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GAO Gives Green Light for CHIP Cuts

Proposed cuts would take $2 billion from CHIP's contingency fund. (BioBarica/Pixabay)
Proposed cuts would take $2 billion from CHIP's contingency fund. (BioBarica/Pixabay)
May 23, 2018

HARRISBURG, Pa. - The Government Accountability Office says Congress can take back money that already has been appropriated for the Children's Health Insurance Program.

The Trump administration has proposed cutting federal spending by $15 billion, with almost half coming from CHIP. Since the cuts would come from mandatory spending, the GAO first had to determine if it's allowable under congressional rules.

According to Shawn Gremminger, director of federal relations for the health-care advocacy group Families USA, $5 billion is from funds that states are not expected to spend, but $2 billion would come from CHIP's contingency fund, set aside in case states spend more than expected.

"That can happen for a number of reasons," he said, "either because there are more children who get enrolled in the program than was expected, because prices increased at a faster rate than expected, or because of some sort of natural or man-made disaster."

The administration has claimed that because CHIP isn't expected to spend those funds, the cuts would not affect the program's ability to function. But Gremminger countered that the whole point of a contingency fund is to have it available if expenses exceed expectations. While the other $5 billion may not be necessary for CHIP, past surpluses still have been used for health care.

"In previous years, that money has been redirected to discretionary funding for the HHS appropriations bill," he said, referring to the Department of Health and Human Services. "So, while it has not always been spent on CHIP, it has been spent toward health care and health care for children."

He said the cuts are being proposed as a way to soften the fiscal impact of the trillion-dollar tax cut passed in December that detractors claim mostly benefits corporations and the rich.

The proposed cuts also would take $800 million from the Center for Medicare and Medicaid Innovation. Gremminger noted that the Center was created by the Affordable Care Act specifically to find ways to save on health-care costs.

"They're actually reducing the ability of one of the very few places in government where they are actively working on trying to bring down the actual cost of health care," he said. "It really makes no sense."

The House is expected to take up a rescission bill with the proposed cuts in early June.

Andrea Sears, Public News Service - PA