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SCHIP: Not-So-Happy New Year

December 18th, 2007

Perhaps the signal event in federal health policy for 2007 is the failure to reauthorize the State Children’s Health Insurance Program (SCHIP). On Wednesday, December 13, President Bush vetoed the second version of the SCHIP reauthorization.

The failure to pass an SCHIP reauthorization also means that the regulations adopted by the Centers for Medicare and Medicaid Services (CMS) in August remain in place and threaten planned SCHIP expansions in 23 states. Five states with wildly differing political landscapes ranging from Oklahoma to New York planned expansions of coverage based on their understanding of the SCHIP regulations that had previously guided the program. These states have either had their expansion plans rejected or rolled back their plans because of the CMS directives. The rollbacks of these planned expansions affect an estimated 80,000 children and probably more, as the other states that planned expansions pull back from implementation. 

It is worth asking what could have led to such an impasse that both political parties and the electorate would be staring at a situation where potentially hundreds of thousands of poor children will lose or be denied access to health insurance. Last winter, at many health policy conferences, even leading spokesmen for the Bush administration like Mark McClellan assumed that there would be successful legislation reauthorizing SCHIP. No one assumed that it would be easy, but it seems unlikely that anyone would have predicted the derailment seen in two presidential vetoes.

Even in January 2007 it was impossible to ignore the drumbeat of presidential primary campaigning, but at the time, it seemed that the Republican frontrunners would have supported an SCHIP reauthorization that did not narrow or confine state actions and eligibility to children whose families earned 200 percent of poverty. The Massachusetts reforms guided by Governor Romney depended on SCHIP eligibility levels at 300 percent of poverty.

New York State had eligibility levels at 250 percent and had covered poor children in a state program even prior to SCHIP’s passage. New York City mayors have generally been supportive of state and federal efforts to insure poor children. Senator McCain had supported covering adults through Arizona’s SCHIP program. Governor Huckabee was not yet among the GOP leaders, but he had a strong record of public health promotion for children during his administration. During his tenure as governor, Arkansas in 2004 became the seventh state to provide prenatal benefits to pregnant women under SCHIP. In 2006, it also received a waiver, like Arizona, to cover childless adults and parents of SCHIP children. Advocates of SCHIP in Arkansas noted that Arkansas had become a national leader under SCHIP, cutting its rate of uninsured children by half as a result of the program. Arkansas has also benefited from federal largesse in its SCHIP program, achieving a remarkable 82 percent match rate for federal funds.

The failure to reauthorize an SCHIP program that allows states to continue the flexibility represented by the Republican frontrunners’ home states and indeed many of the fifty states remains one of the great political mysteries of the year. As the 2008 political campaign grew louder and domestic issues began to overtake foreign policy ones, SCHIP became, in John Iglehart’s words the “surrogate ideological marker” for the 2008 campaign. Along the way, it has also been inextricably linked to the immigration issue

The linking of SCHIP with ferment over immigration certainly muddies the picture of what is likely to happen with bills in 2008 that attempt to reauthorize SCHIP, extend access to coverage for uninsured Americans, and address other health care reforms including elimination of disparities.

Health Affairs takes a more in-depth look at these issues and the connections between health care policy making and the presidential campaigns in forthcoming volumes in spring 2008.

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2 Responses to “SCHIP: Not-So-Happy New Year”

  1. Dan Groszkruger Says:

    SCHIP has now been extended, with some more money added, through March 2009. So, one has to wonder what all the fuss was about? If Congress and the Bush administration could agree to extend the existing program (consistently described as “popular” and deserving of broad “bipartisan support”), what necessitated the demands for huge expansions, leading to two presidential vetoes? The answer, I must conclude, was just partisan politics.

    When I first heard the Democrats’ proposal to increase the number of children covered (from 6.5 to 10 million) at a cost of $50 million (later, reduced to $35 million), I expected to hear more details regarding why these enrollment and funding levels were desirable, or necessary. My expectations were never met! In fact, there was a strange lack of curiosity, on the part of both healthcare providers and the media, regarding how these lofty goals were established, and why.

    I knew that , in 1997, SCHIP was intended to cover families with incomes too high to qualify for Medicaid. SCHIP enrolled more than 6 million low-income children, at a cost of about $5 billion per year. That works out to total expenditures of $50 billion to cover 6.5 million kids for ten (10) years. The Democrats’ proposal was to spend an additional $35 billion, over five (5) years, or an additional $7 billion per year, raising yearly expenditures to $12 billion per year. The additional money would come from increasing the federal tax on cigarettes (a seeming “horn of plenty” for money to fund new programs). Also, the 3.5 million new enrollees included some families who already had private health insurance. About a quarter of the states spent the majority of SCHIP funds to cover adults, not children. Most states had not enrolled but a fraction of the low-income families who qualified before any expansion of eligibility.

    So, with the above facts known (or available), what justified the $35 billion for up to 10 million kids? More important, why pick such huge increases (more than doubling yearly expenditures) and why sweep in families known to already have health insurance? My theory is that the levels were selected to ensure a veto! Approaching an election year, the Democrats were willing to put the healthcare of millions of poor kids at risk in order to create a phony issue for the next election. Speaker Pelosi and Majority Leader Reid were quick to castigate President Bush, and the Republicans who voted against overriding the veto, as not caring about children. The rhetoric surrounding both vetoes was scalding, with promises that Republicans who voted with the administration would be sorry, and they would be held accountable during the next election.

    But, I may be mistaken. Tell me again about why we need $35 billion and 10 million kids??? Any other plausible theories that fit these events?

  2. WilliamHill Says:

    The State Children’s Health Insurance Program (SCHIP). This is Title XXI of the Social Security Act and is jointly financed by the Federal and State governments and administered by the States. Within broad Federal guidelines, each State determines the design of its program, eligibility groups, benefit packages, payment levels for coverage, and administrative and operating procedures. SCHIP provides a capped amount of funds to States on a matching basis for Federal fiscal years (FY) 1998 through 2007. Federal payments under title XXI to States are based on State expenditures under approved plans effective on or after October 1, 1997.

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