Despite getting a 6-year extension, CHIP faces a funding cliff, experts warn

A pediatrician and his patient
CHIP faces a steep funding cut in 2024 under the recently passed extension. (Getty/shironosov)

Though Congress renewed CHIP for six years in a stopgap spending measure, the insurance program that covers more than 9 million kids could still face financial issues down the line. 

The spending bill, President Donald Trump signed into law earlier this month, would extend the Children's Health Insurance Program for six years, but experts worry about a "CHIP cliff" that is built into the extension. 

Congress' spending deal provides for $25.9 billion in funding in 2023, but that drops to $5.7 billion in 2024, a 78% cut, Bruce Lesley, president of the advocacy group First Focus, said in a post on Medium. This cliff makes it likely that the program will be significantly underfunded from 2024 onward. 

A compounding factor, according to Lesley, is that Congress could take steps to repeal more elements of the Affordable Care Act or make cuts to Medicaid, which would impact the cost to renew CHIP in the future. 

"There is no legitimate reason ... Congress should continue to subject CHIP to temporary and uncertain extensions," Lesley wrote. 

RELATED: Industry Voices—Why funding the Children's Health Insurance Program matters 

States, too, face problems in the wake of the battle over CHIP, the Washington Examiner reported. The CHIP extension cuts the federal funding matching rate beginning in 2020, decreasing from 93% in 2019 to $81.5% in 2020. It will drop again to 70% in 2021. 

Joan Alker, executive director of the Georgetown University Center for Children and Families, told the news outlet that while the gradual decreases will offer time for states to adjust to the changes, she's concerned that some people may not realize CHIP was extended at all. 

After CHIP expired in September and Congress spent months kicking the can down the line on a long-term extension, some states issued warnings to CHIP enrollees that they may lose insurance. Alker said that in a number of states, officials worried the program was gone for good. 

"What we are concerned about is there may have been a chilling effect on enrollment, but we just don't know," she told the Examiner. 

And the states most at risk during the uncertainty around CHIP didn't emerge from the quagmire totally unharmed, according to an article from The Washington Post. In Alabama, for example, thousands of dollars were spent on letters to warn people that they could lose coverage, many of which were later shredded, unsent, after Congress reached a deal. 

"There was harm and foul in this limbo period," Jim Carnes, policy director of Alabama Arise, an advoacy group in the state, told the newspaper. "Those who contend there wasn't do not appreciate the burden it put on working parents with children with healthcare needs." 

"They don't understand how unfair the process was to say, 'We’re going to toy around with your children's health insurance for a while and see what comes out of it,'" he said.