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Extending CHIP for 10 years rather than 5 saves $6 billion, CBO says

States are facing a shortfall in the program that serves 9 million children if CHIP is not extended by the end of January.

Susan Morse, Senior Editor

A new Congressional Budget Office report shows that extending the Children's Health Insurance Program for 10 years, rather than the proposed five, would save the federal government $6 billion.

The CBO based its report on a Senate Bill to extend CHIP funding for five years. Legislators must act to fund CHIP by the end of January or many states will run out of funding for the program that serves 9 million children.

[Also: 9M children in limbo as Congress debates CHIP funding]

On Jan. 5, the CBO and Joint Committee on Taxation estimated that the Senate bill would increase the deficit by $800 million over the next 10 years.

The new estimate released Thursday said a 10-year extension would save $6 billion through 2027.

[Also: House passes bill reauthorizing CHIP funding, delays cuts to disproportionate share hospitals]

Extending CHIP yields net savings because the federal cost of alternatives to providing coverage are larger than the cost of CHIP coverage, the CBO said.
All of the provisions that would be in place at the end of five years of funding in 2022 would continue unchanged through 2027, the bipartisan agency said.

The extension would increase the deficit between 2018 and 2020 and reduce the deficit after that, the CBO said.

CHIP's authorization for federal funding expired Sept. 30, 2017. Since its inception in 1997, it has received bipartisan support, but this year Republicans and Democrats have been unable to agree on healthcare legislation, among other issues.

Lawmakers face a Jan. 19 deadline to pass a spending bill to avoid a government shutdown.

Twitter: @SusanJMorse
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