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From Health Law Daily, January 23, 2018

Short-term spending bill reauthorizes CHIP, delays ACA taxes

By Harold Bishop, J.D.

The short-term spending bill allowing the federal government to reopen through February 8, 2018, provides six-years of funding for the Children’s Health Insurance Program (CHIP), the Child Enrollment Contingency Fund (established for states that predict a funding shortfall based on higher than expected enrollment), the Childhood Obesity Demonstration Project, the Pediatric Quality Measures Program, and specified outreach and enrollment grants (H.R. 195, enacted January 22, 2018).

CMS is also required under H.R. 195 to make additional funding available to states for specified activities related to Medicaid-related mechanized claims systems. Finally, the bill amends the Internal Revenue Code and the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) to suspend specified health-related taxes and fees.

CHIP. The authorization for CHIP, which provides health insurance coverage to nearly 9 million children and 375,000 pregnant women, ended on September 30, 2017. The bill will provide CHIP with approximately $124 billion in funding through FY 2023. The bill also reauthorizes through FY 2023 the qualifying-states option and the express-lane eligibility option. For the first two years of the reauthorization, federal money will pay for at least 88 percent of the program’s expenses in every state. This will maintain the Federal Matching Assistance Percentage (FMAP) levels provided in the ACA through FY 2019 (ACA, sec. 2001). Thereafter, the federal share will decrease over two years to its pre-ACA level.

Delay of ACA taxes. The bill includes a temporary delay in the implementation of three health care-related taxes: (1) the medical device excise tax (ACA. sec. 9009); (2) the so-called Cadillac tax, which taxes employers who offer very expensive health insurance plans (ACA, sec. 9001); and (3) the health insurance tax, which is an annual fee to be applied to all health insurance plans (ACA. sec. 9010). All of the taxes were designed to offset the cost of expanding insurance coverage to low- and middle-income Americans under the ACA. All of these taxes have had their implementation previous postponed or delayed due to their unpopularity.

Under the bill, the existing moratorium on implementation of the medical device excise tax is continued through December 31, 2019; the implementation of the Cadillac tax will be delayed until the 2022 plan year; and the health insurance plan tax will be delayed until plan year 2020.

Because the bill did not move through budget reconciliation, the parliamentary procedure that requires 60 votes in the Senate to avoid a filibuster, the bill could contain the delays in the ACA-related taxes without worrying about their effect on the budget deficit.

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