WASHINGTON — Congressional Democrats and state officials are mulling their options on how to counter sweeping new policy changes by the Bush administration that will make it nearly impossible for states to expand a popular health care program for children.
The State Children's Health Insurance Program was created in 1997 to provide health coverage for kids whose families earn too much to qualify for Medicaid, but not enough to afford private health insurance. The program is administered by the states and the federal government, and it historically targets youngsters from families that earn up to twice the federal poverty level. In 2007, that's $41,300 for a family of four.
But to help curb the growing numbers of Americans without health coverage, states began expanding the SCHIP's income eligibility thresholds to include more children from higher-earning families. At least 10 states have adopted or are considering proposals to cover youngsters from families that earn up to three times the poverty level, or roughly $61,950 for a family of four.
About 6.6 million children are covered through the SCHIP program. Of the estimated 9 million uninsured youngsters in the United States, between 5 million and 6 million are eligible for SCHIP coverage.
President Bush and many GOP lawmakers oppose the coverage expansions, saying they go well beyond the low-income children the program was intended to cover. The president also has said that higher program eligibility limits would cause "crowd out," in which families drop private coverage to enroll their children in the SCHIP plan, which is much less expensive.
In order to keep the program focused on low-income children, the Bush administration has notified state officials that before they can enroll children from families earning above 250 percent of the federal poverty level — $51,625 for a family of four — states must first enroll at least 95 percent of children from families earning below twice the poverty level.
Dennis Smith, director of the federal Center for Medicaid and State Operations, said the new requirement is "aggressive, but doable."
State officials and Congressional Democrats such as Rep. Fortney "Pete" Stark, D-Calif., disagreed.
"There aren't any states that are going to get 95 percent of people signed into these programs," Stark said. "They have set a hurdle that's impossible. They might as well just come out and say let's kick kids off the rolls."
Catherine Hess, senior program director at the National Academy for State Health Policy, said Vermont has the nation's highest enrollment rate at roughly 92 percent.
Another new requirement calls for new enrollees above 250 percent of poverty to go without insurance for a year before they can enroll in SCHIP. The new rules also require the new higher income enrollees to pay co-payments or premiums that are roughly what they'd pay in the private market.
The changes will immediately affect all new enrollees. But states already serving enrollees earning over 250 percent of the poverty level would have one year to amend their programs to meet the new guidelines, Smith said.
Joy Wilson, health policy director at the National Conference of State Legislatures, said the changes were indicative of a new "regulatory activism" at the Centers for Medicare and Medicaid Services, in which more policy is being implemented by directive.
"This is our objection to a lot of what they do," Wilson said of the Bush administration. "They go forward with a letter to state health officials and change policy without any kind of input from stake holders."
Some have suggested the changes, announced formally last Friday, are improper and subject to congressional review because they were implemented without advance notice and without an opportunity for to states to weigh in on the measures.
But Smith said the moves were consistent with previous policy changes by the agency. Sen. Max Baucus, chairman of the Senate Finance Committee, which has oversight over Smith's agency, wasn't so sure.
"This drastic change in policy sets states up to fail and jeopardizes coverage for tens of thousands of children in low-income, working families," the Montana Democrat said. "I hope the administration will reconsider these changes."
Baucus and other lawmakers will return in September to craft final legislation to extend the SCHIP program, which is set to expire on Sept. 30, if no funding agreement is reached.
President Bush has proposed a $5 billion increase that government analysts say would be insufficient to continue funding at current program level. The House of Representatives passed a Democratic bill that would increase program funding by nearly $50 billion over five years, while the Senate approved a $35 billion budget hike for the program. Increased tobacco taxes would fund both measures.
Bush has promised to veto either bill, saying either would be too expensive and would constitute a first step toward government-funded universal health coverage.