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.