President Signs CHIP Bill, Freeing Up $450 Million in State Funds for Critical California Priorities

It’s official: President Obama today signed into law H.R. 2, which extends federal funding for the Children’s Health Insurance Program (CHIP) through September 2017. California primarily uses federal CHIP dollars — along with state funds — to support health care coverage for certain low-income children enrolled in Medi-Cal.

In addition to maintaining a key source of support for children’s health coverage, H.R. 2 will have a positive impact on California’s state budget. This is because the bill leaves in place a substantial increase in the share of CHIP costs paid by the federal government, as we explained last month. With the feds paying more, California will pay much less than Governor Brown assumed in his proposed budget for 2015-16, the state fiscal year that begins this coming July 1. In fact, California is expected to spend roughly $450 million less on children’s health coverage through Medi-Cal than the Governor projected, according to the Legislative Analyst’s Office. State savings are likely to be even higher in 2016-17.

Lawmakers and Governor Brown in the next 10 weeks or so will decide how to spend these newly freed-up state dollars in the coming fiscal year. There’s no shortage of worthy ideas, particularly given that the state’s recovery from the Great Recession remains elusive for many Californians and critical state services continue to operate at recession-era levels. A short list of key priorities includes increasing California’s abysmally low payments to dentists and other providers in Medi-Cal, expanding access to affordable child care for working families, and boosting income support for low-income Californians in order to help families, seniors, and people with disabilities move out of poverty.

— Scott Graves