One of the hallmarks of SCHIP (the State Children’s Health Insurance Program) has been state flexibility and innovation. Many advocates for children did not warmly embrace the original legislation creating SCHIP. Some Democrats, such as Sen. Jay Rockefeller (D-WV), feared that creating an insurance program that was not an entitlement and not tied to federal Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) requirements would leave many children with substandard care. Many of SCHIP’s reluctant supporters today are in the paradoxical position of supporting and even cheering on SCHIP and its reauthorization at levels that would allow the states to continue with innovative and expansive outreach and enrollment policies. The current debate over SCHIP reauthorization has created unusual alliances between business and child advocacy groups.

It has also challenged the ideological underpinnings of the debate. Many Republicans oppose the various innovations adopted by the states such as New Jersey’s decision to raise eligibility to 350 percent of the federal poverty level (FPL), or program expansions used by fifteen states to cover some groups of adults. Rep. Nathan Deal (R-GA), the ranking minority Republican member on the House Energy and Commerce Subcommittee on Health, has already characterized expansions like New Jersey’s as “excessive.” 

Bush administration proposals. Some Republicans have expressed support for the Bush administration’s proposals that would support reauthorization for SCHIP at the minimal $5 billion dollar level with restrictions limiting the program to children only and/or cut off SCHIP at 200 percent of FPL. Among those who have expressed support for all or parts of this proposal is Sen. Chuck Grassley (R-IA). 

Sen. Orrin Hatch (R-PA), one of SCHIP’s original backers, has stated, “We should not expand to other populations until we cover all SCHIP-eligible children.” His remarks seem to indicate that he would not support renewing the kind of flexibility that let states enroll pregnant women, college-age young adults, or low-income parents. 

The Georgia experience. One of the most interesting places to examine the tension between a successfully run SCHIP program predicated on state flexibility and the constraints it would face under current GOP proposals is in Deal’s home state of Georgia. Georgia’s SCHIP program [free-access article], known as PeachCare, is one of the seventeen that faces current shortfalls in funding. Perhaps not unrelated is the fact that it has been a successful SCHIP program, albeit a much more modest one than New Jersey’s. PeachCare currently enrolls about 273,000 children, and it covers children not eligible for Medicaid from ages 1-19 up to 235 percent of FPL. 

Georgia’s Republican governor, Sonny Perdue, has been tirelessly lobbying the federal government and the president to address the current shortfall of $131 million. He recently testified before the Senate Finance Committee about the impending shortfall and noted that without immediate help, PeachCare would cap enrollment starting later this month. On the other hand, Governor Perdue had already decided earlier in February that given the impasse in Washington, he would accede to the desired federal standard of 200 percent of FPL. This level, also supported by Georgia House Speaker Glenn Richardson, would roll back the current PeachCare eligibility of 235 percent of FPL and disenroll 21,000 children. 

Other states. Georgia’s predicament is perhaps dramatic but not unique. Several other states facing shortfalls are considering moving their SCHIP enrollees to Medicaid to continue their coverage. 

The Georgia situation, though, highlights one of the grand ironies underlying the SCHIP debate. SCHIP was once seen as a model of state flexibility and innovation. It fit well with the concept of federalism, of states determining the best way to spend their dollars rather than being forced to follow federal mandates. 

SCHIP had wide support from the GOP and from governors of both parties. The governors were also strong supporters of the Deficit Reduction Act (DRA), but the implementation of DRA rules requiring Medicaid enrollees to produce original U.S. birth certificates for enrollment and retention has put states’ flexible enrollment procedures at odds with the what looks like a new federal mandate. To quote a Kaiser Commission report: “In implementing the new requirement, states are having to establish procedures that run counter to what they have learned over time about successful strategies.” Virginia has already seen a significant impact on its Medicaid enrollment. 

The birth certificate rule is likely to affect SCHIP enrollment as well, since many states have one-stop or no-wrong-door enrollment policies for both programs. Children’s advocates have noted the irony of the DRA requirements supported by the federal government undermining the very flexibility this administration had touted in supporting Medicaid waivers to the states.

SCHIP reauthorization. The battle over SCHIP reauthorization is taking on some of the same odd qualities, as certain members of the GOP, such as Congressman Deal and Senator Grassley, pull back from the flexibility given the original SCHIP program. They are now viewing that very flexibility as a major step on the road to a government health insurance and entitlement program.

Democrats, on the other hand, are now celebrating the very flexibility they once questioned. Deal’s counterpart, Rep. Frank Pallone Jr. (D-NJ), majority chair of the Energy and Commerce Health Subcommittee, has stated that the hallmark of SCHIP is its flexibility, and he has no intention of moving any of the administration’s proposals to restrict eligibility through the committee. 

Unruly or innovative states? Not only has the fight over reauthorization of SCHIP created strange bedfellows, but it has redefined who’s in favor of federalism. Child advocates, once the core group backing entitlements such as Medicaid, are now deeply entrenched in the battle to preserve state flexibility and expansiveness in health care. The federal government, having opened the door to state experimentation, now finds itself in a desperate battle to close that door and impose top-down control over the unruly but innovative states. 

The history of the SCHIP program and challenges it faces in reauthorization are discussed in the upcoming March/April issue of Health Affairs, available March 6.