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White House Rules Clip Kids From SCHIP

Image has not been found. URL: /wp-content/uploads/2008/09/bush-hand21.jpgPresident George W. Bush (WDCpix)

Late one Friday evening last August, as the White House and congressional Democrats were embroiled in debate over the expansion of a popular children’s health care initiative, the Bush administration quietly and unilaterally unveiled a dramatic policy change (pdf): States no longer could use federal dollars to expand their State Children’s Health Insurance Programs (SCHIPs) until almost all the state’s lowest-income children had coverage. State officials fumed, and Democratic leaders vowed to kill the changes. Yet roughly seven months later, the rules not only remain, but the White House has extended their reach to place even greater restrictions on kids’ coverage. As a result, experts say, thousands of youngsters will be denied access to the program outright, while others must wait a year to enroll.


Illustration by: Matt Mahurin

Central to the controversy is the partisan disagreement over the role of SCHIP in a modern America, where the price of health care is skyrocketing. Enacted in 1997, the program was designed to cover kids from families too wealthy to qualify for Medicaid, but too poor to afford their own insurance. Congress originally set the eligibility ceiling at 200 percent of poverty — or currently $42,400 for a family of four — but in light of rising health care costs and regional cost-of-living discrepancies, a number of states have expanded coverage to include higher-income children. Though the Bush administration had once encouraged those expansions, it now wants to rein them in.

The debate highlights the stark ideological differences between the two parties in their approach to health care, particularly the government’s role in providing it. While most Democrats favor a robust expansion in federal health coverage — even to include the uninsured of modest incomes — the White House and its Republican supporters would transfer greater responsibility to private industry and individual patients. How wide is the chasm? House Democrats last year pushed for a $60 billion SCHIP expansion through 2012, while the administration proposed $5 billion (The issue remains unresolved.) Indeed, the administration’s new SCHIP rules — arriving in the form of a three-page letter to state health officials — were created to prevent the state and federal program from encroaching on private insurance markets. The trouble is, health-care advocates argue, thousands of kids will lose out on coverage in the process.

The debate highlights the stark ideological differences between the two parties in their approach to health care, particularly the government’s role in providing it.

In Louisiana, for example, where SCHIP covers kids living in families earning up to 200 percent of the federal poverty level, or $42,400 for a family of four, state officials passed legislation last year hiking that figure to 300 percent, or $63,600 for the same family. Citing its new guidelines, however, the White House rejected that proposal, and last week federal officials approved an altered plan with an eligibility ceiling of 250 percent of poverty, or $53,000 for a family of four.

The change leaves about 6,000 uninsured youngsters ineligible for the program, according to a December survey conducted by researchers at Louisiana State University. Kirby Goidel, director of LSU’s Public Policy Research Lab and lead researcher behind the survey, said cost was the biggest reason parents cited for their kids’ lack of insurance.

The news has left advocates torn between cheering the expansion and condemning the White House for preventing what might have been. “I’m grateful for the 250 percent,” said Mary Joseph, director of the Children’s Defense Fund of Louisiana. “But it’s just frightening that [the administration] would come down here and drop all those rules and restrictions on us. We’re leaving thousands of children on the side of the road.”

The 300-percent proposal was approved by the state last year, when the Democratic government of former Gov. Kathleen Blanco held power. After Republican Gov. Bobby Jindal took office early this year, he appointed Alan Levine — a one-time health agency appointee under former Florida Gov. Jeb Bush (R) — as secretary of Louisiana’s health department. Citing this changing of the guards, a number of observers suggested that elements of the revised plan reflect a difference in partisan priorities.

“We had a governor and a secretary standing firm over what they thought was in the best interest of children,” said Sharon Pomeroy, policy coordinator at Agenda for Children, a New Orleans-based child advocacy group. “Now we’ve got a new governor and a new secretary, and they’ve got different ideas about what’s in the best interest of children.”

Other states have traveled similar roads. In Wisconsin, for example, state officials approved a plan setting a 300-percent eligibility ceiling, but the August guidelines knocked it down to 250 percent. In New York, lawmakers approved a plan taking SCHIP eligibility to 400 percent of poverty. When the administration rejected the proposal last year, the state filed a lawsuit, which is still pending.

Under the new federal guidelines, states wishing to cover children living above 250 percent of poverty must first cover 95 percent of kids living below 200 percent. State officials have equated that to a hard cap, because no state has achieved 95 percent coverage. Still, Louisiana has come close, covering 94.5 percent of that population, according to the LSU survey. It remains unclear, however, how the Centers for Medicare and Medicaid Services, which issued the rules, would determine whether states have complied with them.

Edward Schor, vice president of the Commonwealth Fund, a private health policy institute, said the August guidelines reflect the creativity of a White House frustrated in its failure to enact pet policies through the Democratic Congress. “What they’re doing,” Schor said, “is using this letter and other regulatory vehicles as a way to accomplish what they couldn’t do through Congress.”

There are other complaints from state officials and health advocates. The new guidelines, for example, were written specifically for SCHIP programs, but CMS has more recently decided to apply them to Medicaid as well. Also, while the rules set explicit restrictions on states wishing to cover beneficiaries living above 250 percent of poverty, the agency is now applying those same restrictions to kids living below that level. Families taking advantage of Louisiana’s new expansion, for example, will have to pay monthly premiums, as well as co-payments for a variety of services afterwards.

Even more controversial, Louisiana kids wishing to move from private coverage into the expansion program must remain uninsured for one year before they are eligible — a rule originally targeting only states proposing to cover kids living above 250 percent of poverty. Though certain exceptions exist — such as when kids lose coverage because a parent dies or loses a job — health advocates question the logic of leaving kids without coverage for so long.

Advocates are also attacking the administration model that Louisiana officials chose for its newly-approved expansion. While the state’s SCHIP kids have historically had their services managed through Medicaid, the expanded program will be administered by the Office of Group Benefits, which handles health benefits of state employees. That change, kids’ groups say, threatens the seamlessness that has been an asset of the program.

Bruce Lesley, president of the children’s health group First Focus, said that keeping the program a part of Medicaid would be far more efficient and inexpensive than coordinating benefits, terminations and other interactions across agencies.

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