Fed Rules Threaten Proposed Expansion of Ohio SCHIP Program

Cross-posted at my new location, Ohio Daily Blog:

Late last week the Bush administration announced new policies that will make it impossible, or at least extremely difficult, for states to expand Medicaid eligibility to children in families with incomes above 250% of the federal poverty line. (The poverty line is about $20,650 for a family of four, so 250% is about $51,625.). The rule changes are explained in articles in the New York Times and the Washington Post today.

SCHIP is a program with broad bipartisan support that provides health insurance for about 6.6 million children with parents who work but do not earn enough to afford private health insurance. Families under the poverty line qualify for Medicaid without resort to SCHIP, but this $5 billion-per-year program extends that eligibility for children in families up to 200% of the poverty line. Some states have already extended the eligibility to 250% or 300% using certain administrative waivers available to the states, and some propose to raise it even higher. Ohio has incorporated a plan to raise the limit from 200% to 300% in the recently passed 2007-2009 biennial budget.

However, SCHIP is scheduled to expire on September 30th unless renewed by Congress, and Bush and the legislature have been fighting about how much additional funding to include with the renewal. Bush has threatened to veto any renewal legislation that exceeds his proposal to renew with $30 billion in funding over the next five years, a total increase of $5 billion. The Senate has passed a bill to renew the program with $35 billion in funding (a $10 billion increase), and the House has passed a more complicated extension that would renew the program with $75 billion in funding (a $50 billion increase).

The Bush administration says that it is trying to re-focus the program on uninsured children in low-income families, and to avoid the possibility that middle-income families will choose free public insurance instead of paying for private insurance. Advocates for children argue that families above 200% frequently cannot afford the health insurance that they need, so the fear of expanded SCHIP coverage as crowding out potential purchasers of health insurance is a myth.

The rule changes impose three basic restrictions on states who wish to extend eligibility above 250%, as Ohio does. First, the state must have achieved an Medicaid and SCHIP participation rate of 95% for families under the 200% level. Second, SCHIP enrollment should require copayments or premiums that approximate private insurance, and should impose a one-year waiting period (i.e., the state must determine that the each child is uninsured for that long before enrollment). Third, states must first show that the number of children in the target population covered by private insurance has not decreased by more than 2% in the preceding five years.

This morning I called Amy Nicholls Swanson, Executive Director of Voices for Ohio's Children, and Ericka Thoms, Policy and Planning Associate at the Center for Community Solutions, for their initial reaction to the changes. They both said it is too soon to provide a detailed response (the changes were announced late Friday and public policy advocates are just now meeting to assess the situation). However, when I asked Swanson if the new procedures seem drastic and punitive she freely agreed. She was driving from a meeting with a state official involved in the administration of Medicaid funds and promised to deliver a more detailed appraisal of the changes later.

Thoms pointed out that no state has achieved 95% participation, and that the level of SCHIP funding increase supported by the Bush Administration appears to be insufficient for states to afford that level of participation. She also pointed out that the one year waiting period strikes her as "dangerous." Right now there is a thirty-day turn around period. Asking families to go without health insurance for children for a year means that you could have children who are sick not getting the care that they need.

In the Post article, Rep. Rahm Emmanuel (D-IL), an architect of the SCHIP program, comments that he thinks "states will see the letter [announcing the rule changes] for what it is, and that's a political ploy by the president. This is a political attempt by the administration to try to intimidate states." Thoms agreed that it may be a ploy, but worries that it may be a very effective one. What puzzles her is that the changes seem to be "kind of thumbing their nose at bipartisanship." There is broad bi-partisan support for the goal of covering children whose families can't otherwise obtain insurance, but these changes seem to be much more about protecting the profits of private insurers than achieving that goal. There is "much more support in Congress for covering kids than there is for this kind of really punitive regulatory procedure."

During the recess, Thoms said, members of Congress have been hearing about how important SCHIP is to their constituents. The concern among advocates for children has always been to come up with a compromise SCHIP extension bill that would garner enough bipartisan support to withstand a veto, and that is more likely to be at the Senate level of funding than the more expansive House bill, but both bills endorse expanding coverage for kids. "I don't see how Bush has support in Congress for blocking the expansion of coverage," she said.

It will be very interesting to see what happens in the next few weeks as policy experts react to the rule changes and members of Congress return from the August recess. I hope to post much more on this issue soon. What is clear already, however, is that the goal of approaching universal health care coverage for Ohio children is hanging in the balance.