New Rules for Kids' Health Insurance
New Rules for Kids' Health Insurance
The S-CHIP Controversy
The State Children's Health Insurance Program (S-CHIP) has provided health insurance for millions of kids since the program began in 1997. But it is set to expire at the end of next month, and Congress and the Bush administration can't agree on how it should continue.
When Congress returns next month, one of its top priorities will be to complete work on legislation to renew the popular state children's health insurance program, known as S-CHIP. Late last week, however, the Bush administration decided to make its own changes to the program — in advance of Congressional action. Officials in states affected by the changes are not pleased.
The Effort to Insure More Children
The S-CHIP program, which turns 10 this year, was created to cover children in families with incomes that are too high to qualify for Medicaid, but still too low to afford private insurance. In most states, that income cutoff is twice the federal poverty level, or about $41,000 for a family of four.
But several states have chosen to set eligibility higher. New Jersey, for example, covers kids in families with incomes up to three and a half times the poverty level. Ann Kohler, the state's Deputy Commissioner of Human Services, says that's because New Jersey is among the most expensive places in the country to live. So a family that makes 350 percent of the federal poverty level in New Jersey might not be as well off as a family earning 200 percent of the poverty rate in another state, where the cost of living is lower.
'Low Income Kids First'
But New Jersey may have to cut back its S-CHIP program unless it meets strict, new requirements. The new rules were laid out in a letter sent last Friday by Dennis Smith, who heads the Medicaid and S-CHIP programs for the federal government.
"Really the most important message...was find those low-income kids first," Smith says. "They are your first responsibility and we want to make certain you have done that."
To that end, states can only expand S-CHIP to include moderate-income kids after they've found and enrolled virtually all of the poorer kids — 95 percent. But state officials and analysts say the new requirements are so unrealistic that no state will be able to meet them.
Judith Solomon, of the Center on Budget and Policy Priorities, used to run the outreach program for Connecticut's S-CHIP program. She says you couldn't get that enrollment rate up to 95 percent even if you knocked on every door in the state looking for eligible kids. There are language barriers — people who just don't want public assistance — and it's a population that's always in flux.
"Children are born, children age out, they reach age 19 and are no longer eligible," Solomon says. "Family income goes up, family income goes down; it's a very dynamic situation."
The Bush administration is also worried that families who can afford private health insurance will switch to S-CHIP if it's available because it's cheaper. Administration official Dennis Smith says that's a concept known as crowd-out, and it undermines what S-CHIP was designed to do.
"The goal is to increase insurance coverage," Smith says. "But in crowd out, you're not increasing it, you're simply substituting one kind of coverage for another."
To help prevent that crowd-out, the administration will now require families who previously had private insurance to go without coverage for a year before becoming eligible for S-CHIP.
States would also have to demonstrate that the number of children in the state who are covered by private insurance isn't declining.
But New Jersey's Ann Kohler calls that part of the new rules particularly unfair.
"I cannot imagine any state being able to comply with that," she says. "There are lots of reasons why people lose their private insurance, but it's not because of the S-CHIP program. People are not dropping their private insurance to get onto the S-CHIP program."
For now, these rules are in effect. But Congress is likely to try to change that. Both the House and Senate passed S-CHIP bills a couple of weeks ago — and neither contained these sorts of restrictions. Lawmakers are expected to send a final version of the bill to the president by the end of September. That's when the real fight will begin.
The S-CHIP Controversy
What is S-CHIP?
The State Children's Health Insurance Program (S-CHIP) is jointly funded by the federal government and the states to provide health insurance to the working poor — children from families that make too much money to qualify for Medicaid, but not enough to pay for health insurance. In 2006, S-CHIP covered approximately 6.7 million children.
What is the controversy?
S-CHIP is up for renewal this year, but Congress and the White House have very different ideas about how to continue this program. Recently the House and Senate both passed bills to extend and expand S-CHIP to cover children from families that are in somewhat higher income brackets, in recognition that the cost of living in some states is higher than in others. But President Bush said he would veto these bills. The White House is concerned that if the eligibility criteria are loosened in that way, some families who make enough money to afford private insurance will switch to the government-funded program instead.
New Bush Administration Rules
Last Friday, Bush Administration health officials sent state health officials a letter containing new criteria that states need to meet before they can expand S-CHIP to include children from families that make more than 250 percent of the poverty level ($42,900 for a family of three). Currently, 18 states and the District of Columbia provide health insurance coverage to children from families with incomes above 250 percent of the poverty line, or are in the process of doing so. States must comply with the new rules within a year.
According to the new requirements, before states can expand S-CHIP to cover children from families that make more than 250 percent of they poverty level, they must:
- Establish that the child has been without health insurance for at least one year.
- Assure the federal government that at least 95 percent of children currently eligible for S-CHIP or Medicaid are enrolled in one of those programs.
- Make sure that an S-CHIP family's contribution to its health care costs (premiums, co-pays and deductibles) is only slightly less than the family would pay for a comparable private insurance plan. However, families could not be required to pay more than 5 percent of their income toward S-CHIP costs.
From NPR reports and the Associated Press