CBO explains CHIP revenue?

We reached out to the Congressional Budget Office to try to get clarification on its report on the 10-year budgetary effect of CHIP reauthorization.


A PolitiFact fact check brought to my attention an apparent discrepancy in CBO’s report on the budget effects of extending the CHIP program for 10 years.

The text of the report says CHIP saves money because services through CHIP cost the federal government less than the services would cost through other means:

Extending funding for CHIP for 10 years yields net savings to the federal government because the federal costs of the alternatives to providing coverage through CHIP (primarily Medicaid, subsidized coverage in the marketplaces, and employment-based insurance) are larger than the costs of providing coverage through CHIP during that period.

Yet the accompanying chart lists “employment-based insurance” not as a “cost” but as a source of revenue. The chart reports that revenue from “employment-based insurance” provides the bulk of the $12.9 billion in revenue that offsets the net increased projected outlays through CHIP, Medicaid and ACA marketplace subsidies.

It would serve the public well to have an explanation of how reauthorizing CHIP results in an increase in federal revenue.

Upon receiving CBO’s explanation I would assuredly publish it and encourage fact checkers to clarify their reporting on this important issue.

We will update this item with any response we receive from CBO.

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