Children’s Health Coverage Is Next Up for Congress

When Congress goes back to work after the August break, at the top of the agenda will be the reauthorization of the State Children’s Health Insurance Program (SCHIP). A popular and successful program, SCHIP finances coverage for millions of children in working poor families, those with household incomes at the level just above Medicaid eligibility. Yet there are still about nine million uninsured children in America. SCHIP will expire on September 30 this year if Congress does not reauthorize it. The reauthorization process offers a chance not just to continue the program but to reach the remaining uninsured children.

The House and Senate each have passed SCHIP reauthorization bills. Both bills would substantially expand the program, aiming to reach currently eligible children who have not yet enrolled in the program and to reach children in working families with income at the next step higher than the current program allows. The bills differ substantially in the size of the expansion, the method of funding, and other features. The White House, not waiting for the final product, has declared that it would rather see children uninsured than covered by an expansion of government-supported insurance and has threatened a veto.

The Senate Bill
SCHIP is currently funded at the rate of $5 billion per year, or $25 billion over the next five years. The Senate’s Children’s Health Insurance Program Reauthorization Act of 2007 would increase this five-year amount by about $35 billion. The Congressional Budget Office estimates that the Senate bill would result in an additional four million children having health coverage in 2012. The bill is funded by a 61-cent per-pack increase in the federal tobacco tax. Among the other provisions in the bill:

• The funds will be allotted to states under a new formula emphasizing each state’s projected comparative need for the funds.
• There are new incentive bonuses for states to enroll more eligible children in Medicaid and SCHIP.
• There is a separate new pot of money for outreach, especially to racial and ethnic minorities, and other measures to support outreach and easier enrollment procedures.
• The bill extends the Medicaid citizenship documentation rule to SCHIP but also creates an easier way for families to meet it. States must enroll and provide insurance to otherwise eligible children, and then their citizenship is determined through matching their social security numbers with the Social Security Administration and relying on that agency’s determination of citizenship. If there is no match, then the families have a 90-day “grace period” in which to document citizenship in other ways.
• New waivers to permit parent coverage are prohibited. In the 11 states that have such waivers, such as FamilyCare in Illinois, SCHIP matching funds are available for two more years, and separate matching funds are available thereafter.
• Coverage of childless adults is forbidden, and in the four states that already have waivers to cover childless adults, those waivers are phased out after one year.
• States can receive SCHIP matching funds for child coverage up to 300 percent of the poverty level, and the lower Medicaid match for children at higher levels. However, states (such as Illinois) that already cover children at higher levels are not subject to the lower matching rate for higher-income children.
• States may allow families an option to receive assistance in paying the premiums for private or employer-sponsored insurance, provided that the parents retain access to the full SCHIP insurance package. This appears to allow either a system that requires the private plan to cover the full SCHIP package or that provides the family with an option to switch freely back and forth between SCHIP and a private plan.
• There is a $200 million fund for grants to states to improve dental benefits.

Under the Children’s Health and Medicare Protection Act of 2007, the House would provide an additional $50 billion for SCHIP over the next five years. The Congressional Budget Office estimates that an additional five million children would gain coverage. The bill is funded through a 45-cent increase in the federal tobacco tax and elimination of payments to private Medicare managed care providers that are higher than the actual cost of care. Among the other provisions in the bill:

• Funds will be allotted to states based on their actual use and projected need, and states will be able to receive increased allotments if they enroll an unexpectedly large additional number of children. Over time the specific state allotments will be indexed to reflect increases in the cost of medical care and in the population.
• States will be eligible for bonuses when they enroll more currently eligible children in Medicaid or SCHIP. The bonuses are conditioned upon states adopting best practice methods for streamlining enrollment.
• States may adopt “express lane” enrollment methods that use eligibility information that the family has already submitted for other programs, such as child care, school lunch, or food stamps.
• The bill makes citizenship documentation optional for states with respect to children but requires states to document citizenship for adults (not including foster children or recipients of Supplemental Security Income or Medicare or Social Security). If a state chooses not to require children to document, it will be subject to an audit based on a random sampling of cases, and it will have to repay the federal share of expenditures for the percentage of services that the audit reveals were provided to undocumented kids. The bill also provides that persons who are subject to documentation rules should be enrolled and provided insurance while they are pursuing documentation.
• States with existing parent coverage waivers, such as FamilyCare in Illinois, will be allowed to continue them. Other states may pursue such waivers only if they can show that they have an outreach program to cover all children and do not have waiting lists for children.
• No new waivers are allowed for coverage of childless adults, but current waivers may continue.
• States gain the option to cover legal immigrant children under Medicaid and SCHIP (current law bars such children from the programs for their first five years in the country).
• Up to ten states may receive waivers to allow employers who have a majority of employees with income under 200 percent of the poverty level to buy into SCHIP or Medicaid for all their employees if the employers contribute at least half of the cost of the premium.

Both bills contain provisions aimed at enhancing access to care and quality of care, ensuring dental coverage, and enhancing parity between coverages for mental and physical conditions.

The Bush administration’s original proposal for SCHIP reauthorization would provide an additional $5 billion over the next five years, which most experts agree would not cover the cost of inflation and thus would represent a cut in the program in real terms. Although the SCHIP reauthorization bills received significant numbers of Republican votes in both houses and were negotiated between leaders of both parties in the relevant committees, the White House announced that it would veto either bill on the stated grounds that it is an expansion of government-provided insurance, which the administration opposes on principle. As to the children without coverage, the president argues, “They can go to the emergency room, can’t they?”

The House and Senate will appoint members to a conference committee, assigned to hammer out a bill that reconciles the differences in the two bills. The members of that committee have not yet been appointed. The conference report will then be voted on in the two houses, and much will depend upon whether there is a veto-proof majority on those votes or whether the Congress and the president negotiate a compromise.

Excellent and timely information on the two bills, the underlying issues, the progress of the conference process, and recommended advocacy steps is available from many sources, including the Georgetown University Center for Children and Families, www.ccf.georgetown.edu, the Center on Budget and Policy Priorities, www.cbpp.org, and Families USA, www.familiesusa.org.