Senator Edward Kennedy's role in creating CHIP

In the myriad of articles and tributes to Senator Edward Kennedy we found one this morning that focused on his work to expand programs to help the poor. Kennedy was instrumental in creating CHIP, the federal program that brings universal health care to children in the U.S.

From this article from South Coast Today, writer Becky Evans tells us more about the creation of S-CHIP.

“I don't think you will see a U.S. senator anytime soon who will contribute as much to helping the poor and the working class, particularly in SouthCoast, but all over the country,” said Sen. Mark C. Montigny, D-New Bedford.

Montigny, who collaborated with Kennedy on numerous local projects throughout the years, said one of his most rewarding experiences was working with the senator during the 1990s to develop a universal health care program for uninsured children.

Kennedy, with his extensive health care knowledge, helped advise Montigny and former state Rep. John McDonough on legislation that created a state health insurance program for uninsured children. The Massachusetts program, which delivered health care to thousands of uninsured children in SouthCoast, later served as a model for a nationwide program, Montigny said.

The federal program, known today as the Children's Health Insurance Program, or CHIP, provides matching funds to states that offer health insurance to families with children.

“Here he was advising us on how to do it in Massachusetts and then soliciting advice from us on how to do it nationally,” Montigny said of Kennedy.

“There is no one who has done more to push health care expansion in this country,” he added.

US congress to vote on S-CHIP expansion

The US Congress is set to vote on the S-CHIP expansion later this week. Congress passed the expansion package only to get it vetoed by President Bush a couple of times. Now, with a President-Elect about to arrive who will sign the bill, Congress will get it passed again. This should give President-Elect Obama something that he can claim he accomplished early in his administration.

For details on the vote and an analysis on how the expansion of children's health care will be paid for, E Max Health provides a round up of news stories about S-CHIP.

Although House Majority Leader Steny Hoyer (D-Md.) last week said the package would be nearly the same as the bill vetoed by Bush in 2007, some Democratic aides have said the pending economic-stimulus package and previous $700 billion economic bailout have limited the amount of federal money available and could force Democrats to cut costs on the original proposed expansion, the Times reports (Lengell, Washington Times, 1/12).

The original proposal included an increase in the federal cigarette tax to fund the SCHIP expansion. The 2007 bill, which supporters believe would have increased SCHIP enrollment from six million to 10 million, would have raised the tax by 61 cents per pack and would have cost an estimated $35 million over five years (Kaiser Daily Health Policy Report, 1/8).

However, because the 61-cents-per-pack cigarette tax likely will not cover the full cost of a five-year expansion, aides to House Democrats said lawmakers would seek a shorter SCHIP reauthorization, CQ Today reports (Armstrong, CQ Today, 1/9). According to the Times, SCHIP's expenses have increased over the last two years and cigarette sales are declining, making it necessary to seek new revenue sources for an expansion (Washington Times, 1/12). Lawmakers are waiting for cost projections from the Congressional Budget Office before they determine the length of the reauthorization. According to lobbyists and congressional aides, the extension likely will be between two years and four-and-a-half years.

According to CQ Today, a shorter-term reauthorization could mean that Democrats will attempt a "fuller expansion" of the program as part of a comprehensive health reform package. Rep. Diana DeGette (D-Colo.) said, "If a shorter-term reauthorization is the only way to craft a stronger bill that would provide coverage for more eligible children, we should take that course."

House Minority Leader John Boehner (R-Ohio) and Minority Whip Eric Cantor (R-Va.) wrote in a letter to Obama and House Speaker Nancy Pelosi (D-Calif.) that Republicans want the program to require coverage of children below 200% of the federal poverty level before increasing to higher income levels. The letter said, "Republicans are committed to reauthorizing SCHIP in a manner that puts poor children first, which is the original intent of the program." They also want the legislation to require stricter citizenship documentation (CQ Today, 1/9).

Expanding SCHIP "is good politics and the right thing to do" and is "one of the clearest signals" that Obama has sent in "his determination to learn from the Clinton years, particularly from the former president's failures on health care," E.J. Dionne, Washington Post columnist, writes in a Post opinion piece. According to Dionne, in 1994 a group of senators suggested Clinton try to insure all children when his plan for universal coverage was encountering difficulties, in order to "make, at least, a down payment on reform."

New SCHIP Legislation Makes Significant Changes From Vetoed Bill to Focus More Heavily on Poor Children

from the Center on Budget and Policy Priorities

Changes Answer Criticisms of Earlier, Vetoed Bill
By Edwin Park and Judith Solomon

On November 30, Congress sent the President a revised version of bipartisan legislation to strengthen children’s health coverage (H.R. 3963). The bill includes substantial changes from the bill the President vetoed in October (H.R. 976) that directly address a number of concerns raised by the earlier bill’s opponents. Despite these changes, however, the President is expected to veto the new legislation as well.

According to the Congressional Budget Office, the new bill would cover nearly 4 million uninsured children by 2012, at a cost of about $35 billion over five years, fully offset by an increase in federal tobacco taxes.[1] Key changes in the second bill include:

1. The second bill focuses even more on covering the lowest-income uninsured children.

Arguing that any legislation to reauthorize the State Children’s Health Insurance Program (SCHIP) should “cover poor kids first,” opponents of the first bill suggested that it would primarily cover middle-class children.[2] CBO estimates clearly indicate, however, that the vast majority of the uninsured children who would have received coverage under the first bill have low incomes.[3]

Nevertheless, the second bill makes two significant changes to further target the increased coverage on the lowest-income uninsured children.

* It would prohibit any state from extending SCHIP coverage to children in families above 300 percent of the poverty line. (The one state that already covers children above that level — New Jersey, which covers about 3,000 children from 300 to 350 percent of the poverty line — would be allowed to continue doing so.)[4] This provision is significantly more restrictive than the original bipartisan bill. The first bill would have allowed states to continue to expand SCHIP above 300 percent of the poverty line, as under current law, although at a reduced federal matching rate and only if the state met new requirements for participation in Medicaid and SCHIP among eligible low-income children.

* Also of considerable significance, the second bill further targets the financial incentives for enrolling eligible but uninsured children on those with the lowest incomes. The second bill would provide incentives to states only for enrolling uninsured children who are eligible for Medicaid and would increase the size of those incentives. It would drop the incentives included in the original bipartisan bill for enrolling somewhat higher-income children eligible for SCHIP.

According to CBO estimates, the result of these changes is as follows:

* By 2012, the second bill would cover a total of 3.9 million children who would otherwise be uninsured, a 100,000 increase over the original bill.

* Of these 3.9 million children, 3.4 million — or 87 percent — would have incomes below states’ current eligibility limits. (This is 200,000 more than under the original bill.)

* 1.9 million — or essentially half — of these children would be eligible for Medicaid, and most of them would be poor. (This is a 200,000 increase in coverage among the lowest-income uninsured children compared to the original bill.)

* Only 500,000 of the 3.9 million otherwise-uninsured children who would gain coverage under the bill would do so as a result of state actions to broaden their SCHIP eligibility criteria. (This is 100,000 fewer than under the original bill.) All of these 500,000 children would be below 300 percent of the poverty line.

2. The second bill tightens the citizenship documentation option; it would ensure that ineligible undocumented immigrants are not enrolled in Medicaid and SCHIP, without reducing enrollment among eligible citizen children.

Opponents of the first bill falsely claimed that it would somehow extend Medicaid and SCHIP to undocumented immigrants or otherwise allow many ineligible undocumented immigrants to enroll.[5]

The Deficit Reduction Act of 2005 imposed a new citizenship documentation requirement on citizens eligible for Medicaid. The requirement has proved onerous and prevented many poor citizen children who are eligible for Medicaid from enrolling. (A recent survey for the Kaiser Commission on Medicaid and the Uninsured determined that the requirement was a key reason why Medicaid enrollment has declined for the first time in nearly a decade.[6]) The first SCHIP bill gave states a new option to comply with the requirement: for individuals who have already signed a sworn declaration that they are U.S. citizens, state Medicaid agencies could match individuals’ names and Social Security numbers with information in the Social Security Administration (SSA) database to ensure that the name and Social Security number were accurate. The bill also extended the citizenship documentation requirement to SCHIP for the first time.

The second bill includes changes that fully address opponents’ charges in this area:[7]

* Opponents claimed that some people who are not citizens can have Social Security numbers and that proving the numbers are valid does not prove these people are citizens. The second bill responds to this concern by tightening the new data matching option, requiring states to verify not only names and Social Security numbers with information in the SSA database, but also citizenship. States that use the new option would have to submit to SSA the names and Social Security numbers of all Medicaid applicants who declare they are U.S. citizens. SSA would check this information against the SSA database and determine not only whether the name and Social Security number match, but also whether the SSA database shows that the applicant is a citizen.

* If SSA could not confirm the accuracy of the applicant’s name, number, and citizenship, the individual would have to provide the state with original documents, such as a birth certificate or passport, to prove his or her citizenship, as is required under the citizenship documentation requirement now in place.

3. The second bill accelerates the elimination of SCHIP coverage of childless adults.

Opponents of the first bill criticized it for allowing states to use SCHIP funds to cover adults through waivers.[8] This criticism ignores the fact that the bill would have significantly curtailed SCHIP coverage of adults: it barred the federal government from granting any new waivers to states to cover parents, required states to move SCHIP-covered parents out of SCHIP after two years, and reduced the federal matching rate for such coverage. It also eliminated SCHIP coverage of adults without children after two years.

The second bill would take the further step of eliminating SCHIP coverage of childless adults by the end of calendar year 2008, nine months earlier than under the first bill.

4. The second bill takes additional steps to limit “crowd-out.”

Opponents of the first bill have incorrectly claimed that it would not produce much of a gain in coverage but instead would primarily lead children who now have private insurance to be switched to public programs.[9] CBO analysis showed this charge was incorrect: nearly two-thirds of the children who would gain SCHIP or Medicaid coverage under the bill by 2012 (3.8 million out of 5.8 million) would otherwise be uninsured. Only slightly more than one-third (34 percent) would otherwise have some form of private coverage.[10]

Moreover, as CBO director Peter Orszag and leading health experts have explained, virtually any effort to cover more of the uninsured — including tax deductions or credits for the purchase of insurance in the private market — would result in some “crowd-out.” In discussing the first SCHIP bill passed by the House, which also had a crowd-out rate of about one-third, Orszag noted that he “has not seen another plan that adds 5 million kids to SCHIP with a 33 percent crowd-out rate. This is pretty much as good as it is going to get” (except for approaches that would impose mandates on employers, individuals, or states).[11]

The second SCHIP bill includes changes to further reduce the risk of crowd-out.

* It requires all states to adopt best practices developed by the Secretary of Health and Human Services, in consultation with states, on limiting crowd-out. The original bill only required states that expand coverage above 300 percent of the poverty line to adopt such practices.

* As discussed above, the second bill further increases the focus on the lowest-income children. Because such children are highly unlikely to have other access to health insurance, there is less risk of crowd-out at those income levels.

* The bill also encourages states to take up an existing “premium assistance” option, under which states can enroll SCHIP-eligible uninsured children in employer-sponsored health insurance — if their families have access to such coverage — by using SCHIP funds to help families pay the required premiums. The first SCHIP bill included provisions to make it easier for states to implement premium assistance. The second bill goes further, adding a fiscal inducement for states to institute the premium assistance option.[12]

CBO estimates indicate that the second bill produces a slightly lower crowd-out rate than the first, one, of just under 33 percent.

End Notes:

[1] Congressional Budget Office, “CBO’s Estimate of Changes in SCHIP and Medicaid Enrollment of Children Under the Children’s Health Insurance Program Reauthorization Act of 2007,” October 24, 2007 and Congressional Budget Office, “CBO’s Estimate of the Effects on Direct Spending and Revenues of the Children’s Health Insurance Program Reauthorization Act of 2007,” October 24, 2007.

[2] See Robert Greenstein, “Poor Children First — Or Last?,” Center on Budget and Policy Priorities, October 17, 2007.

[3] See Edwin Park, “CBO Estimates Show SCHIP Agreement Would Provide Health Insurance to 3.8 Million Uninsured Children,” Center on Budget and Policy Priorities and Congressional Budget Office, “CBO’s Estimate of Changes in SCHIP and Medicaid Enrollment of Children Under the House Amendments to the Senate Amendments to H.R. 976, the Children’s Health Insurance Program Reauthorization Act of 2007,” September 24, 2007. See also Genevieve Kenney et al., “SCHIP Reauthorization: How Will Low-income Children Benefit Under the House and Senate Bills?” Urban Institute, as updated on November 8, 2007 at http://www.urban.org/publications/411545.html.

[4] Jocelyn Guyer, “Coverage of Uninsured Children in Moderate-Income Families under SCHIP,” Center for Children and Families, Georgetown University Health Policy Institute, October 2007.

[5] See “Charge that Bipartisan SCHIP Compromise Bill Aids Undocumented Immigrants Is False,” Center on Budget and Policy Priorities, September 25, 2007.

[6] Vernon Smith et al., “As Tough Times Wane, States Act to Improve Medicaid Coverage and Quality,” Kaiser Commission on Medicaid and the Uninsured, October 2007. See also Government Accountability Office, “States Reported That Citizenship Documentation Requirement Resulted in Enrollment Declines for Eligible Citizens and Posed Administrative Burdens,” June 2007; “Medicaid Citizenship Documentation Requirements Deny Coverage to Citizens And Cost Taxpayers Millions,” Majority Staff, Committee on Oversight and Government Reform, July 24, 2007; Donna Cohen Ross, “Medicaid Requirement Disproportionately Harms Non-Hispanics, State Data Show,” Center On Budget and Policy Priorities, July 10, 2007, and “New Medicaid Citizenship Documentation Requirement Is Taking A Toll,” Center on Budget and Policy Priorities, March 13, 2007.

[7] For a comprehensive analysis of how the second SCHIP bill ensures that ineligible undocumented immigrants do not enroll in Medicaid and SCHIP, see Judith Solomon and Allison Orris, “New Children’s Health Legislation Would Not Allow Any Undocumented Immigrants to Enroll in SCHIP or Medicaid,” Center on Budget and Policy Priorities, December 3, 2007.

[8] See, for example, White House, “Press Briefing Via Conference Call by Senior Administration Officials on SCHIP Reauthorization,” October 17, 2007.

[9] See “The President’s Comments on Congress’ SCHIP Plan,” Center on Budget and Policy Priorities, September 20, 2007 and Robert Greenstein, “The Administration’s Dubious Claims about the Emerging Children’s Health Insurance Legislation: Myths and Realities,” Revised July 20, 2007.

[10] It is also important to note that this CBO estimate is widely misunderstood. A large share of the SCHIP “crowd-out,” as estimated by CBO, involves children who are uninsured now but who eventually would obtain private coverage if SCHIP coverage were not available. These are not children who had private insurance which their families voluntarily dropped for public program coverage. See Leighton Ku, “’Crowd-Out’ Is Not the Same as Voluntarily Dropping Private Health Insurance for Public Program Coverage,” Center on Budget and Policy Priorities, September 27, 2007.

[11] “SCHIP: Governors, Health Officials, Seek Withdrawal of CMS Rules Targeting ‘Crowd-Out’ by SCHIP,” BNA Health Care Daily, August 31, 2007.

[12] To qualify for incentive payments for enrolling more of the eligible but uninsured children, states would have to adopt for their Medicaid and SCHIP programs at least five of eight enrollment and retention strategies listed in the bill, one of which is premium assistance. This should result in more states implementing premium assistance programs.

New Children's Health Legislation Would Not Allow Any Undocumented Immigrants to Enroll in SCHIP or Medicaid

from the Center on Budget and Policy Priorities

By Judith Solomon and Allison Orris

President Bush has said he will veto the second bipartisan compromise bill passed by Congress (H.R. 3963) to reauthorize the State Children’s Health Insurance Program (SCHIP). The Administration claims, in part, that the bill “continues to allow SCHIP to cover ineligible individuals,” namely undocumented immigrants.[1] Some members of Congress and the Heritage Foundation have made similar charges.

This claim is false. The second bill contains significant changes that close the door on the possibility that undocumented immigrants could be found eligible for Medicaid or SCHIP. It would require clear proof that all children, parents, and pregnant women applying for Medicaid and SCHIP who declare that they are U.S. citizens are indeed citizens: either the state would check the applicant’s Social Security record to see that it contains a Social Security Administration-verified indicator of U.S. citizenship, or the applicant would have to provide the state with a document such as a birth certificate. To ignore this fact and incorrectly claim that undocumented immigrants would receive coverage under the bill is not valid justification for vetoing the extension of health coverage to nearly 4 million uninsured children.

Background: The Citizenship Documentation Requirement

Undocumented immigrants have never been eligible for SCHIP or Medicaid (other than for some emergency medical care). Legal immigrants applying for Medicaid have always had to submit documents proving that they meet the federal eligibility requirements that apply to legal immigrants. In addition, states have always been able to require individuals whose claim to U.S. citizenship appears questionable to submit documents proving their citizenship. In 2005, Dr. Mark McClellan, then-administrator of the Centers for Medicare and Medicaid Services, wrote that this policy “allows states to enroll eligible individuals while preserving program integrity.”[2]

Nevertheless, in the Deficit Reduction Act passed in 2006, Congress enacted a new requirement that every U.S. citizen child, parent, and pregnant woman applying for (or receiving) Medicaid prove his or her citizenship by providing an original birth certificate, passport, or similar document. States have reported that the new rule has kept thousands of children who are U.S. citizens from receiving the coverage for which they would otherwise qualify, because their parents lacked ready access to a birth certificate or passport.

Supporters of the citizenship documentation requirement claim that it is intended to keep undocumented immigrants from fraudulently enrolling in Medicaid. Thus far, however, virtually no undocumented immigrants have been identified under the rule. (See box.) Instead, as Congressional Budget Office (CBO) Director Peter Orszag recently stated, the available evidence “suggests that virtually all of those who have been unable to provide the required documentation are U.S. citizens.”[3] Director Orszag has also said, “even before the Deficit Reduction Act, we did not believe there was any significant problem with unauthorized immigrants in either [SCHIP or Medicaid.]”[4]



New Bill Would Further Tighten Citizenship Rules While Improving Verification Procedures

The second children’s health bill passed by Congress is tougher than current law: it retains the citizenship documentation requirement in Medicaid and extends it to SCHIP. At the same time, it gives states a new way to meet the requirement that would cause far less disruption and harm for eligible U.S. citizens.

The first children’s health bill (H.R. 976) would have permitted states to allow Medicaid and SCHIP applicants and beneficiaries to meet the documentation requirement by having the state match their name and Social Security number (SSN) with information in the Social Security Administration (SSA) database. Opponents argued that this would not show whether an individual is a U.S. citizen and that the bill would therefore allow undocumented immigrants to enroll in the program. In particular, they relied on a letter from SSA commissioner Michael Astrue to Congressman Jim McCrery stating that matching an individual’s name and SSN with SSA would not verify whether an individual is a citizen.[5]

The new bill addresses this problem by significantly modifying the proposed state option in the earlier bill:

* Any state adopting the option would be required to use the SSA database to determine not only whether an individual’s name and Social Security number match (as in the earlier bill), but also whether the applicant is a citizen. SSA records for individuals who have received SSNs since 1981 contain an indicator showing whether the individual is a U.S. citizen. Since 1978, any individual applying for an SSN has been required to provide evidence of age, identity, and immigration status, so this citizenship indicator is based on evidence of citizenship and identity that was verified by SSA.[6]

By relying on the citizenship indicator, SSA can easily verify citizenship for Medicaid and SCHIP applicants who received their SSN after 1981. Most of the people subject to the documentation requirement will have received their SSNs after 1981 and thus can have their citizenship verified in this manner.[7]

* If SSA cannot verify an individual’s citizenship by checking its records, or if there are unresolved discrepancies between the information provided by the individual and the information in the SSA database, the individual must provide the state with an original document, such as a birth certificate or passport, to prove his or her citizenship.

By allowing states to verify citizenship in a way that will be less costly and burdensome, the new children’s health bill responds to the appeal by governors of both parties for increased flexibility in this area. (California Governor Arnold Schwarzenegger, for example, has stated that the current rules have “created a situation where U.S. citizens actually have fewer rights than non-citizens when applying for Medicaid benefits.”) The bill would not allow undocumented immigrants to enroll in either Medicaid or SCHIP.



Provision Would Allow More Eligible People to Get Health Care and Cut Administrative Costs

CBO estimates that the citizenship provision in the new bill would enable an additional 500,000 people who are eligible for Medicaid or SCHIP to enroll in the program in 2008; another 200,000 eligible people would enroll in subsequent years, because most states would use the new SSA matching option to verify citizenship. The new enrollees would all be U.S. citizens or qualified legal immigrants.

The improved verification procedures also would reduce federal and state administrative costs, by allowing states to use more cost-efficient methods to ensure that undocumented immigrants do not receive Medicaid. States report that the current documentation requirement is imposing millions of dollars in increased administrative costs, particularly by increasing the need for staffing.[8]

Citizenship Documentation Requirement Has Kept Thousands of U.S. Citizens
From Receiving Health Coverage

Numerous states have reported that U.S. citizen children have been removed from, or denied entry into, Medicaid because of the 2006 citizenship documentation requirement. The Government Accountability Office, the House Oversight and Government Reform Committee, and the Center on Budget and Policy Priorities have reported these results based on data that the states have collected.[1]

The six states that have examined this issue in greatest detail found they had spent $17 million so far to administer the burdensome requirement, had denied health insurance to tens of thousands of needy children and parents as a result, and had identified a grand total of eight undocumented individuals (some or all of whom they may have caught under their previous procedures).[2] For example, the number of low-income children insured through Medicaid dropped by 11,000 in Virginia and 14,000 in Kansas due to the new requirements; each state identified one applicant who incorrectly claimed to be a citizen.[3]

The three states that collected data by racial/ethnic group found that the children losing coverage due to the requirement are overwhelmingly non-Hispanic whites and non-Hispanic blacks. Hispanic children have been affected far less. In Virginia, for example, enrollment has fallen significantly among white and black children since the requirement took effect, while it has climbed among Hispanic children. This would not be occurring if the provision were actually affecting undocumented immigrants, since an estimated 78 percent of undocumented immigrants are from Mexico, Central America, or South America, according to the respected Pew Hispanic Center.[4]

A recent study by the Kaiser Commission on Medicaid and the Uninsured confirms that Medicaid application processing delays under the new citizenship documentation requirements are the main reason why Medicaid enrollment dropped in 2007 for the first time in a decade. According to Kaiser, 37 states reported that the new documentation requirements had a negative impact on enrollment, and 45 states reported that the new requirements increased administrative costs.[5]

[1] Government Accountability Office, “States Reported That Citizenship Documentation Requirement Resulted in Enrollment Declines for Eligible Citizens and Posed Administrative Burdens,” June 2007; “Medicaid Citizenship Documentation Requirements Deny Coverage to Citizens And Cost Taxpayers Millions,” Majority Staff, Committee on Oversight and Government Reform, July 24, 2007; Donna Cohen Ross, “Medicaid Requirement Disproportionately Harms Non-Hispanics, State Data Show,” Center on Budget and Policy Priorities, July 10, 2007, at http://www.cbpp.org/7-10-07health.htm; and Donna Cohen Ross, “New Medicaid Citizenship Documentation Requirement Is Taking A Toll,” Center on Budget and Policy Priorities, revised March 13, 2007, at http://www.cbpp.org/2-2-07health.htm.

[2] Committee on Oversight and Government Reform, op. cit.

[3] Donna Cohen Ross, “Medicaid Requirement Disproportionately Harms Non-Hispanics, State Data Show,” op. cit.

[4] An estimated 13 percent are from Asia, and 9 percent are from Europe, Africa, and other areas. Jeff Passel, “The Size and Characteristics of the Unauthorized Migrant Population in the United States,” Pew Hispanic Center, March 2006.

[5] Vernon Smith et al., “As Tough Times Wane, States Act to Improve Medicaid Coverage and Quality: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2007 and 2008,” Kaiser Commission on Medicaid and the Uninsured, October 2007, at http://www.kff.org/medicaid/upload/7699.pdf.

In sum, the new children’s health bill contains strong new safeguards to prevent undocumented immigrants from obtaining health benefits while also reducing the barriers that are denying coverage to thousands of eligible U.S. citizen children. The claim that the bill would enable undocumented immigrants to obtain health care — like the claim or implication that it represents no change from the first, vetoed bill — is inaccurate.

End Notes:

[1] “Just the Facts: Top Five Reasons the Democrats’ ‘New’ SCHIP Bill Is Actually More of the Same,” White House Office of the Press Secretary, October 25, 2007. Some in Congress have repeated this claim, such as Representative Marsha Blackburn (R-TN), who stated that the bill “would provide free taxpayer-funded health care to illegal immigrants.” Robert Pear, “8 Democrats Pose Hurdle for Children’s Health Bill,” New York Times, November 15, 2007.

[2] Memorandum from Mark B. McClellan to Daniel R. Levinson, Acting Inspector General, April 8, 2005, printed as Appendix D in Office of Inspector General, U.S. Department of Health and Human Services, “Self-declaration of U.S. Citizenship for Medicaid,” June 2005.

[3] Letter from Congressional Budget Office Director Peter Orszag to the Honorable Nancy Pelosi, October 25, 2007, “Additional Information on CBO’s Estimate of the Budgetary Impact of Section 211 of H.R. 3963, the Children’s Health Insurance Program Reauthorization Act of 2007.”

[4] Manu Raju and Jonathan E. Kaplan, “Reid Looks to Buy Time on SCHIP,” The Hill, October 31, 2007.

[5] Letter from Social Security Commissioner Michael Astrue to Congressman Jim McCrery, September 24, 2007.

[6] Office of the Inspector General, Social Security Administration, Congressional Response Report A-08-06-26100, December 2006 at http://www.ssa.gov/oig/ADOBEPDF/audittxt/A-08-06-26100.htm.

[7] For some applicants who obtained their SSNs before 1981, citizenship could be verified through information in the SSA database showing that they were born in the United States. When this is not possible, the legislation would require these applicants to provide documents such as a birth certificate or passport to prove their citizenship.

[8] Donna Cohen Ross, “New Medicaid Citizenship Documentation Requirement Is Taking a Toll,” Center on Budget and Policy Priorities, revised March 13, 2007, at http://www.cbpp.org/2-2-07health.htm.

Martinez Bill Would Weaken Children's Health Coverage

from the Center on Budget and Policy Priorities

Bill Would Lead to Cuts in SCHIP While Creating Poorly Designed Tax Credit
By Edwin Park , Judith Solomon and Matt Broaddus

Senator Mel Martinez (R-FL) has introduced legislation (S. 2193) intended to rally opponents of bipartisan children’s health legislation recently vetoed by President Bush, a revised version of which was passed by the House on October 25 and the Senate on November 1. The Martinez bill also has been introduced in the House, as H.R. 3888, by Representative Marilyn Musgrave (R-CO) and is cosponsored by House Minority Leader John Boehner (R-OH) and House Minority Whip Roy Blunt (R-MO).

In contrast to the bipartisan SCHIP legislation, which the Congressional Budget Office estimates would cover nearly 4 million uninsured children by 2012, the Martinez plan provides less federal funding than states need simply to sustain their existing SCHIP programs. It also overturns procedures that have governed SCHIP since its inception, under which SCHIP funds allocated to states that do not use them are redistributed to states that can use them to cover uninsured children. The Martinez plan would instead return to the Treasury all funds not used by states to which they were initially allocated. This would lead over time to further reductions in SCHIP coverage.

In addition, the plan would prohibit outright the coverage of children whose families have incomes above 250 percent of the poverty line, and would establish requirements that few states could meet as a precondition for being permitted to cover children over 200 percent of the poverty line ($34,300 for a family of three). Most states now providing SCHIP coverage to children over 200 percent of the poverty line would have to terminate it.

Finally, the plan would create a refundable tax credit that families with incomes between 200 and 300 percent of the poverty line could use to purchase health insurance for children, primarily in the individual health insurance market. The tax credit would be too small to make coverage affordable for many children, except for coverage with large gaps. Families whose children have medical conditions would find it particularly difficult to find affordable coverage for their children with the tax credit, if they could find coverage at all.

This analysis is principally divided into two parts — first, a discussion of the Martinez bill’s SCHIP provisions, and then a discussion of its tax credit proposal.



The Bill’s SCHIP Provisions

According to Congressional Budget Office estimates, if SCHIP funding remains frozen at the current level of $5 billion per year, states will face a federal funding shortfall of $13.4 billion over the next five years (fiscal years 2008-2012).[1] CBO estimates that by 2012, some 35 states would have insufficient federal funding to maintain their current programs and that the number of children enrolled in an average month would fall far below today’s level.

CBO also estimates that the bipartisan SCHIP reauthorization legislation vetoed by the President would entirely avert these shortfalls and thereby prevent 700,000 children from losing SCHIP coverage and becoming uninsured by 2012, and also cover an additional 3.1 million children who otherwise would be uninsured, for a total coverage gain by 2012 of 3.8 million children. The revised version of the vetoed bill that the House of Representatives approved October 25 and the Senate passed November 1 would result in a slightly higher coverage gain of 3.9 million children, according to CBO.

The SCHIP provisions in the Martinez bill stands in sharp contrast to those in the bipartisan bill. The Martinez bill would neither fully close the looming shortfalls nor help states cover more uninsured children. The bill’s SCHIP provisions bill are identical to those in legislation (H.R. 3176) introduced earlier this year by Reps. Jim Barton (R-TX) and Nathan Deal (R-GA). A discussion of the bill’s key SCHIP provisions follows.

1. The plan would not provide states with sufficient funding to maintain existing SCHIP programs.

The Martinez bill would provide $11.5 billion in additional SCHIP funding over the next five years (above the current $5 billion annual funding level). This is about $2 billion less than the $13.4 billion CBO has estimated is needed to allow states to sustain their existing SCHIP programs. The bill would also use a new formula for allocating SCHIP funds among the states, under which a large portion of these funds would be directed to states that likely would not be able to fully use them, while other states with greater funding needs were given insufficient funds to maintain their current caseloads. Aggravating this problem, the bill also would institute a sharp change in the SCHIP law by barring any reallocation of federal SCHIP funds from the states not fully using their allotments to states that need more funds to avert cuts; the unused funds would revert to the Treasury instead. This would cause the SCHIP cutbacks to be significantly deeper.

* Currently, funds provided to a state that remain unspent after three years are redistributed to other states. The Martinez plan would end this, requiring unused funds to revert to the Treasury rather than being redistributed to other states. An estimated $2 billion in unspent funds would revert to the U.S. Treasury over the next five years, even as many states were being driven to cut their programs and thereby increase the number of uninsured children because of inadequate funding.

* The combined result would be an estimated total federal SCHIP funding shortfall of $12.2 billion over the next five years. Some 27 states would have insufficient federal SCHIP funding by 2012 to sustain their current programs, with the shortfall reaching $3.6 billion that year alone, an amount equal to the projected annual cost of covering 2.3 million children on a monthly basis.[2]

2. The plan would sharply restrict state flexibility in covering children and force many states to lower their SCHIP income limits substantially.

The Martinez bill would strictly limit SCHIP eligibility to 250 percent of the poverty line and terminate coverage above that level. In addition, states would be barred from covering children with incomes between 200 percent and 250 percent of the poverty line — between $34,300 and $42,900 for a family of three — unless their Medicaid and SCHIP programs covered at least 90 percent of the eligible children below 200 percent of the poverty line.

No means-tested federal program reaches 90 percent of all of the individuals or families eligible for it, and no state meets this threshold for Medicaid and SCHIP. Reaching a 90 percent threshold is particularly difficult in a health care program, since a significant number of low-income parents do not enroll their children until the children first become ill or otherwise need costly treatments.

As a result, up to 24 states (including the District of Columbia) would be forced to scale back their current SCHIP eligibility levels and remove children from the program. Many of these children could become uninsured.

On a related front, the bill also would overturn current rules that enable states to deduct from a family’s income certain expenses that a family incurs, such as costs for child care needed for a parent to work. In place of the current state rules in this area, the bill would require that the federal government issue new rules on how to measure a family’s income and mandate that all states adopt these rules. To the extent that the new rules (which the federal executive branch would write after enactment of the legislation) limited or denied states the right to deduct costs for items such as child care, even more children would become ineligible and be dropped from SCHIP — even in states with SCHIP income limits below 200 percent or 250 percent of the poverty line. (In a number of states, children can have gross income somewhat above their state’s SCHIP income limit but qualify because their income falls below the limit when child care or other deductible costs are subtracted.) By outlawing the current state rules and replacing them with new federal rules whose content is unknown, the bill could end up requiring as many as 35 states to terminate some children from their SCHIP programs.

The bill also would prohibit states that now do so from continuing to use SCHIP funds to provide health insurance to low-income parents of children enrolled in Medicaid or SCHIP. A modest number of states provide coverage to low-income parents under waivers that were approved by the federal government, in most cases by the Bush Administration. States could continue covering parents who are currently enrolled, but as these parents cycled out of the program (as their incomes rose or they became ineligible for other reasons), states would be prohibited from replacing them with newly eligible low-income parents. In addition, currently enrolled parents could remain covered only until a state’s existing waiver expired, since waiver renewals would be prohibited.

Various studies have found that covering children and their parents together results in a larger share of the eligible children being enrolled and receiving needed health care services. At a July 19 Congressional hearing, CBO director Peter Orszag explained that “restricting eligibility to parents does have an effect on take up among children…. for every 3 or 4 parents you lose, you might lose 1 or 2 kids, for example.”[3] (The bipartisan SCHIP legislation the President vetoed — and the revised version of that legislation that Congress has just passed — also restrict parent enrollment in SCHIP, but do so in a much less draconian manner that should not cause the number of uninsured low-income parents to rise markedly.[4])

3. The plan lacks any new tools or financial incentives for states to enroll more of the eligible but uninsured low-income children.

The bipartisan children’s health legislation the President vetoed contains various new tools to help states find and enroll eligible, uninsured low-income children. For example, the bipartisan bill includes an “Express Lane” option to enable state SCHIP and Medicaid agencies to use other benefit programs, such as the school lunch program, to identify eligible, uninsured children and to use income information that children’s families have provided to those programs to help streamline the enrollment of these children in Medicaid. The vetoed bipartisan bill would also provide strong financial incentives for states to increase enrollment among eligible low-income children, and the revised version of the vetoed that bill the House and Senate recently passed contains even stronger incentives targeted on poor children. These tools and incentives are a primary reason that CBO estimates that the new version of the bipartisan bill would lead to 3.9 million uninsured children gaining coverage by 2012, with 1.9 million (or nearly half) of them being children eligible for Medicaid. Most children eligible for Medicaid live below the poverty line.[5]

The Martinez legislation differs markedly here. It would provide no new enrollment tools or financial incentives for states to enroll low-income children, including poor children. The plan would merely provide for a modest set of outreach grants — $500 million over five years — to states and other organizations to enroll children who are eligible for SCHIP and Medicaid but are uninsured. (A similar outreach grant provision is included in the vetoed bill.)

4. The Martinez bill would allow SCHIP funds to be diverted to private insurance plans offering inadequate coverage for children and carrying high cost-sharing charges that many low-income families have difficulty affording.

Under current law, states may establish “premium assistance” programs under which states help enroll SCHIP-eligible children in employer-sponsored health insurance by using SCHIP funds to help pay the required premiums for that coverage. States using SCHIP funds for this purpose must ensure that enrolling eligible children in an employer plan would not be more costly than enrolling the children in SCHIP directly. In addition, states using this option must provide supplemental (or “wrap-around”) benefits if the benefits under the employer-based plan have gaps compared to the benefits the child would receive under SCHIP. Finally, a state must ensure that the premiums, deductibles and co-payments a family must pay for a child under an employer plan would not be greater than the maximum amount allowed under the SCHIP program which generally is no more than 5 percent of a family’s annual income.

A number of states now operate these “premium assistance” programs as part of their SCHIP (and, in some cases, Medicaid) programs. The vetoed bipartisan SCHIP legislation contains provisions that would make the premium assistance option easier and more attractive for states to use, while maintaining the safeguards for beneficiaries. The revised version of the legislation recently approved by the House and Senate adds additional financial incentives for states to elect this option.

The Martinez bill, in contrast, would replace the current state option in this area with a mandate that all states not only operate a premium assistance option for children whose families have access to employer-based coverage but also provide “alternative coverage options” under which SCHIP funds would be used to enroll children primarily in coverage that private insurance companies offer in the individual health insurance market. Under both the premium assistance and the private coverage alternatives, the current requirements that the private coverage have adequate benefits and affordable cost sharing — and not cost the government more than it would cost to enroll the child in SCHIP — would essentially be dropped. For the first time, SCHIP funds could be used to enroll children in private coverage that provides greatly scaled-back health coverage, charges deductibles and co-payments that low-income families may not be able to afford, and may cost the federal government more than it would to enroll the children directly in SCHIP.

Enrollment in these private coverage options would be voluntary for parents. But some low-income parents are likely to have difficulty understanding the differences between the benefits and cost-sharing requirements under a private coverage option and the state SCHIP program, especially if the private plans market their products aggressively. Significant numbers of low-income children could end up in health plans with fewer benefits and substantially higher cost-sharing charges. Subsidizing private coverage in this manner also could be more costly in some cases.



The Proposed Tax Credit

The Martinez bill would provide a refundable tax credit of $1,400 per child for families with incomes between 200 percent and 300 percent of the poverty line, which those families could use to help them purchase health insurance for their children in the individual market or through their employer. The tax credit is apparently intended in part as a substitute for existing SCHIP coverage of children in this income range. As explained above, most states would no longer permitted to cover children above 200 percent of the poverty line through SCHIP.

The proposed substitution of the tax credit for SCHIP coverage raises serious questions, particularly in light of the tax credit’s design.

1. Coverage would remain unaffordable for many families in this income range.

The refundable tax credit of $1,400 per child generally would not be sufficient to purchase adequate coverage in the private insurance market.

* Most families in this income range that are uninsured do not have access to coverage through an employer. Only 8 percent of families with income between 200 and 400 percent of the poverty line have declined an offer of employer-sponsored insurance,[6] and Urban Institute researchers have estimated that approximately 80 percent of the uninsured children between 200 percent and 300 percent of the poverty line live in a family where their parent does not have access to an employer-based plan that covers children.[7]

* As a result, the vast majority of uninsured children who would be eligible for the tax credit could use it only to purchase coverage in the individual health insurance market. But meaningful coverage in the individual market is unlikely to be affordable for such families with a tax credit of this size, since there would be no employer contribution to offset part of the premium costs. For example, the average premium for family coverage in an employer-sponsored plan, including the employer’s share, is estimated to be $12,100 in 2007.[8] (Coverage just for children is generally not offered now, so a comparable figure for its cost is not available.) Moreover, coverage in the individual market tends to cost more than comparable coverage provided through an employer because the administrative costs are higher in the individual market.[9]

* For this and other reasons, studies show that most people who try to purchase coverage for themselves or their families in the individual market end up not buying it. The Commonwealth Fund Biennial Health Insurance Survey, a national survey conducted from late 2005 through early 2006, found that nine of every ten adults who attempted to purchase coverage in the individual market — and 95 percent of low-income people who tried to buy such coverage — ended up without it. (Some 72 percent of low-income people who tried to purchase coverage in the individual market found it difficult or impossible to find coverage they could afford; others were refused coverage outright because of pre-existing health conditions.[10])

* The problems would be most severe for children with conditions like asthma or diabetes. In most states, companies selling insurance in the individual market can vary premiums substantially based on a family member’s health. For children with medical problems, insurers in most states can charge very high amounts, refuse coverage for these children’s medical conditions, or refuse to sell the families insurance altogether.[11] A Commonwealth Fund survey found that one of every three individuals in poorer health who sought coverage in the individual market was rejected outright or charged a higher premium for their pre-existing conditions.[12]

2. Health insurance purchased in the individual market typically imposes substantial deductibles and co-payments and covers fewer benefits.

Families that actually manage to purchase coverage for their children in the individual market often would face high out-of-pocket costs for deductibles, co-payments, and expenses that their health plans do not cover. These costs are generally much higher than the costs faced by people with employer-sponsored insurance or public coverage through Medicaid or SCHIP.

* A recent study that compared health plans offered through the individual market, employer-based plans, and public health insurance programs found that individual-market coverage provides the least financial protection for beneficiaries. (Public coverage provides the most.) Regardless of their income level, families with individual-market insurance were more likely to face out-of-pocket expenses that exceeded $2,000 a year and constituted more than 5 percent of family income. The problem was most severe for low-income people: nearly half with individual-market coverage paid more than 5 percent of their income for out-of-pocket expenses, on top of what they paid for premiums, presumably because their plans usually had high deductibles and/or high co-payments.[13]

* Another study found that families with incomes between 200 and 299 percent of the poverty line who purchased insurance in the individual market spent 21 percent of their income on medical costs, including premiums and cost-sharing, an amount far above what most analysts consider affordable for families in this income range. The authors of the study suggest these percentages would be even higher if the data were not skewed by the fact that only relatively healthy people were able to purchase individual-market coverage in the first place.[14]

* In the same vein, a California study found that individual-market insurance paid just over half — 55 percent — of beneficiaries’ medical costs, well below the 83 percent of medical costs paid by policies in the small-employer group market.[15]

These figures are cause for concern. An extensive body of research shows that people often cope with high cost-sharing in their health plans by going without necessary health-care services. The Commonwealth Fund survey cited above found that more than one-third of all people with individual-market insurance had deductibles of $1,000 or more and that close to half of this high-deductible group did without at least one needed medical service such as filling a prescription, seeing a specialist when needed, taking a test recommended by a doctor, or seeing a doctor for a health problem.

Moreover, low-income people with chronic health conditions are the most vulnerable to forgoing needed health care due to deductible and co-payment charges, since they have the most difficulty affording such charges.[16] The proposed tax credit, which could be used only for the premium costs of health insurance and not for deductibles or co-payments, would be of little help here.

For those reasons, the tax credit in the Martinez bill is not well designed to help children between 200 percent and 300 percent of poverty secure adequate, affordable coverage. In a recent analysis of the Martinez tax credit, Linda Blumberg and Genevieve Kenney, health care experts at the Urban Institute, conclude:

“The tax credit Senator Martinez proposes would involve significant financial burdens for families with healthy children and even larger burdens for families whose children have health problems …. The central problem with the tax credit proposal is that, to take advantage of it, most families with uninsured children will need to purchase coverage in the nongroup [i.e., the individual] market …. Barring any legislative language that would prevent insurers from using current common practices, children with even minor health problems may be denied coverage outright or may be offered coverage at much higher premiums than shown here. Alternatively, insurers are permitted to offer policies that permanently eliminate coverage for particular health conditions, body parts, or body systems. This means that a child with asthma may have his respiratory system excluded from a policy; a child with allergies may only be offered a policy that does not cover prescription drugs.”[17]

For children who would be pushed off SCHIP and whose families would have to use the tax credit in the individual market instead, the Martinez bill thus would be deleterious.

3. Past history shows that a children’s health insurance tax credit of this nature holds potential for substantial marketing abuses.

In 1990, Congress created a modest tax credit (tied to the Earned Income Tax Credit) to help low- and moderate-income families purchase health insurance for their children. This children’s health insurance tax credit operated in a fashion similar to the approach taken by the Martinez bill: a modest tax credit was provided that could be used to purchase children’s coverage in the individual insurance market, without meaningful government standards or safeguards.[18]

Once this tax credit was created, a number of insurers began to offer extremely scaled-back insurance plans for children, with premiums set exactly equal to the amount of the tax credit, and to use high-pressure sales tactics to market their plans. Substantial numbers of lower- and moderate-income families enrolled their children in these individual market plans, only to find that the plans often provided flimsy coverage that offered little protection against substantial health care costs. Complaints of abuse mounted, prompting both the Subcommittee on Oversight of the House Ways and Means Committee and the Internal Revenue Service to undertake investigations.

The investigations found that many low-income working families were being sold nearly worthless policies. For example, some insurers sold policies that barred coverage for all pre-existing conditions or contained limits such as one outpatient visit per year. The investigations found widespread use by insurance agents of misleading sales tactics.[19]

The problems with the tax credit grew so serious that in 1993, its original sponsor, Lloyd Bentsen, led the effort to undo the damage and eliminate it.[20] The children’s health insurance credit was repealed in 1993, and widely regarded as a failure.

The Martinez bill provisions that would establish a tax credit for the purchase of children’s coverage could result in similar abuse today. The Martinez proposal for a tax credit of about $1,400 per child is not much greater in today’s terms (i.e., after adjustment for increases in health care costs) than the maximum value of the tax credit of the early 1990s.[21]

Moreover, reports this year by state insurance commissioners, news organizations, and watchdog groups have documented that the aggressive marketing of private health insurance plans in Medicare — where there are substantially more standards than there would be under the Martinez tax credit — has caused some elderly Medicare beneficiaries to sign up for plans that are inappropriate for them.[22] A survey of state insurance agencies found that 37 of the 43 states responding had received complaints that agents selling private plans in Medicare were using confusing or misleading marketing practices, with the abuses including such practices as selling of inappropriate plans to Medicare beneficiaries whose mental capacities are limited by dementia.[23] The Centers for Medicare and Medicaid Services recently released detailed information on numerous marketing and other beneficiary-protection violations committed by private insurers participating in Medicare.[24]



State Health Reform Project

Finally, the Martinez bill contains a new initiative under which states could receive five-year federal grants to support state programs to increase health coverage and access, improve the quality and efficiency of health care, and test alternatives for the delivery of health care services. These grants could be more illusory than real. The bill provides no funding for them; it merely authorizes them. The grants would materialize only if room were found for them in the annual appropriations bills.

To launch significant expansions of health care coverage, states need assurance of stable financing. Without a firm commitment of funding that will continue for a meaningful period of time, it is unlikely that many states would take up the invitation to apply for the grant program. Under the appropriations process, however, any grant funds that materialize will likely be provided for only a year at a time.

The grant program contained in the Martinez bill has another shortcoming as well — the bill includes no standards for the coverage that states could provide with the grants.[25] Low-income people who need subsidies to afford health coverage also need protection from high cost-sharing changes, high out-of-pocket costs resulting from inadequate benefit packages, and misleading sales tactics. Without minimum coverage standards, a state could use federal funds authorized for the grant program to provide vouchers for high-deductible health plans in the individual market with few or no standards against flimsy policies, discrimination against less healthy applicants, or deceptive marketing practices. That could leave people, especially those who have medical conditions, without access to appropriate coverage, if they could purchase coverage at all.



Conclusion

The Martinez legislation does not provide sufficient SCHIP funds to allow states to sustain their existing SCHIP programs. It also would force many states to make their SCHIP eligibility criteria considerably more restrictive and disqualify many children who now are covered. In addition, despite the rhetorical emphasis by opponents of the vetoed SCHIP legislation on poor children, the Martinez bill fails to provide any new tools or financial incentives to help states reach and enroll them. The bill also would allow SCHIP-eligible children to be transferred to private plans with fewer benefits and higher cost-sharing, even if the costs of the private coverage for these children were greater than that of providing SCHIP coverage directly.

One of the critical features of the bill is a new tax credit for coverage of children between 200 percent and 300 percent of the poverty line. The bill is designed to shift a number of children from SCHIP to the tax credit. But the tax credit is inadequate and poorly designed. And it would be used primarily in the troubled individual health insurance market where insurers can vary premiums based on children’s health status and deny coverage entirely to children and other individuals who are sicker.

Unlike the bipartisan SCHIP legislation approved by the Senate and House that would cover nearly 4 million uninsured children by 2012, the more ideologically-driven Martinez plan would likely make little or no net gain in covering uninsured children, and could cause substantial numbers of children who currently have adequate coverage through SCHIP to become uninsured or underinsured.

End Notes:

[1] See Congressional Budget Office, “Fact Sheet for CBO’s March 2007 Baseline: State Children’s Health Insurance Program,” February 23, 2007 and Edwin Park, “CBO Estimates That States Will Face Federal SCHIP Shortfalls of $13.4 Billion Over Next Five Years,” Center on Budget and Policy Priorities, February 26, 2007. Because of substantially higher SCHIP spending projections reported by states in the most recent SCHIP expenditure data from August 2007, the total federal funding shortfall would be significantly larger than what CBO previously estimated in March 2007.

[2] These estimates come from the Center on Budget and Policy Priorities’ SCHIP expenditure model, which is based on the model developed by the actuaries at the Center for Medicare and Medicaid Services at the U.S. Department of Health and Human Services. The estimates measure how short states would fall of the funding they would need to maintain their current SCHIP programs, with current state participation rates and eligibility criteria.

[3] Letter from Peter Orszag to Senator Max Baucus, Chairman of the Senate Finance Committee, Congressional Budget Office, July 24, 2007.

[4] The bipartisan legislation would move the existing waivers covering parents outside of SCHIP in 2010, and starting in 2011, lower the matching rate for parents enrolled through SCHIP under existing waivers. It would set the reduced matching rate halfway between the SCHIP and Medicaid matching rates. States would have to meet certain benchmarks in their children’s coverage to qualify for this matching rate.

[5] Edwin Park and Judith Solomon, “New SCHIP Legislation Makes Significant Changes from Vetoed Bill to Focus More Heavily on Low-Income Children,” Center on Budget and Policy Priorities, October 25, 2007.

[6] Lisa Clemans-Cope, Bowen Garrett, and Catherine Hoffman, “Changes in Employees’ Health Insurance Coverage, 2001-2005,” Kaiser Commission on Medicaid and the Uninsured, October 2006.

[7] Linda Blumberg and Genevieve Kenney, “Can a Child Health Insurance Tax Credit Serve as an Effective Substitute for SCHIP Expansion?,” Urban Institute, October 2007.

[8] Kaiser Family Foundation and the Health Education and Research Trust, “Employer Health Benefits 2007 Annual Survey,” September 2007.

[9] Jon Gabel, et al., “Individual Insurance: How Much Financial Protection Does It Provide?” Health Affairs web exclusive, April 17, 2002

[10] Sara R. Collins et al., “Squeezed: Why Rising Exposure to Health Care Costs Threatens the Health and Financial Well-Being of American Families,” The Commonwealth Fund, September 2006.

[11] For a further discussion of problems in the individual health insurance market, see Mila Kofman and Karen Pollitz, “Health Insurance Regulation by States and the Federal Government: A Review of Current Approaches and Proposals for Change,” Georgetown University Health Policy Institute, April 2006 and Edwin Park, “Administration’s Proposed Tax Credit for the Purchase of Health Insurance Could Weaken Employer-Based Health Coverage,” Center on Budget and Policy Priorities, Revised April 6, 2004.

[12] Collins, et al., op cit.

[13] Yu-Chu Shen and Joshua McFeeters, “Out-of-Pocket Health Spending Between Low- and Higher-Income Populations,” Medical Care, 44:3, March 2006.

[14] Linda J. Blumberg et al., “Setting a Standard of Affordability for Health Insurance Coverage,” Health Affairs web exclusive, June 4, 2007. These findings were based on an analysis of MEPS data for 2001 to 2003.

[15] “Health Insurance: Can Californians Afford It?” California HealthCare Foundation, June 2007.

[16] The research on the impact of cost-sharing on low-income people is summarized in Leighton Ku and Victoria Wachino, “The Effects of Increased Cost-Sharing in Medicaid: A Summary of Research Findings,” Center on Budget and Policy Priorities, July 7, 2005; and Julie Hudman and Molly O’Malley, “Health Insurance Premiums and Cost-Sharing: Findings from the Research on Low-Income Populations,” Kaiser Commission on Medicaid and the Uninsured, March 2003.

[17] Blumberg and Kenney, op cit.

[18] The only standard is that the Martinez tax credit could not be used to purchase non-health insurance plans such as liability, disability and worker’s compensation insurance; limited health plans covering only vision and dental benefits; and health insurance covering only certain diseases and illnesses.

[19] “Report on Marketing Abuse and Administrative Problems Involving the Health Insurance Component of the Earned Income Tax Credit,” Subcommittee on Oversight of the Committee on Ways and Means, U.S. House of Representatives, June 1, 1993. See also Hearing before the Subcommittee on Oversight of the Committee on Ways and Means, U.S. House of Representatives, “Abusive Insurance Sales and Marketing Techniques Involving the Earned Income Tax Credit,” March 4, 1993.

[20] Bentsen proposed repeal in 1993 when he was Secretary of the Treasury.

[21] The 1992 tax credit of $451 would be $1,023 in 2007, when adjusted for the increase in national per-capita health care expenditures.

[22] Robert Pear, “Methods Used by Insurers are Questioned,” New York Times, May 7, 2007.

[23] Testimony of Sean Dilweg, Insurance Commissioner for the State of Wisconsin, Senate Special Committee on Aging, May 16, 2007.

[24] Robert Pear, “Medicare Audits Show Problems in Private Plans,” New York Times, October 7, 2007. See also Centers for Medicare and Medicaid Services, “Corrective Action Plan (CAP) Detailed Report,” September 27, 2007.

[25] The bill would merely require the federal entity awarding the grants to devise a menu of options for state proposals that could include expansions of public programs and the creation of purchasing pools as well as tax credit approaches, providing coverage through the individual market and health savings accounts. The entity would also establish some minimum performance measures and goals with respect to coverage, cost and quality.

Rockefeller: S-CHIP fight far from over

from The Allied News

By CHARLES OWENS
BLUEFIELD DAILY TELEGRAPH (BLUEFIELD, W.V.)

BLUEFIELD, W.Va. —

U.S. Sen. Jay Rockefeller, D-W.Va., is promising a fight on Capital Hill when it comes to resurrecting the Children’s Health Insurance Program.

Rockefeller, who co-authored legislation that would reauthorize the federal CHIP program, said he was disappointed and angered by President Bush’s decision to veto the S-CHIP bill. The legislation would have expanded health insurance to millions of children.

However, the fight is far from over, Rockefeller said last week.

“I said many times that I didn’t believe the president would ever veto the CHIP bill,” Rockefeller said. “It is simply unconscionable that he did — and we need to do all we can to reverse this heartless move. In the Senate, we’ve got enough votes to override the President’s veto. In the House, we’re about 15 votes shy of a successful override.”

Rockefeller said he expects the debate over the S-CHIP program to continue this week.

“And when Congress returns next week, we’ll continue our fight to get everyone on board to expand health insurance to millions more children,” Rockefeller said. “The fight is far from over. We’re going to keep sending this bipartisan legislation back to the president — again and again — until he does the right thing by our nation’s children and working families.”

According to Rockefeller, about 90 percent of kids currently enrolled in the S-CHIP program are in families making $41,300 or less a year. Rockefeller said these same families cannot afford private health insurance.

Rockefeller said the president has been making incorrect claims about the S-CHIP program. For example, Rockefeller said Bush has alleged that the bill spends too much money, and that it will take kids out of private insurance and enroll them in a government-run health care program Those allegations are “simply untrue,” according to Rockefeller.

The veteran West Virginia lawmaker instead argues that the S-CHIP program is one of the most cost-effective public-private health insurance programs ever created.

The S-CHIP program has been helping children in West Virginia for more than a decade with health care needs, according to Rockefeller.

Charles Owens writes for the Bluefield (W.Va.) Daily Telegraph.

Dems vow new bill if S-chip veto stands

from the Olberlin Times

By HOPE YEN, Associated Press Writer Sun Oct 14, 5:11 PM ET

WASHINGTON - House Democratic leaders said Sunday they were working to gather votes to override a veto on a popular children‘s health program, but pledged to find a way to cover millions without insurance should their effort fail.

Deputy press secretary Tony Fratto quoted President Bush as saying he is "willing to work with members of both parties from both houses" on the issue.

Pelosi and Hoyer promised to pass another bipartisan bill if needed.

"We‘ll try very hard to override it. But one thing‘s for sure: We won‘t rest until those 10 million children have health care," she said in an interview broadcast Sunday.

"This is a defining moment for the Republican Party, in my opinion," Hoyer said, before adding later: The program is "not going to die. We‘re going to go back and we‘re going to pass another bill."

An override requires a two-thirds majority in the House and Senate. The Senate approved the increase by a veto-proof margin, but the earlier House vote fell about two dozen votes short.

On Sunday, House Minority Leader John Boehner, R-Ohio, said he hopes that Democrats will agree to negotiate once the veto is sustained so that the children‘s insurance program can be reauthorized.

"Most people don‘t want government-run health insurance," he added. "Republicans are working on a plan that will provide access to all Americans to high-quality health insurance, make sure that we increase the quality of health insurance that we have in America."

On Sunday, Pelosi did not comment on the predicted vote tally.

Fratto said it was untrue that Bush had never sought compromise in the vetoed legislation, contending that Democrats had shut out administration officials in the original negotiations. House Democrats have countered that they had already compromised enough because they wanted $50 billion for the program but dropped it down to $35 billion to appease Senate Republicans.

"It is encouraging that Speaker Pelosi has expressed a willingness to find common ground," Fratto said Sunday.

Pelosi spoke on ABC‘s "This Week," and Hoyer and Boehner appeared on "Fox News Sunday."

By HOPE YEN, Associated Press Writer Sun Oct 14, 5:11 PM ET

WASHINGTON - House Democratic leaders said Sunday they were working to gather votes to override a veto on a popular children‘s health program, but pledged to find a way to cover millions without insurance should their effort fail.

Deputy press secretary Tony Fratto quoted President Bush as saying he is "willing to work with members of both parties from both houses" on the issue.

Pelosi and Hoyer promised to pass another bipartisan bill if needed.

"We‘ll try very hard to override it. But one thing‘s for sure: We won‘t rest until those 10 million children have health care," she said in an interview broadcast Sunday.

"This is a defining moment for the Republican Party, in my opinion," Hoyer said, before adding later: The program is "not going to die. We‘re going to go back and we‘re going to pass another bill."

An override requires a two-thirds majority in the House and Senate. The Senate approved the increase by a veto-proof margin, but the earlier House vote fell about two dozen votes short.

On Sunday, House Minority Leader John Boehner, R-Ohio, said he hopes that Democrats will agree to negotiate once the veto is sustained so that the children‘s insurance program can be reauthorized.

"Most people don‘t want government-run health insurance," he added. "Republicans are working on a plan that will provide access to all Americans to high-quality health insurance, make sure that we increase the quality of health insurance that we have in America."

On Sunday, Pelosi did not comment on the predicted vote tally.

Fratto said it was untrue that Bush had never sought compromise in the vetoed legislation, contending that Democrats had shut out administration officials in the original negotiations. House Democrats have countered that they had already compromised enough because they wanted $50 billion for the program but dropped it down to $35 billion to appease Senate Republicans.

"It is encouraging that Speaker Pelosi has expressed a willingness to find common ground," Fratto said Sunday.

Pelosi spoke on ABC‘s "This Week," and Hoyer and Boehner appeared on "Fox News Sunday."

Walsh against Bush's veto of the S-CHIP Bill

from News 10 now

Republican Congressman James Walsh will join members of the opposing party to try and override President Bush's veto of the S-CHIP Bill.

House Democrats voted to increase spending for the S-CHIP program by $35 billion over five years.

Bush wants just a $5 billion increase.

The State Children's Health Insurance Program offers health coverage to kids from families with incomes of up to 200% of the poverty level.

Despite his strong view, Walsh doesn't think there will be enough votes to override the president's veto.

"I voted for it, and I will vote again to override. Now whether the votes are there to override, I don't know, I don't believe they are. And If they're not, then we have to again, have a negotiation, hopefully we can get a compromise that everyone can agree to. Because we don't want this program to expire, it's really important," said Walsh

House Speaker Nancy Pelosi is vowing to pass new legislation if the override effort fails.

The President has said he might consider more funding for the program, but only under certain conditions.

Montana congressional candidate speaks out over President's S-CHIP veto

from KPAX

Democratic Congressional candidate Bill Kennedy is pushing to override the President's veto on the State Children's Health Insurance Program. Kennedy spoke about the issue at State Capitol Wednesday morning.

S-CHIP provides health insurance to more than 14,000 children in low-income families, and Yellowstone County Commissioner Bill Kennedy says those in support of the President's veto are making a mistake.

"President Bush has decided he wants to play politics with our children's health."

Last week, the President vetoed a bill that would expand the State Children's Health Insurance Program by $35-billion. S-CHIP, which expired last month, provides health insurance to children from low income families.

In one week Congress will vote on whether or not to override President Bush's veto. 22 votes are needed to overturn his decision. Commissioner Bill Kennedy says it is Republican Congressman Dennis Rehberg's duty to convince the 151 Republicans who voted against the Bill to change their votes.

"Montana's only Congressman has tried to weasel his way around this bill. He voted against it, then he voted for it."

Montana Republican Party Executive Director, Chris Wilcox, insists Rehberg is in full support of CHIP even though he voted against the original House Bill earlier this year.

"Congressman Rehberg has worked very hard. He stood up to the President to override the veto and he's working with both his colleagues in the House and the Senate, Republicans and Democrats, to make sure that happens."

This week, Kennedy sent a letter to every member of Congress outlining the importance of S-CHIP. The letter pinpoints rural children, saying they have additional healthcare challenges and will be particularly vulnerable if the measure is not passed.

The vote will take place on October 18th.

Hubler Challenges King To S-CHIP Debate

from KTIV

One of the Democrats challenging Steve King for his U.S. House seat has offered to debate King on the S-CHIP bill.

Wednesday, Rob Hubler delivered a letter to Congressman Steve King's office. In the letter, Hubler challenged King to a debate regarding the State's Children's Health Insurance Program.

King voted against a bill to expand the program, which offers families who make too much to qualify for Medicaid, and make too much to afford private insurance.

Hubler wants to know why King voted the way he did during a public debate. "He obviously has a position on the SCHIP bill and he wants to make that public," said Hubler. "So, we've decided to offer him the opportunity to do that. Where we can sit down and present our facts and our figures and let the people decide."

Hubler says he has not contacted Congressman Steve King, by phone, to set up a time for a debate. Congressman King says he would welcome a debate with Iowa Governor Chet Culver.

For his part, King says he knew exactly what he was getting into when he voted against the S-CHIP bill. He was the only Iowa congressman.

King says he supports the federal health insurance program at 200% of poverty... meaning a family of four making about $45,000 qualifies.

But, the republican says he doesn't believe a family of four making $103,000 a year should get federal health insurance.

At 300% of poverty, which is what king voted against, an Iowa family of four making $77,000 a year would qualify for the Hawk-I program.

Senate Republican Leadership to Seek Reconsideration of SCHIP Plan That Would Fail to Make Progress in Covering Uninsured Children

from The Center on Budget and Policy Priorities

By Edwin Park and Matthew Broaddus

Senator Mitch McConnell, the Senate Minority Leader, plans to ask for reconsideration of the SCHIP legislation that he and Senate Minority Whip Trent Lott offered as an alternative during Senate floor debate on SCHIP on August 1. The McConnell-Lott proposal was defeated at that time on a 61-35 vote.[1]

In contrast to the bipartisan SCHIP bill the Senate and House approved last month but the President vetoed, which the Congressional Budget Office estimates would cover 3.8 million children who otherwise would be uninsured, the plan that Senator McConnell intends to offer again would not make any progress in reducing the number of uninsured low-income children.

The SCHIP Provisions

The Congressional Budget Office estimates that if SCHIP funding remains frozen at the current level of $5 billion per year, states will face a federal funding shortfall of $13.4 billion over the next five years (fiscal years 2008-2012).[2] CBO estimates that by 2012, some 35 states would have insufficient federal funding to maintain their current programs, and the number of children and pregnant women enrolled in an average month would fall well below today’s level. CBO also estimates that the bipartisan SCHIP legislation that the Senate and House approved would fully avert these shortfalls and thereby prevent 700,000 children from losing their SCHIP coverage and becoming uninsured by 2012. (The bipartisan legislation also would cover an additional 3.1 million children who would otherwise be uninsured, so that a total of 3.8 million children who otherwise would lack insurance would gain coverage by 2012.)

CBO estimates of the original Lott-McConnell amendment from August show that only a net of 700,000 children who would otherwise be uninsured would be covered in 2012, which is the number of children just from ensuring that, in the aggregate, states can maintain their existing SCHIP programs.[3] (It is likely, moreover, that updated CBO estimates of the McConnell legislation would find it would produce net coverage gains smaller than the gains simply from maintaining states’ current SCHIP programs.[4])

The McConnell SCHIP plan produces these disappointing children’s coverage results because it contains the following features:

1. The plan would not provide states with sufficient funding to maintain their existing SCHIP programs.

The plan would provide an additional $13.9 billion over five years above current SCHIP funding levels, enough in the aggregate to address the five-year SCHIP shortfall estimated by the Congressional Budget Office, but only if perfectly targeted. Because some of these funds would be inefficiently distributed among states, the plan would leave federal funding shortfalls in more than one-third of the states by 2012. These states would be at risk of having to institute cuts in their SCHIP programs and reduce the number of children they cover.[5]

*

The plan would use a formula to allocate SCHIP funds among the states under which a portion of the bill’s $13.9 billion in additional SCHIP funding would be directed to states that would not need the funds, even as other states with greater funding needs were given insufficient funds to maintain their current caseloads.
*

Such mistargeting is not uncommon under formula-driven block grants, but the plan would magnify the adverse effects of the mistargeting by changing current law to prohibit the redistribution of unspent funds from states that leave funds unused to states that need them. Currently, funds provided to a state that remain unspent after three years are redistributed to other states. The McConnell plan would reduce the period during which funds are available to two years, starting with the 2008 SCHIP allotments, but prohibit the redistribution of the funds that remain after the two-year period. As a result, the plan would result in an estimated $714 million in unspent funds expiring and reverting to the U.S. Treasury over the next five years, even as numerous states were at risk of having to cut their programs due to a lack of adequate federal funding.

The net result of these features of the plan would be an estimated total federal funding shortfall of $7.2 billion over the next five years, according to our estimates. By 2012, some 20 states would have inadequate federal SCHIP funding to sustain their current programs. The shortfall would reach $2.3 billion in 2012 alone.

2. The plan sharply restricts existing state flexibility in covering children and parents.

Throughout the SCHIP program’s history, states have enjoyed flexibility to provide SCHIP coverage to children in modest-income families — that is, families with incomes above 200 percent of the poverty line (now about $34,300 for a family of three). Currently, 24 states, including the District of Columbia, cover children above 200 percent of the poverty line or are in the process of implementing such an expansion.

Eleven additional states use their flexibility under SCHIP on how to measure income to disregard income used for certain purposes, such as child care costs, and as a result enable some children with gross incomes above 200 percent of the poverty line to qualify.

The McConnell legislation would effectively prohibit all of these states from continuing to cover SCHIP-eligible children in families with gross incomes above 200 percent of the poverty line. Under the plan, “income disregards” would be eliminated. In addition, states would only be able to claim the lower federal Medicaid matching rate (which averages 57 percent, compared to the federal SCHIP matching rate, which averages 70 percent) for children in families with incomes above 200 percent of the poverty line who are already enrolled. States would be prohibited from using any SCHIP funds for new children who have gross incomes above 200 percent of the poverty line, including children who qualify under their state’s current SCHIP income limits. Thus, as children who are currently enrolled cycle out of the program (as they age out, their incomes rise, or they become ineligible for other reasons), states would be barred from replacing them with newly eligible children. This means that coverage of children with gross incomes above 200 percent of the poverty line in these 35 states would be entirely eliminated over time.

This would create a risk that substantial numbers of children in these states who would otherwise be eligible and enrolled in SCHIP would end up without health insurance. In fact, the CBO estimates of the original Lott-McConnell proposal indicate that about 200,000 children who would otherwise be covered through SCHIP in 2012 would instead be uninsured, due to these restrictions.

The plan also would effectively prohibit the relatively small number of states now using SCHIP funds to provide health insurance to some low-income parents of children enrolled in Medicaid or SCHIP from continuing to do so. (These states provide such coverage under waivers approved by the federal government — in the overwhelming majority of cases, by the Bush Administration.) As with the plan’s treatment of children, states would be able to claim the lower Medicaid matching rate for parents who are already enrolled, but would not be able to use any SCHIP funds for new parents. As parents who are currently enrolled leave the program, states would be barred from replacing them with newly eligible parents, so over time, all coverage of low-income parents through SCHIP would end.

Various studies have found that covering children and their parents together results in a larger share of the eligible children being enrolled and receiving needed health care services. In response to a question posed during the Senate Finance Committee’s consideration of SCHIP legislation on July 19, Congressional Budget Office director Peter Orszag explained that “restricting eligibility to parents does have an effect on take up among children…. for every 3 or 4 parents you lose, you might lose 1 or 2 kids, for example.”[6] As a consequence, not only would SCHIP coverage of parents be eliminated in these states, leaving many low-income parents uninsured, but some of the eligible children of these parents likely would end up unenrolled, and uninsured, as well. (The bipartisan SCHIP bill passed by the Senate and House also contains provisions to restrict parent enrollment, by barring any new waivers from being granted to states to cover parents and by reducing the federal matching rate for parent coverage in states that already have waivers to cover parents under SCHIP. The bipartisan bill’s parent provisions are less severe, however, than those in the McConnell legislation.[7])

3. The McConnell plan contains no new tools or financial incentives for states to enroll more eligible but uninsured children.

Peer-reviewed academic studies have estimated that there are between 5 million and 6 million low-income children who are eligible for Medicaid or SCHIP but are not enrolled and are uninsured. (The Congressional Budget Office concurs that this is the best estimate.[8]) Both the bipartisan children’s health legislation approved by the Senate and House include new tools to help states find and enroll more of these eligible, uninsured low-income children.

For example, the bipartisan bill includes an “Express Lane” state option to allow SCHIP and Medicaid agencies to use income information collected by other benefit programs to streamline the enrollment process. The bipartisan bill also would provide financial incentives for states to increase enrollment among eligible low-income children, particularly poor uninsured children who are eligible for Medicaid. These incentives are a primary reason that CBO estimates the bipartisan bill would lead to 3.8 million uninsured children gaining coverage. Of these children, 1.7 million would be uninsured children who are eligible for Medicaid, many of whom live below the poverty line.

McConnell Legislation Would Reduce Benefits and Increase Cost-Sharing for SCHIP-Eligible Children with Access to Employer-Based Coverage

Under current law, states have the option to subsidize private insurance for SCHIP-eligible children whose families have access to employer-sponsored health insurance, if doing so would be cost-effective and the children have access to the same benefits and do not incur higher cost-sharing charges. The bipartisan SCHIP bill passed by the House and Senate includes additional provisions to make it easier for states to adopt this “premium assistance” option.

The McConnell legislation, however, would modify current law and likely make some children now on SCHIP worse off.

*

States would no longer be required to provide supplemental “wrap-around” coverage if the employer plan does not provide benefits equal to those under the SCHIP plan and/or if the employer plan imposes higher co-payments than are charged under the SCHIP plan.
*

States would explicitly be given the option to subsidize high-deductible health insurance plans attached to Health Savings Accounts offered by employers, even though low-income families whose children are eligible for SCHIP are unlikely to be able to afford high deductibles of $2,200 or more before their children receive any benefits.
*

States could make “premium assistance” mandatory, even if SCHIP-eligible children ended up receiving fewer benefits and facing higher co-payments than they would if they received SCHIP coverage directly.

The McConnell legislation, by contrast, would not provide any new enrollment tools or financial incentives for states. The plan would merely provide a modest amount of outreach funding — $400 million over five years — to states and other organizations to enroll children who are eligible for SCHIP but are uninsured. This outreach funding appears to ignore uninsured children who are eligible for Medicaid, even though two-thirds of the eligible but uninsured low-income children are children who are eligible for Medicaid, and they are the poorest uninsured children in the United States.



The Medicaid “Offset” Provisions

Medicaid administrative costs constitute only about 5 percent of total program costs, well below the levels found in private insurance plans. To offset the costs of its SCHIP provisions, however, the McConnell legislation includes two provisions that would substantially reduce federal support for the administrative costs that states incur in operating Medicaid.

While the federal government generally pays 50 percent of most costs that states incur in administering the program, certain administrative activities are eligible for a higher matching rate. The federal government pays 75 percent of the operational costs related to Medicaid management information systems, the inspection and certification of nursing homes, the operation of state Medicaid fraud and abuse control units, and the performance of utilization and quality reviews of hospitals and managed care plans. The federal government also pays 100 percent of the costs of operating an immigration status verification system for use in determining Medicaid eligibility. The McConnell plan would reduce federal support for these costs, weakening states’ ability to devote adequate resources to limiting fraud and abuse, guaranteeing the quality of care, and accurately determining eligibility for Medicaid. In examining the original Lott-McConnell amendment, CBO determined that this provision would reduce federal Medicaid matching payments to states by $8.4 billion over five years.

The McConnell plan also would reduce federal Medicaid matching payments to 46 states that historically have pooled the administrative costs of making eligibility determinations for families receiving Medicaid, food stamps and welfare. CBO estimates this provision would reduce federal Medicaid matching payments to states by an additional $1.8 billion over five years.

By limiting federal support for states’ Medicaid administrative costs, the McConnell plan would likely weaken efforts to encourage states to seek out and enroll more of the uninsured children who are eligible for Medicaid, most of whom are children living below the poverty line. (State outreach and enrollment efforts are financed as Medicaid administrative costs.) Unlike the bipartisan SCHIP bill, which provides states with new policy tools and fiscal incentives to encourage them to enroll more eligible children in Medicaid and SCHIP, the McConnell legislation moves in the opposite direction, weakening state efforts to enroll the lowest-income uninsured children.



Conclusion

The McConnell legislation is seriously flawed. It targets poorly the SCHIP funds that it provides, and would cause substantial funding to revert unspent to the Treasury even as some states were being compelled to cut back their programs due a to lack of adequate federal resources. It would restrict state flexibility in covering children and require many states to make their eligibility criteria considerably more restrictive and thereby to disqualify many children (and some parents) who now are covered. It also would fail to provide tools or financial incentives to help states reach and enroll the substantial numbers of low-income children who are eligible for SCHIP or Medicaid but remain uninsured.

In addition, it includes harmful provisions that would shift Medicaid costs to states and likely undermine ongoing efforts by states to enroll more of the uninsured low-income children who are eligible for Medicaid. As a result, unlike the bipartisan SCHIP reauthorization bill that the Senate and the House approved — which would preserve coverage for 700,000 SCHIP children who would otherwise become uninsured due to inadequate federal funding, and also cover an additional 3.1 million uninsured children by 2012 — the McConnell plan would at best merely allow states as a group to maintain their existing SCHIP programs (and cause some states to have to cut their programs). It would fail to make any progress in covering more of the nation’s low-income children.

End Notes:

[1] The SCHIP provisions in the current McConnell proposal (S. 2152) are identical to those in the Lott-McConnell amendment (S. Amdt. 2593) offered on August 1 as a substitute to the original Senate SCHIP bill. The new version omits several non-SCHIP provisions that would preempt state health insurance laws and expand Health Savings Accounts.

[2] See Congressional Budget Office, “Fact Sheet for CBO’s March 2007 Baseline: State Children’s Health Insurance Program,” February 23, 2007 and Edwin Park, “CBO Estimates That States Will Face Federal SCHIP Shortfalls of $13.4 Billion Over Next Five Years,” Center on Budget and Policy Priorities, February 26, 2007. Because of substantially higher SCHIP spending projections reported by states in the most recent SCHIP expenditure data from August 2007, the total federal funding shortfall would likely be significantly larger than what CBO previously estimated in March 2007.

[3] Congressional Budget Office, “Preliminary CBO Estimate of Changes in SCHIP and Medicaid Enrollment under the Kids First Act of 2007,” August 1, 2007.

[4] Since August, CBO has reduced its estimate of the number of uninsured children who gain coverage when states are provided sufficient funding to maintain their current programs from 800,000 to 700,000. When it originally estimated the enrollment effects of the Lott-McConnell plan in August, CBO estimated a coverage gain of 700,000 — or 100,000 short of the 800,000 who would be covered if current state SCHIP programs are maintained. It is likely that CBO would now reestimate a coverage gain of 600,000 under the McConnell legislation, which would then continue to fall short by 100,000 children of the gains simply from maintaining current SCHIP programs.

[5] These estimates come from the Center on Budget and Policy Priorities’ SCHIP expenditure model, which is based on the model developed by the actuaries at the Center for Medicare and Medicaid Services at the U.S. Department of Health and Human Services. The estimates measure how short states would fall of the funding they would need to maintain their current SCHIP programs, with current state participation rates and eligibility criteria.

[6] See also Leighton Ku, “Collateral Damage: Children Can Lose Coverage When Their Parents Lose Health Insurance,” Center on Budget and Policy Priorities, September 17, 2007.

[7] The legislation approved by the Senate and the House would move the coverage of parents under existing SCHIP waivers outside of SCHIP in 2010, and lower the federal matching rate for covering such parents starting in 2011. It would set the reduced matching rate halfway between the SCHIP and Medicaid matching rates. States would have to meet certain benchmarks in their children’s coverage to qualify for this matching rate.

[8] Letter from Peter Orszag to Senator Max Baucus, Chairman of the Senate Finance Committee, Congressional Budget Office, July 24, 2007.