Trump Seeks $7 Billion Cut to Children’s Health Insurance Program

President Donald Trump is seeking to chop about $7 billion from the Children’s Health Insurance Program, known as CHIP, mostly from unobligated funds, as part of a broader effort to reduce government spending.

Trump is also trying to cut $150 million from the Corporation for National and Community Service, which funds the AmeriCorps for Future Educators program.

Although he signed the $1.3 trillion omnibus fiscal 2018 spending package sent to him by Congress in March, the president has expressed unhappiness with the total amount of federal spending and has declared that he would refuse to sign such budget legislation in the future. The administration first signaled several weeks ago that it was interested in rolling back spending through the rescission process, which allows presidents (with congressional approval) to withhold or defer certain spending.

Congress has 45 days of continuous session to approve or reject Trump’s rescission request. Although the measure would only need 51 votes in the Senate to pass that chamber, instead of a filibuster-proof 60 votes, the proposal might have difficulty getting congressional approval, even though the request for the most part does not affect the fiscal 2018 spending agreement reached after many months of pained negotiations and delays on Capitol Hill.

“These proposals include rescissions of funding that is no longer needed for the purpose for which it was appropriated by the Congress; in many cases, these funds have been left unspent by agencies for years,” Mick Mulvaney, the director of the Office of Management and Budget, wrote to Trump when presenting the rescission requests.

Funding Uncertainty

Trump’s CHIP request follows months of fighting over reauthorization of the program, which covers 9 million children whose families earn too much to qualify for Medicaid but who can’t afford insurance on the open market. Congress let authorization for the program expire on Sept. 30. The delay created uncertainty for states about the fate of federal funding for the program. As part of a continuing resolution to continue government spending in January, Congress ultimately agreed to a six-year reauthorization of CHIP.

In the requested rescission, CHIP constitutes nearly half the total request across various federal programs of $15.4 billion.

Of the requested CHIP rescission, $5.1 billion would be rescinded from reimbursements to states for certain expenses, including $3.1 billion in unobligated balances. Another $2 billion would be rescinded from a program that helps states handle higher-than-expected CHIP enrollment. CHIP is receiving about $17.8 billion in fiscal 2018.

Those who’ve lobbied for less government spending applauded the rescission request. Trump’s request “will signal a desperately needed shift in mentality and begin to build the legislative muscle memory for future action,” said Tim Chapman, the chief operating officer at Heritage Action for America, a conservative political action committee.

But CHIP advocates say the move is unnecessary and shortsighted.

The $2 billion that Trump wants to rescind acts as a contingency fund, and if the request goes through, there would only be $500 million left for states to draw on to cover unforeseen circumstances, said Bruce Lesley, the president of First Focus, an advocacy group that prioritizes federal programs like CHIP, the Earned Income Tax Credit, and Child Tax Credit.

“They’re assuming that there might not be a recession. Recessions happen pretty quickly,” Lesley said. “The contingency fund is there for a reason. If it’s not tapped into, then fine. But there’s no need to decide this now.”

With respect to the remaining $5.1 billion in CHIP money for certain state reimbursements, Lesley also argued that when states have not used that money for that program, lawmakers have typically appropriated it for other federal health programs. He said it would be a mistake for the Trump administration to override that practice.

As for the rescission request’s political prospects, Lesley said, “I think there’s less appetite in the Senate to do this [than the House]. But who knows?”

The $150 million rescission request for the National Corporation for Community Service, which is getting approximately $1.1 billion in fiscal 2018, would affect excess funds set aside for AmeriCorps’ members’ educational awards for fiscal 2018. The rescission request states this move “would have no effect on outlays.”