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Does the Rescissions Bill Undermine Children's Health Care?

May 15, 2018 | Health Care

Many have criticized President Trump's $15 billion rescission package for cutting the Children's Health Insurance Program (CHIP). For instance, a recent letter from 511 outside organizations said the rescissions "would put children’s access to health insurance coverage in jeopardy," undermine the program, and violate the recent budget agreement. Senator Schumer said "President Trump and Republicans in Congress are looking to tear apart the bipartisan Children’s Health Insurance Program (CHIP)" [emphasis added], and other Members of Congress and commentators have made similar statements.

However, these claims are largely false. The proposal to rescind CHIP funding will have little to no impact on CHIP spending, and rather than violating the bipartisan budget agreement, the package contains a similar amount of CHIP rescissions.

While the President’s rescissions package would reduce CHIP budgetary authority (BA) by $7 billion, none of those reductions are expected to result in actual spending cuts. $5.1 billion was allocated for 2017 and cannot be spent. Another $1.9 billion is from the Child Enrollment Contingency Fund, which will very likely not be spent. According to the Congressional Budget Office, the $7.015 billion of CHIP rescissions will result in exactly $0 of savings and have no impact on the number of children with insurance.  

Proposed Rescissions by Department (Millions)
  BA Rescission Outlays Reduced
Dept. of Agriculture $964 $259
Dept. of Commerce $30 $30
Dept. of Energy $5,017 $125
Dept. of Health and Human Services $8,035 $198
 - CHIP $7,015 $0
 - CMMI $800 $0
 - Other $220 $198
EPA & Dept. of Housing and Urban Development $51 $46
Dept. of Justice $106 $106
Dept. of Labor $23 $0
Dept. of State & International Assistance $334 $60
Dept. of Transportation $279 $224
Dept. of Treasury $227 $216
Other $283 $0
Total $15,349 $1,264
Memo: Estimated Outlay Savings (OMB)   ~$3,000

Source: Rescissions from Office of Management and Budget, outlays Congressional Budget Office

It is technically possible that money in the contingency fund could be spent, contrary to current estimates, if enrollment in the next four months is much higher than anticipated. However, the rescission bill leaves $500 million in that fund, more than the total amount that has been spent in the nine years since the fund was created. On October 1, another $4.5 billion will be available to replenish the fund.

In reality, the rescission package will have little or no effect on CHIP spending. This shouldn’t be a surprise to critics, many of whom supported $6.8 billion of rescissions to the same two accounts in the bipartisan omnibus this March. Those reductions also resulted in no savings – but were counted as offsets as a budget gimmick to increase discretionary spending beyond the (already generously increased) budget caps. Since 2011, almost $43 billion has been rescinded from CHIP accounts, all in appropriations bills that passed with bipartisan support.

  President's Rescission FY 2018 Omnibus CHIMP Cuts
Children's Health Insurance Fund (075-0515) $5.150 billion $3.661 billion
Child Enrollment Contingency Fund (075-5551) $1.865 billion $3.111 billion
Total $7.015 billion $6.772 billion
Use of Funds BA Rescission Discretionary Spending Increase

Sources: Office of Management and Budget, Congressional Budget Office 

Almost half of the rescissions package reduces budget authority for the Children's Health Insurance Program, but that spending was unlikely to occur. Reducing it will very likely have no effect on CHIP spending, nor on the number of children covered. It does not undermine the program and is in line with the recent omnibus spending bill. You can learn about the full rescissions process in our explainer here.

Ruling: Largely False