Short-term spending measure funds CHIP for 6 years, delays ACA taxes

Washington, D.C. National Capitol Building
The newly passed short-term government spending bill includes six years of funding for CHIP. (Getty/tupungato)

The short-term spending bill that President Donald Trump signed into law on Monday provides six years of funding for the Children’s Health Insurance Program and delays a trio of Affordable Care Act taxes.

Passage of the measure ends the short-lived government shutdown that resulted from a partisan divide over the Deferred Action for Childhood Arrivals program for undocumented immigrants. The so-called continuing resolution only lasts through Feb. 8.

RELATED: Senate overwhelmingly agrees to short-term spending bill, moves to end government shutdown

The measure brings good news for payers, as it includes a one-year delay of the health insurance tax in 2019. The tax, which is part of the ACA, was suspended last year but returned this year—which is likely one of the reasons premiums climbed for individual market plans. Suspending the tax in 2019, according to (PDF) Leerink Partners analyst Gupte, could boost insurers’ earnings by 10% to 20%.

The short-term spending bill also includes a two-year delay of two other ACA taxes: the Cadillac tax on high-cost employer-based insurance plans and the medical device tax. The former is unpopular with employers, and the latter with the medical device industry.

Indeed, the National Business Group on Health, which represents large employers, hailed the Cadillac tax delay. 

"We very much appreciate Congress’ action to delay the excise tax on employer-provided health benefits, and look forward to continuing to work with Congress to permanently repeal this flawed tax on a valued source of stable, affordable health coverage and innovative approaches to health care delivery,” Brian Marcotte, president and CEO of the group, said in a statement.

In addition, by authorizing six years of funding for CHIP, the measure offers long-awaited relief for the families of children enrolled in separate state CHIP programs. As many as 1.7 million of those enrollees were at risk of losing coverage if Congress failed to fund CHIP long-term.

Yet some pointed out that it shouldn’t have taken as long as it did to fund CHIP. Federal funding for the program expired Sept. 30, and efforts to reauthorize it have stalled amid partisan disputes over offsets.

RELATED: Individual mandate repeal cuts cost of five-year CHIP funding extension, CBO says

“The vote to renew funding for this essential healthcare program is long overdue and has come at high expense,” the advocacy group Health Care for America Now wrote in a statement. “Children’s health should never be part of a political, partisan fight nor should politicians treat healthcare and protection for immigrant youth as items for barter.”

Joan Alker, executive director of the Center for Children and Families at Georgetown University, also expressed frustration at the “needless anxiety” caused by Congress’ inability to act more quickly.

"Families have experienced needless anxiety," she wrote in a blog post. "And we may see a chilling effect on enrollment from the many stories reporting on the expiration of CHIP funding, not to mention states that sent notices about the possible loss of coverage."

On the industry side, six years of CHIP funding is a “modest positive” for both acute healthcare facilities and managed care, Gupte wrote.

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