is a partnership program between the federal government and states that covers around 8.1 million children in the country.

CHIP, which is called the Child Health Plan Plus (CHP+) in Colorado, was enacted in 1997 to provide insurance to low-income children and pregnant women whose family incomes are too high to qualify for Medicaid.  While Colorado receives a 50 percent match rate for Medicaid, the federal match is 65 percent for CHP+. This more lucrative match rate and the cost sharing in CHP+ – clients pay for a small portion of their care, unlike Medicaid clients – has historically made this program popular among policymakers in Colorado.

Nearly 54,000 Colorado children in families with annual incomes between 148 and 265 percent of the federal poverty level (FPL) are enrolled in CHP+, or about four percent of Colorado children. 

The Affordable Care Act (ACA) created a new option for these families – buying subsidized private insurance through health insurance marketplaces.  But this transition would clearly take time.  The ACA authorized CHIP through 2019, but only included federal funding through the end of the 2015 federal fiscal year.

While many Democrats wanted CHIP federal funding extended for an additional four years, to be in line with current authorization of the program, a compromise of two years of additional funding was passed into the recent legislation. Some policymakers worry about the time it would take to shut down the program if no additional funding is forthcoming when the congressional debate over funding resurfaces in 2017.  

One question in Colorado is whether many families who have children enrolled in CHP+ will decide to take advantage of subsidies to buy private insurance through Connect for Health Colorado. Even with subsidies, products on the exchange are likely to cost families more of their income compared to the lower enrollment fees levied by the CHP+ program.  If federal funding is not renewed in two years and parents of CHP+ families do not have alternative and affordable coverage options, children currently enrolled in CHP+ may become uninsured, erasing many of the coverage gains made among Colorado’s children over the past 20 years. 

The part of the new law that affects seniors – Medicare access – was why this bill was passed in the evening of April 14. It prevented that dramatic cut in payment for Medicare services that would have gone into effect on April 15 by repealing the sustainable growth rate formula – the “SGR” – which Congress enacted in 1997 in an effort to hold down Medicare spending.  When the SGR required large reductions in payments to doctors, Congress repeatedly postponed those cuts, passing 17 “doc fix” bills from 2003 to 2014. But a permanent fix was hard to negotiate because that required addressing the hole in the budget.

This year a few things came together to make the SGR repeal possible. Henry J. Aaron at Brookings explains that a slowing in the growth of overall health care spending made the long-term cost estimate of repealing the SGR look not so bad, relatively speaking –$136 billion over ten years. And this paved the way for compromises - which included not raising taxes to cover that budget gap and not having the deal fully funded.

While the compromise is welcome news, provisions are vague.  The new funding mechanism will pay physicians based on “quality, value and accountability,” but there is no clear guidance on how this will happen.  Health policy is complex, and operationalizing these principles will clearly be controversial.  

In this era of politics, compromise at the congressional level is hard to achieve.  We wonder, is bi-partisan congressional passage of the Medicare Access and CHIP Reauthorization Act of 2015 a preview of more conciliatory national debate on health policy?  Or did it pass because children and seniors typically garner more political support on both sides of the aisle?  At this juncture, it’s unclear.  But stay tuned to CHI, where we will keep you informed.