Bush Adds Restrictions to U.S. Children's Health Plan

from Bloomberg

By Catherine Larkin and Edwin Chen

Aug. 21 (Bloomberg) -- The Bush administration, fighting efforts by states and Congress to expand a popular U.S. health program for children in low-income families, is making it more difficult for families to sign up.

In an Aug. 17 letter to state health officials, the administration imposed new standards that White House spokesman Tony Fratto said today would prevent the State Children's Health Insurance Program, or Schip, from becoming ``essentially a middle-class entitlement.''

The 10-year-old program was designed to provide medical insurance to children whose families earn too much to qualify for Medicaid, the federal-state program for the poor, and can't afford to buy private health coverage. President George W. Bush has threatened to veto bills passed by the House and Senate to expand funding for Schip, which now covers 6 million children.

``I can't try and guess what kind of mind-set would foster this, but it's certainly penny-wise and foolish,'' said Representative Pete Stark, a California Democrat, in a telephone interview today. The proposal ``cuts down the ability of the states to provide medical care to children.''

The new policy sets more-restrictive standards for states that want to expand eligibility to households above 250 percent of the poverty level, which amounts to $51,625 in annual income for a family of four. Tens of thousands of children would become uninsured in at least 23 states that provide, or plan to provide, coverage exceeding these limits, said Rachel Klein, deputy director of health policy for Families USA, a consumer group in Washington.

Current Enrollees

The Bush administration does ``not expect any effect on current enrollees'' as a result of these changes, according to the letter.

``As states have expanded into higher income levels, we actually are seeing Schip become a substitute for private insurance,'' White House spokesman Fratto said. ``States are looking to vastly expand eligibility for Schip at a time when no states are making adequate progress in enrolling the target populations, which are families with children at, or below, 200 percent of the poverty line.''

States must implement the new policies within 12 months or face ``corrective action'' from regulators, according to the letter.

``We're appalled,'' said Claudia Hutton, a spokeswoman for the New York Department of Health. ``This looks like the beginning of an effort to dismantle the child health-care program.''

New York has been seeking a waiver to increase eligibility to $83,000, or 400 percent of the poverty level.

New Jersey's Response

New Jersey has the most-generous policy now, accepting children whose families earn up to 350 percent of the poverty level on the rationale that the state has high living expenses. The Bush administration's proposed changes would ``undermine'' the state's program, a spokesman for Democratic Governor Jon Corzine said.

``New Jersey and other states have made great progress in covering uninsured children,'' spokesman Brendan Gilfillan said. ``Those efforts should be encouraged -- as this administration did when it approved our waiver to cover these children.''

Under the new rules, a state must show that a child whose family earns more than 250 percent of the poverty level has been uninsured for at least one year before being signed up for coverage. In addition, the state must demonstrate that at least 95 percent of its children from families making less than 200 percent of the poverty level have been enrolled either in Schip or Medicaid.

The letter sent to state officials was signed by Dennis G. Smith, director of the Centers for Medicaid and State Operations, an agency in the Health and Human Services Department.

Measures in Congress

``This drastic change in policy sets states up to fail and jeopardizes coverage for tens of thousands of children in low- income, working families,'' said Senator Max Baucus, a Montana Democrat and chairman of the Senate Finance Committee, in a statement.

When Congress returns from recess next month, House and Senate Democratic leaders will seek a compromise between separate measures passed this month to expand Schip, attempting to attract enough Republican support to override a veto.

A measure passed by the Senate would add $35 billion over five years to the $25 billion children's health program. The House version would add $50 billion.

Representative Frank Pallone, a New Jersey Democrat who chairs the House Energy and Commerce subcommittee on health, said in a statement today that he will seek to revoke the administration's new rules when Congress takes up the Schip measures.

The House probably wouldn't be able to round up enough votes to override a veto, Representative Stark said.

To contact the reporters on this story: Catherine Larkin in Washington at clarkin4@bloomberg.net ; Edwin Chen in Washington at echen32at@bloomberg.net .