CBO: Senate CHIP fix is 90% cheaper after individual mandate repeal

Repealing the ACA's individual mandate to buy health insurance upped the ante for Congress to renew the Children's Health Insurance Program, which insured nearly 9 million children in 2016. Without the mandate, insuring kids will be much more expensive, according to the Congressional Budget Office.

In a Jan. 5 letter to Senate Finance Committee Chairman Orrin Hatch, R-Utah, the CBO outlined an updated financial analysis of a Senate bill that would reauthorize CHIP funding for five more years, S. 1827. According to the CBO, repealing the penalty for not having health insurance means more Americans will forgo coverage, increasing the cost of premiums on the exchanges. As premiums increase, federal subsidies to offset costs of coverage will also have to increase.

Therefore, insuring children through the exchanges will be more expensive for the federal government than it would have been before the mandate was repealed. Plus, without CHIP, more children are likely to become insured through the marketplace, and parents who would have otherwise gone uninsured may be more likely to enroll in a marketplace family plan to cover both themselves and their children, doubly impacting federal costs associated with marketplace coverage. 

Because of this tradeoff, repealing the mandate makes reauthorizing CHIP roughly 90 percent cheaper than before. Now, the CBO estimates reauthorizing CHIP for five years under S. 1827 would increase the federal deficit by $800 million from 2018-2027. This is down significantly from the CBO's October estimate, which topped $8 billion.

Read more about the CBO estimate here.


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