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                                                      Calendar No. 288
115th Congress       }                       {                Report
                                 SENATE
 1st Session         }                       {                 115-197
======================================================================



 
         KEEP KIDS' INSURANCE DEPENDABLE AND SECURE ACT OF 2017

                                _______
                                

               December 20, 2017.--Ordered to be printed

                                _______
                                

               Mr. Hatch, from the Committee on Finance, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 1827]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Finance, to which was referred the bill 
(S. 1827) to extend funding for the Children's Health Insurance 
Program, and for other purposes, having considered the same, 
reports favorably thereon with an amendment in the nature of a 
substitute and recommends that the bill, as amended, do pass.

                                CONTENTS

                                                                   Page
 I. LEGISLATIVE BACKGROUND............................................1
II. EXPLANATION OF THE BILL...........................................2
III.BUDGET EFFECTS OF THE BILL........................................7

IV. VOTES OF THE COMMITTEE...........................................12
 V. REGULATORY IMPACT AND OTHER MATTERS..............................12
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED............12

                       I. LEGISLATIVE BACKGROUND

    The Committee on Finance, having considered S. 1827, a bill 
that would amend titles XI, XIX, and XXI of the Social Security 
Act to extend funding for the Children's Health Insurance 
Program and otherwise revise related provisions, reports 
favorably thereon and recommends that the bill do pass.

Background and need for legislative action

    The Children's Health Insurance Program (CHIP) is a means-
tested program that provides health coverage to targeted low-
income children and pregnant women in families that have annual 
income above Medicaid eligibility levels but have no health 
insurance. CHIP is jointly financed by the federal government 
and the states, and the states are responsible for 
administering CHIP.
    Funding for CHIP has been reauthorized at four different 
times since its creation in 1997. Most recently, the Medicare 
Access and CHIP Reauthorization Act of 2015 provided a two year 
reauthorization. In statute, FY2017 is the last year a federal 
CHIP appropriation is provided. While some funds may continue 
to be spent, new funding for FY2018 expired on September 30, 
2017.
    The Keeping Kids' Insurance Dependable and Secure (KIDS) 
Act of 2017 incorporates funding and policy reauthorizations 
for a five year continuation of CHIP. On September 7, 2017, the 
Senate Finance Committee conducted a legislative hearing on 
reauthorizing funding for CHIP. Subsequently, on October 4, 
2017, the Senate Finance Committee held an executive session to 
pass a funding extension of CHIP out of the Committee for 
consideration by the full Senate.
    The KIDS Act (S. 1827) would extend federal CHIP funding 
through FY2022 and continue the increased enhanced federal 
medical assistance percentage (E-FMAP) in current law for two 
years (i.e., through FY2019) and with a phased-down 11.5 
percentage point increase in 2020. The bill also includes 
extensions of other CHIP provisions (e.g., the Express Lane 
eligibility option and the maintenance of effort [MOE] for 
children in families with incomes below 300% of the federal 
poverty level [FPL]) and other programs and demonstrations 
(e.g., the Child Obesity Demonstration Project and the 
Pediatric Quality Measures Program).

                      II. EXPLANATION OF THE BILL


A. Amends Titles XI, XIX, and XXI of the Social Security Act To Extend 
  Funding for the Children's Health Insurance Program, and for Other 
                                Purposes


                         SECTION 1: SHORT TITLE

Present law

    None.

Explanation of committee bill provision

    Establishes the title of the Act as the ``Keep Kids' 
Insurance Dependable and Secure Act of 2017'' or the ``KIDS Act 
of 2017.''

    SECTION 2: FIVE-YEAR FUNDING EXTENSION OF THE CHILDREN'S HEALTH 
                           INSURANCE PROGRAM

Present law

    The Children's Health Insurance Program (CHIP) is currently 
funded through FY2017 with appropriated amounts specified in 
statute. Since CHIP was first established in 1997, it has been 
funded through subsequent legislation. For instance, the 
Children's Health Insurance Program Reauthorization Act of 2009 
(CHIPRA; P.L. 111-3) provided federal CHIP funding for FY2009 
through FY2013, the Patient Protection and Affordable Care Act 
(ACA; P.L. 111-148, as amended) provided federal CHIP funding 
for FY2014 and FY2015, and the Medicare Access and CHIP 
Reauthorization Act of 2015 (MACRA, P.L. 114-10) provided 
funding for FY2016 and FY2017.
    For FY2016 and FY2017, the annual appropriation amounts 
were $19.3 billion and $20.4 billion, respectively. The FY2017 
appropriation was the combination of semiannual appropriations 
of $2.85 billion from Section 2104(a) of the Social Security 
Act (SSA) plus a one-time appropriation of $14.7 billion from 
MACRA Section 301(b)(3), which was provided for the first six 
months of the fiscal year and remain available until expended. 
The federal government reimburses states for a portion of every 
dollar they spend on CHIP, up to state-specific annual limits 
called allotments. Allotments are the federal funds allocated 
to each state for the federal share of its CHIP expenditures. 
State CHIP allotment funds are provided annually, and the funds 
are available to states for two years. Under current law, 
FY2017 is the last year CHIP allotments are authorized. There 
are two formulas for determining state allotments: an even-year 
formula and an odd-year formula.
    In even years, such as FY2016, state CHIP allotments are 
based on each state's federal allotment for the prior year plus 
any Child Enrollment Contingency Fund payments from the 
previous year, adjusted for growth in per capita National 
Health Expenditures and child population in the state (i.e., 
the allotment growth factor).
    In odd years, state CHIP allotments are based on each 
state's spending for the prior year (including federal CHIP 
payments from the state CHIP allotment, Child Enrollment 
Contingency Fund payments, and redistribution funds). This 
figure is adjusted using the same growth factor as the even-
year formula (i.e., growth in per capita National Health 
Expenditures and child population in the state). Because the 
odd-year formula is based on states' actual use of CHIP funds, 
it is called the ``rebasing year,'' and a state's CHIP 
allotment can either increase or decrease depending on that 
state's CHIP expenditures in the previous year.
    CHIPRA established the Child Enrollment Contingency Fund to 
provide shortfall funding to eligible states. It was funded 
with an initial deposit equal to 20% of the appropriated amount 
for FY2009 (i.e., $2.1 billion). In addition, for FY2010 
through FY2017, such sums as are necessary for making Child 
Enrollment Contingency Fund payments to eligible states are to 
be deposited into this fund, but these transfers cannot exceed 
20% of the appropriated amount for the fiscal year or period.
    For FY2009 through FY2017, states with a funding shortfall 
and CHIP enrollment for children exceeding a state-specific 
target level shall receive a payment from the Child Enrollment 
Contingency Fund. This payment will be equal to the amount by 
which the enrollment exceeds the target, multiplied by the 
product of projected per capita expenditures and the enhanced 
federal medical assistance percentage (E-FMAP).
    Certain states expanded Medicaid eligibility for children 
prior to the enactment of CHIP in 1997. Under the qualifying 
state option, these states are allowed to use their CHIP 
allotment funds to finance the difference between the Medicaid 
and CHIP matching rates (i.e., federal medical assistance 
percentage [FMAP] and E-FMAP rates, respectively) for the cost 
of children in Medicaid in families with income above 133% of 
the federal poverty level (FPL). The following 11 states meet 
the definition: Connecticut, Hawaii, Maryland, Minnesota, New 
Hampshire, New Mexico, Rhode Island, Tennessee, Vermont, 
Washington, and Wisconsin. Under current law, FY2017 is the 
last year in which the qualifying state option was authorized.
    CHIPRA also created a state plan option for ``Express 
Lane'' eligibility through September 30, 2013. Under this 
option, in order to ease administrative burden, states are 
permitted to rely on a finding from specified ``Express Lane'' 
agencies (e.g., those that administer programs such as 
Temporary Assistance for Needy Families, Medicaid, CHIP, and 
the Supplemental Nutrition Assistance Program) for 
determinations of initial eligibility for Medicaid or CHIP, 
eligibility redeterminations for Medicaid or CHIP, or renewal 
of eligibility coverage under Medicaid or CHIP. This provision 
was extended through subsequent legislation and most recently 
in MACRA. Under current law, authority for ``Express Lane'' 
eligibility determinations extends through September 30, 2017.
    Eligibility for Medicaid and CHIP is determined by both 
federal and state law, whereby states set individual 
eligibility criteria within federal standards. Under existing 
maintenance of effort (MOE) provisions, states are required to 
maintain their Medicaid programs with the same eligibility 
standards, methodologies, and procedures in place as of March 
23, 2010 through September 30, 2019, for children up to the age 
of 19. States are also required to maintain income eligibility 
levels for CHIP children through September 30, 2019, as a 
condition for receiving payments under Medicaid.

Explanation of committee bill provision

    Section 2 would extend federal CHIP funding for five years 
by adding federal appropriations for FY2018 through FY2022 
under SSA Section 2104(a). The funding amounts would be:
           $21.5 billion for FY2018,
           $22.6 billion for FY2019,
           $23.7 billion for FY2020,
           $24.8 billion for FY2021, and
           $25.9 billion for FY2022.
    The funding for FY2022 would be structured as it was for 
FY2017, with semiannual appropriations of $2.85 billion plus a 
one-time appropriation in the amount of $20.2 billion, which 
would be provided for the first six months of the fiscal year 
and remain available until expended.
    This section would authorize CHIP allotments for FY2018 
through FY2022 under SSA Section 2104(m), maintaining the 
allotment formulas for odd- and even-year allotments. It would 
structure the federal CHIP funding for FY2022 under SSA Section 
2104(m)(10) the same as it was structured for FY2015 and 
FY2017. For FY2022, funding for the first half of the year 
would be available from SSA Section 2104(a)(25)(A), and from a 
one-time appropriation continued consistent with current law. 
Funding for the second half of the year would be provided in 
SSA Section 2104(a)(25)(B).
    The full-year amount for state allotments would be 
determined according to the even-year formula for CHIP 
allotments, which means each state's allotment would equal the 
allotment for the prior year plus any Child Enrollment 
Contingency Fund payments from the previous year, multiplied by 
the allotment increase factor.
    This section would extend the funding mechanism for the 
Child Enrollment Contingency Fund under SSA Section 2104(n) and 
payments from the fund, the qualifying state option under SSA 
Section 2105(g)(4), and authority for Express Lane eligibility 
determinations under SSA Section 1902(e)(13)(I) through FY2022.
    This section would extend the Medicaid (SSA Section 
1902(gg)(2)) and CHIP (SSA Section 2105(d)(3)) MOE requirements 
for children in families with annual income less than 300% of 
the federal poverty level for three years from October 1, 2019 
through September 30, 2022.

  SECTION 3: EXTENSION OF CERTAIN PROGRAMS AND DEMONSTRATION PROJECTS

Present law

    SSA Section 1139A(e), as added by CHIPRA Section 401(a), 
required the HHS Secretary, in consultation with the CMS 
Administrator, to conduct a demonstration project to develop a 
model for reducing childhood obesity by awarding grants to 
eligible entities (e.g., community-based organizations, 
federally-qualified health centers, and universities and 
colleges) to carry out the project.
    CHIPRA authorized the appropriation of $25 million for the 
period of FY2009 through FY2013 to fund the demonstration 
project. ACA Section 4306 replaced the authorization of 
appropriation with a total appropriation of $25 million for the 
period of FY2010 through FY2014. MACRA Section 304(a) 
appropriated $10 million to fund the demonstration project for 
FY2016 and FY2017.
    SSA Section 1139A authorizes a variety of activities 
related to pediatric quality measurement and care. Under SSA 
Section 1139A(a), the HHS Secretary was required to identify 
and publish an initial core set of pediatric quality measures 
by no later than January 1, 2010. SSA Section 1139A(b) required 
the Secretary to establish a Pediatric Quality Measures Program 
(PQMP) by January 1, 2011. This program is required to identify 
pediatric quality measure gaps and development priorities, 
award grants and contracts to develop measures, and revise and 
strengthen the core measure set, among other things. Section 
1139A(c) requires states to submit reports to the Secretary 
annually to include information about state-specific child 
health quality measures applied by the state, among other 
things. Funding for these activities was appropriated in the 
amount of $45 million for each of FY2009 through FY2013. 
Section 210 of the Protecting Access to Medicare Act of 2014 
(PAMA, P.L. 113-93) extended funding for the PQMP for FY2014 by 
requiring that not less than $15 million of the $60 million 
appropriated for adult health quality measures under SSA 
Section 1139B(e) for FY2014 be used to carry out Section 
1139A(b). MACRA Section 304(b) appropriated $20 million for the 
period of FY2016 through FY2017 for the purposes of carrying 
out SSA Section 1139A.

Explanation of committee bill provision

    This section would amend SSA Section 1139A(e)(8) to 
appropriate $25 million for the period of FY2018 through FY2022 
to carry out the childhood obesity demonstration project. It 
would also amend SSA Section 1139A(i) to appropriate funding in 
the amount of $75 million for the period of FY2018 through 
FY2022 to be used to carry out the certain activities of 
Section 1139A to remain available until expended.

        SECTION 4: EXTENSION OF OUTREACH AND ENROLLMENT PROGRAM

Present law

    CHIPRA Section 201 appropriated (out of funds in the 
Treasury that were not otherwise appropriated) $100 million in 
outreach and enrollment grants from FY2009 through FY2013 to be 
used by eligible entities (e.g., states, local governments, 
community-based organizations, elementary or secondary schools) 
to conduct outreach and enrollment efforts that increase the 
participation of Medicaid and CHIP-eligible children. Of the 
total appropriation, 10% is directed to a national campaign to 
improve the enrollment of underserved child populations, and 
10% is targeted to outreach for Native American children. The 
remaining 80% is distributed among eligible entities for the 
purpose of conducting outreach campaigns, focusing on rural 
areas and underserved populations. Grant funds also are 
targeted at proposals that address cultural and linguistic 
barriers to enrollment. The ACA extended funding by 
appropriating $140 million for FY2009-FY2015 for outreach and 
enrollment grants. MACRA Section 303 appropriated $40 million 
for FY2016 and FY2017 for outreach and enrollment grants. Under 
current law, appropriated funds for CHIP outreach and 
enrollment grants have not been enacted for FY2018 or 
subsequent fiscal years.

Explanation of committee bill provision

    This section would amend SSA Section 2113 to appropriate 
$100 million for CHIP outreach and enrollment grants for the 
period of FY2018 through FY2022.

  SECTION 5: EXTENSION AND REDUCTION OF ADDITIONAL FEDERAL FINANCIAL 
                         PARTICIPATION FOR CHIP

Present law

    The federal government's share of CHIP expenditures 
(including both services and administration) is determined by 
the E-FMAP rate. The E-FMAP rate is derived each year by the 
HHS Secretary using a set formula, and it varies by state. By 
statute, the E-FMAP (or federal matching rate) can range from 
65% to 85%.
    The ACA included a provision to increase the E-FMAP rate by 
23 percentage points (not to exceed 100%) for most CHIP 
expenditures from FY2016 through FY2019. This increases the 
statutory range of the E-FMAP rate to 88% through 100%. In 
FY2017, the E-FMAP rates ranged from 88% (13 states) to 100% 
(12 states).

Explanation of committee bill provision

    This section would continue the 23 percent increased E-FMAP 
rate under SSA Section 2105(b) in current law for two years 
from FY2018 to FY2019. The rate would then decrease compared to 
the previous year to 11.5 percentage points in FY2020, with no 
increased E-FMAP in FY2021 and FY2022.

                    III. BUDGET EFFECTS OF THE BILL


                         A. Committee Estimates

    The Committee adopts as its own the preliminary cost 
estimate prepared by the Director of the Congressional Budget 
Office pursuant to section 402 of the Congressional Budget Act 
of 1974.

                          B. Budget Authority

    In compliance with section 308(a)(1) of the Congressional 
Budget and Impoundment Control Act of 1974 (P.L. 93-344), the 
Committee states that provisions of the bill as reported 
involve new or increased budget authority.

            C. Consultation With Congressional Budget Office

    In accordance with section 403 of the Congressional Budget 
and Impoundment Control Act of 1974 (P.L. 93-344), the 
Committee advises that the Congressional Budget Office has 
submitted a cost estimate on the bill. The following is the 
preliminary cost estimate provided by the Congressional Budget 
Office pursuant to section 402 of the Congressional Budget Act 
of 1974.

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 20, 2017.
Hon. Orrin G. Hatch,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1827, the Keep Kids' 
Insurance Dependable and Secure Act of 2017.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Emily King.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

S. 1827--Keep Kids' Insurance Dependable and Secure Act of 2017

    Summary: S. 1827 would extend federal funding for the 
Children's Health Insurance Program (CHIP) for five years, 
through fiscal year 2022. The bill also would make several 
other changes to CHIP, including a change in the federal 
matching rate for the program and an extension of the 
requirement that states maintain eligibility levels as they 
were in 2010.
    CBO and JCT estimate that, on net, enacting this 
legislation would increase the deficit by $8.2 billion over the 
2018-2027 period. That amount includes a spending increase of 
$14.9 billion and an increase in revenues of $6.7 billion. 
About $2 billion of the estimated revenue increase would be 
off-budget.
    Pay-as-you-go procedures apply because enacting the 
legislation would affect direct spending and revenues.
    CBO estimates that enacting the legislation would not 
increase net direct spending or on-budget deficits in any of 
the four consecutive 10-year periods beginning in 2028.
    S. 1827 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary effect of S. 1827 is shown in the following table. 
The costs of this legislation fall within budget function 550 
(health).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        By fiscal year, in billions of dollars--
                               -------------------------------------------------------------------------------------------------------------------------
                                  2018      2019      2020      2021      2022      2023      2024      2025      2026      2027    2018-2022  2018-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      INCREASES OR DECREASES (-) IN DIRECT SPENDING
 
CHIP:
    Estimated Budget Authority      15.8      16.9      18.0      19.1      20.2         0         0         0         0         0       90.0       90.0
    Estimated Outlays.........       2.7      10.1       8.7       7.2       7.6       7.2       5.4         0         0         0       36.4       49.0
Medicaid:
    Estimated Budget Authority      -0.9      -3.6      -2.3      -2.2      -2.1      -2.3      -1.8         0         0         0      -11.0      -15.1
    Estimated Outlays.........      -0.9      -3.6      -2.3      -2.2      -2.1      -2.3      -1.8         0         0         0      -11.0      -15.1
Marketplaces:
    Estimated Budget Authority      -0.4      -2.1      -2.9      -3.4      -3.8      -3.6      -2.9         0         0         0      -12.6      -19.2
    Estimated Outlays.........      -0.4      -2.1      -2.9      -3.4      -3.8      -3.6      -2.9         0         0         0      -12.6      -19.2
Other:
    Estimated Budget Authority       0.2         0         0         0         0         0         0         0         0         0        0.2        0.2
    Estimated Outlays.........         *         *         *         *         *         *         *         *         *         0          *        0.2
    Total Changes:
        Estimated Budget            14.7      11.2      12.8      13.5      14.3      -5.9      -4.8         0         0         0       66.5       55.9
         Authority............
        Estimated Outlays.....       1.4       4.5       3.6       1.6       1.7       1.4       0.6         *         *         0       12.7       14.9
 
                                                                  INCREASES IN REVENUES
 
Marketplaces..................         *       0.1       0.1       0.1       0.1       0.1       0.1         0         0         0        0.4        0.7
Employer-Sponsored Insurance..       0.1       0.7       0.9       1.1       1.2       1.1       0.9         0         0         0        3.9        6.0
Mandate Penalties.............         0         *         *         *         *         *         *         *         0         0          *          *
    Total Changes.............       0.2       0.7       1.0       1.2       1.3       1.3       1.0         *         0         0        4.4        6.7
        On-Budget.............       0.1       0.5       0.7       0.8       0.9       0.8       0.7         *         0         0        2.9        4.4
        Off-Budget............       0.1       0.3       0.3       0.4       0.4       0.4       0.3         0         0         0        1.5        2.3
 
                                NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES
 
Net Change in the Deficit.....       1.3       3.8       2.6       0.4       0.4       0.1      -0.4         *         *         0        8.5        8.2
    On-Budget.................       1.3       4.0       2.9       0.8       0.9       0.5      -0.1         0         0         0       10.0       10.5
    Off-Budget................      -0.1      -0.3      -0.3      -0.4      -0.4      -0.4      -0.3         0         0         0       -1.5       -2.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: CHIP = Children's Health Insurance Program; ``Other'' includes outreach and enrollment grants, the child obesity demonstration project, and the
  pediatric quality measures program; * = between - $50 million and + $50 million; components may not add to totals because of rounding.

    Basis of estimate: S. 1827 would extend funding for CHIP 
through 2022, change the federal matching rate in 2020, and 
extend certain eligibility requirements. CBO and JCT estimate 
that enacting this legislation would increase federal spending 
by $14.9 billion and revenues by $6.7 billion, for a net cost 
of $8.2 billion over the 2018-2027 period, relative to CBO's 
baseline.

Extension of funding

    The bill would provide a total of $118.5 billion for CHIP 
allotments to states over five years. The net cost of the 
extension described above ($8.2 billion) is substantially less 
than the amount of funding provided for three reasons. First, 
pursuant to the rules that govern CBO's baseline, certain 
expiring programs, including CHIP, are assumed to continue in 
the baseline beyond their scheduled expiration dates. In 
accordance with those rules and the structure of CHIP financing 
in 2017, CBO assumes the continuation of $5.7 billion of CHIP 
funding in each year over the 2018-2027 period. CBO's estimate 
of CHIP spending under this bill is net of that spending 
already assumed in the baseline.
    Second, the increase in spending for CHIP would be 
partially offset by reductions in the net costs of federal 
subsidies provided for other forms of health insurance, 
including Medicaid, insurance purchased through the health 
insurance marketplaces established under the ACA, and 
employment-based health insurance. Those reductions would occur 
because most of the people who would receive coverage through 
CHIP as a result of enacting S. 1827 would otherwise receive 
federally subsidized coverage under current law. Specifically, 
CBO estimates that of the approximately six million children 
who would be covered by CHIP under S. 1827:
           About 40 percent would be covered by 
        Medicaid under current law. Thus, enacting S. 1827 
        would reduce federal Medicaid spending by $15.1 billion 
        during the 2018-2027 period relative to CBO's baseline.
           About 25 percent would receive subsidies for 
        private health insurance purchased through the 
        marketplaces under current law. Children in families 
        with income between 138 percent and 400 percent of the 
        poverty guidelines who are not eligible for Medicaid 
        would generally qualify for subsidies to purchase 
        health insurance through the marketplaces if they do 
        not have access to employment-based coverage through a 
        parent. If S. 1827 is enacted, CBO estimates those 
        subsidies would be $20 billion lower over the 2018-2027 
        period because those children would enroll in CHIP 
        instead of purchasing coverage through the 
        marketplaces. The estimated decrease in subsidies for 
        coverage purchased through marketplaces comprises a 
        $19.2 billion reduction in outlays and a $0.7 billion 
        increase in revenues.
           About 25 percent would participate in 
        employment-based health insurance under current law, 
        because some parents with offers of family coverage 
        through an employer will choose to enroll their 
        children in such plans. Under S. 1827, CBO and JCT 
        estimate that revenues would be $3.8 billion higher 
        over the 2018-2027 period because parents who would no 
        longer enroll their children in health insurance 
        through their employer would receive less of their 
        income in nontaxable health benefits and more in 
        taxable wages.
           Fewer than 10 percent would be uninsured 
        under current law and some would be subject to the 
        penalty associated with the individual mandate. 
        Enacting S. 1827 would reduce federal revenues 
        associated with collecting that penalty by less than 
        $50 million over the 2018-2027 period.
    Finally, the net cost of the extension is less than the 
$118.5 billion that would be provided by S. 1827 because CBO 
does not expect that all of the appropriated funds would be 
spent.

Federal matching rate

    Under current law, a 23 percentage point increase in the 
CHIP federal matching rate that went into effect in 2016 will 
expire after 2019. The average matching rate would return to 
historical levels of about 70 percent beginning in 2020. Under 
S. 1827, states would receive an 11.5 percentage point increase 
in the matching rate in 2020 and the matching rate would return 
to historical levels beginning in 2021. CBO estimates that 
approximately $2 billion of the net cost of S. 1827 is due to 
this provision.

Maintenance of eligibility levels requirement

    Under current law, states are required to maintain CHIP 
eligibility levels, methodologies, and procedures as they were 
on March 23, 2010 through September 30, 2019. CBO expects that, 
under current law, some states would lower CHIP eligibility 
levels and/or impose more restrictive eligibility procedures 
(such as waiting periods) beginning in 2020, which would reduce 
the number of children eligible for CHIP.
    S. 1827 would mostly extend this requirement through 2022. 
Instead of the requirement applying to all children, beginning 
in 2020 it would be limited to children in families with income 
below 300 percent of the poverty guidelines. It would also 
apply to children in families with income above 300 percent of 
the poverty guidelines who do not have access to an offer of 
employer-sponsored insurance through a family member. (Because 
the vast majority of children in CHIP are in families with 
incomes below 300 percent of the poverty guidelines, CBO 
estimates that continuing this requirement, as modified by S. 
1827, would affect at least 98 percent of children who would be 
enrolled in CHIP if the current requirement were fully extended 
through 2022.)
    CBO expects that more children would enroll in CHIP under 
S. 1827 because of the extension of the eligibility 
requirements that are scheduled to expire in 2019. Overall, the 
cost to the federal government of covering these children in 
CHIP would be less than the average cost of covering them in 
the marketplaces and employment-based insurance. As a result, 
CBO estimates that this provision would reduce the estimated 
net cost of extending CHIP funding through 2022 by about $700 
million.

Demonstration programs

    The bill would provide $200 million of funding for the 
Childhood Obesity Demonstration Project, the Pediatric Quality 
Measures Program, and outreach activities to children that aim 
to increase enrollment in Medicaid and CHIP. Based on 
historical spending patterns for similar activities, CBO 
estimates that those provisions would increase outlays by 
approximately $200 million over the 2018-2027 period.
    Increase in long-term direct spending and deficits: CBO 
estimates that enacting the legislation would not increase net 
direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2028.
    Intergovernmental and private-sector impact: S. 1827 
contains no intergovernmental or private-sector mandates as 
defined in UMRA.

                       IV. VOTES OF THE COMMITTEE

    In compliance with paragraph 7(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee states that, with a 
majority present, the Keeping Kids' Insurance Dependable and 
Secure (KIDS) Act of 2017 was ordered favorably reported by a 
voice vote on October 4, 2017.

                 V. REGULATORY IMPACT AND OTHER MATTERS


                          A. Regulatory Impact

    Pursuant to paragraph 11(b) of rule XXVI of the Standing 
Rules of the Senate, the Committee makes the following 
statement concerning the regulatory impact that might be 
incurred in carrying out the provisions of the bill.

Impact on individuals and businesses, personal privacy and paperwork

    In carrying out the provisions of the bill, there is no 
expected imposition of additional administrative requirements 
or regulatory burdens on individuals or businesses. The 
provisions of the bill do not impact personal privacy.

                     B. Unfunded Mandates Statement

    The Committee adopts as its own the estimate of federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act of 1995 (P.L. 104-4). The Congressional Budget Office 
estimates the bill would not impose intergovernmental or 
private-sector mandates as defined in the Unfunded Mandates 
Reform Act and would impose no costs on state, local, or tribal 
governments.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In the opinion of the Committee, it is necessary in order 
to expedite the business of the Senate, to dispense with the 
requirements of paragraph 12 of rule XXVI of the Standing Rules 
of the Senate (relating to the showing of changes in existing 
law made by the bill as reported by the Committee).

                                  [all]