S-CHIP

S-CHIP

S-CHIP isn't particularly a hot topic at the moment, after the President's second veto of it. My daughter had to write a paper analyzing some aspect of public policy for one of her classes, and gave me permission to share it with you.

I suppose that I should explain that she is rather partial to S-CHIP because she sees such a program (regardless of the fine details) as an alternative to a broader and more costly system, such as single payer health coverage.

I am not comfortable with the national government funding such a program. The decision about whether to operate such a program properly belongs with the states, simply because there is nothing intrinsically national about medical care. I have some concerns about the way that some states have implemented S-CHIP, and the dangers of mission creep.

As an example of mission creep, the Rural Electrification Administration was originally established in the 1930s to assist in setting up rural electric coops for desperately poor farmers with no electricity--and some of those coops are now very prosperous suburban communities. When last I checked, some years back, the REA was still enjoying a very nice subsidy from the federal government, when the justification for it no longer existed. More recently, I blogged about how families with incomes above $100,000 a year live in government-subsidized low income housing. They were poor when they moved in, but they aren't poor now.

I am also concerned about one of Bush's concerns--the danger that S-CHIP might encourage people who are currently have private health insurance to change plans. In the Victorian period, the followers of Jeremy Bentham argued that public assistance in workhouses should be "less-eligible conditions." By this, they meant that if a person sought governmental assistance by entering a workhouse, it should be less pleasant than being on the outside. The reason was simple: there was a limited amount of resources available to the government to spend on caring for the poor, and therefore the workhouse should be of a nature that no one would go there if they had the option of finding a private sector job, and providing for themselves. In the modern context, I think all but the most hopelessly deluded would agree that welfare assistance to the able-bodied should provide less benefits than you would get from working at minimum wage. (At least in Idaho, that is definitely the case.)

As I have previously explained, I suspect that both the scale of the expansion Democrats in Congress proposed, and Bush's actual reasons for the the vetoes, have more to 2008 election politics than the stated reasons.

Anyway, without further ado, my daughter's paper about S-CHIP:

Analyzing the Children's Health Insurance Program Reauthorization Act (CHIPRA) of 2007

In the 1990's, the federal government began to evaluate the large-scale issue of uninsured children in the United States. By 1997, 23 percent of low-income children (those from households below 200 percent of the federal poverty guidelines) were uninsured (“State Children's Health Insurance Program” [S-CHIP], 2007). Medicaid provided insurance for the very low-income children, but those from “working poor” families (between 100 to 200 percent of the federal poverty guidelines) were ineligible for Medicaid (“S-CHIP,” 2007). As a way to provide insurance for them, the federal government established the State Children's Health Insurance Program (S-CHIP) as part of the Balanced Budget Act of 1997 (Kaiser Commission, 2007a). By 2006, the number of low-income, uninsured children has decreased to 14 percent, and S-CHIP (together with Medicaid) is generally acknowledged as the cause (Kaiser Commission on Medicaid and the Uninsured, 2007a; “S-CHIP,” 2007).

While S-CHIP has been successful, funding was only alloted for ten years. As a result, the S-CHIP program funding had to be reauthorized by Congress in 2007 (“S-CHIP,” 2007). In spite of S-CHIP's success, the Children's Health Insurance Program Reauthorization Act of 2007 (CHIPRA) has been the subject of heated debate. The first bill (H.R. 976) was passed by Congress, but vetoed by the President. It was revised and Congress passed H.R. 3963 (the revised CHIPRA bill), only to have it vetoed again in mid-December (Kaiser Commission on Medicaid and the Uninsured, 2007b; Stolberg, 2007). This second veto leaves Congress and Americans wondering what will happen to the S-CHIP program in the future.

S-CHIP Program Overview

Since S-CHIP is administered at the state-level, there is some variation between state programs. However, as a whole, S-CHIP is designed to insure low-income children “who are uninsured and not eligible for Medicaid, typically from families with incomes up to 200 percent of the Federal Poverty Level (FPL)” (Kaiser Commission, 2007a, p. 1). Nationally, there were 6 million low-income children covered by S-CHIP throughout 2005, and 4 million children enrolled at any given point during that year (Kaiser Commission, 2007a). Children are the focus and majority of enrollees in the program, though the original legislation allowed states to use waivers to cover parents, childless adults and pregnant women (Kaiser Commission, 2007a).

Today, the S-CHIP program costs approximately $7 billion annually and consists of both federal and state funds. In 2006, S-CHIP was funded by $5.4 billion of federal funds and $2.4 billion of state funds (The Kaiser Family Foundation, n.d.). The federal guidelines regarding the use of the federal funds are fairly broad. States have the choice to use the federally administered funds to expand the current Medicaid program, create a completely separate S-CHIP program, or use a combination of the two approaches – which is what Idaho and twenty other states use (Kaiser Commission, 2007a).

When the program began, the federal funds alloted for S-CHIP were more than the states needed. However, as the program has expanded, the current level of funding is not enough. There are estimates that “over the next five years $13 to $15 billion over current levels will be required to maintain current SCHIP enrollment levels” (Kaiser Commission, 2007a, p. 2). This amount is needed for current enrollment and does not begin to address the eight to nine million uninsured children, the majority of who qualify for Medicaid or S-CHIP, but are not currently enrolled (“S-CHIP,” 2007; Kaiser Commission, 2007b).

The reauthorization of federal funds for S-CHIP is not simply continued funding at current levels; instead, it will require a dramatic increase in funding. Besides objections to the content of the proposed CHIPRA bills, the level of funding is one of the issues debated by Congress and the president's administration.

H.R. 976

With an expiration date of September 30, 2007, Congress began debating how much funding to reauthorize and where the extra funds would come from. In July, the Senate voted on a bill that would add an additional $35 billion beyond the current $5 billion spent annually, resulting in a total of $60 billion for S-CHIP over the next five years. The House voted to increase the $35 billion to $50 billion over five years, but eventually compromised on the final bill – H.R. 976 – and asked for the additional $35 billion (“S-CHIP,” 2007). To increase the extra funding, Congress debated between increasing the federal tobacco tax or cutting Medicaid payments to insurance companies who cared for the elderly (Pear, 2007a). Eventually, the bill proposed a 61-cent cigarette tax per pack which would result in $35 billion, and would allow an additional 4 million uninsured children to enroll in S-CHIP (“S-CHIP,” 2007). The Democrats wanted to make sure that the federal tobacco tax would pay for the extra $35 billion and not add to an already immense federal deficit from the current administration's spending on the Iraq War (Pear, 2007b).

Bush (along with many Republicans) felt that H.R. 976 had several problems, and threatened to veto H.R. 976 almost immediately (“S-CHIP, 2007). Bush had originally proposed to continue paying $5 billion annually and gradually add an additional $5 billion (total) over the next five years. He stated that a very large expansion of the program would be a step “down the path to government-run health care for every American” (“S-CHIP,” 2007, para. 4). In addition, Bush demanded that “nearly all poor children eligible for the program be found and enrolled before any in slightly higher-income families could be covered” (Loven, 2007, para. 12).

There were other criticisms of the bill because it did not “adequately address the following issues: income eligibility for coverage of children, crowd-out, and the treatment of immigrants, parents and childless adults” (Kaiser Commission, 2007b, p. 1). Bush felt that the issues of inadequately addressed expansion, funding and eligibility justified his presidential veto of H.R. 976 on October 3, 2007 (“S-CHIP,” 2007; Kaiser Commission, 2007b).

H.R. 3963

After Bush's veto in October, Congress rapidly create a revised CHIPRA bill (H.R. 3963). Taking into consideration the criticisms of the bill, H.R. 3963 was similar to H.R. 976 with several significant changes. It still required the additional $35 billion of funding, and sought to cover an additional 4 million children (Pear, 2007a). However, it addressed several of the problem areas. Under H.R. 976, states could set their eligibility levels, though the matching rate was restricted if they went above 300 percent of the federal poverty level (FPL). H.R. 3963 did not allow any state (except New Jersey) to cover children above 300 percent of the FPL (Kaiser Commission, 2007b). Neither bill allowed coverage of legal or illegal immigrants, but H.R. 3963 has a stricter citizenship verification process through the use of the Social Security Administration's records (Kaiser Commission, 2007b). H.R. 976 had proposed a two year period for childless adults to transition off of Medicaid. However, Republicans criticized this period as too long, so H.R. 3963 shortened the transition period from two years to one year (Kaiser Commission, 2007b).

Once H.R. 3963 was revised, the House passed it at the end of October. The Senate passed it one week later on November 1, 2007 (64-30) (Pear, 2007b). The bill was sent to the president, who had until December 12 to sign it into law or veto it. He chose to veto the bill, writing to the House that since “Congress has chosen to send me an essentially identical bill that has the same problems as the flawed bill I previously vetoed, I must veto this legislation, too” (Bohan, 2007, para. 4). Once again, he wrote that the problems with the bill were “it allows adults into the program, would cover people in families with incomes above the U.S. median and raises taxes” (Loven, 2007, para. 4).

Future of S-CHIP

After Bush's second veto, there is concern about the next step for S-CHIP funding. On Wednesday, December 12, the House chose to defer the vote to override the presidential veto until January 23. January 23 was chosen since it “coincides with the week Bush come to Congress for the State of the Union address” (Loven, 2007, para. 8). If the veto stands, some Democrats have discussed a possible extension at current funding levels until September 30, the end of the fiscal year (Bohan, 2007). However, the current funding is not enough to even maintain the 6.6 million children currently enrolled in S-CHIP (Stolberg, 2007).

The Congressional Budget Office reports that S-CHIP needs at least $5.8 billion to keep the current enrollment, meaning it will be $800 million short over the next year (Stolberg, 2007). As a result, 21 states estimate that they will have fully exhausted their federal funding before September 30. In fact, nine states will have exhausted their funds by March 2008, leaving millions of children uninsured (The Kaiser Family Foundation, 2007). This leaves people wondering what is next for S-CHIP. Judith Arnold, the director of the Children's Health Insurance Program in New York, sums up what many are thinking: “I am getting more and more nervous about the future of the program” (Pear, 2007a, para. 9).

Implications for Idaho

Although Idaho is not one of the states who will experience a funding shortfall in 2008, Idaho's children depend heavily on S-CHIP and federal funding. In June 2006, 14,287 Idaho children were enrolled in Idaho's separate S-CHIP program, and enrollment is increasing (The Kaiser Family Foundation, n.d.a). Nationally, the percentage increase in enrollment from 2005 to 2006 was 1.7 percent. Idaho's increased enrollment was twice as high with a 3.6 percent increase from 2005 to 2006 (The Kaiser Family Foundation, n.d.a). As Idaho's population rapidly increases, the need for S-CHIP will probably increase as well.

To provide coverage for the approximately 14,000 Idaho children enrolled in S-CHIP, Idaho depends heavily on federal funds. Compared to the national average of 65%, federal funds made up 79% of Idaho's S-CHIP total funding from FY 2004-2007, and is projected to stay at that level if the federal funding is available (The Kaiser Family Foundation, n.d.b). Idaho may not be directly affected yet by the presidential vetoes of both CHIPRA bills (H.R. 976 and H.R. 3963). However, Idaho's dependency on federal funds and increased need for S-CHIP coverage could mean that it will be negatively affected by a lack of increased funding at some point in the future.

Conclusion

S-CHIP is a program that affects six million children nationally, and 14,287 children locally. A program that affects this many children deserves continued attention. The second veto left Congress wondering what was next for the S-CHIP funding debate, but the House quickly decided that they would not let this second veto stand. In the next month, one would hope that the House could overturn the veto with enough bipartisan support. Since the second bill (H.R. 3963) passed the Senate with a large margin (64-30) and has both Republican and Democratic support, there may be a chance for Congress to overturn the president's veto (Pear, 2007b). At a minimum, our Congress needs to come up with an alternative for 2008 that keeps the program funded enough to keep the currently enrolled children insured. Ideally, they would extend funding for more. Regardless of what happens, Americans needs to understand S-CHIP, its impact, and demand that our Congress reach a decision to support this program.

References

Bohan, C. (2007, December 12). Bush vetoes children's health bill a second time. The Washington Post. Retrieved December 12, 2007, from http://www.washingtonpost.com.

Kaiser Commission on Medicaid and the Uninsured. (2007a, January). State Children's Health Insurance Program (SCHIP) at a glance. Retrieved December 12, 2007, from http://www.kff.org/medicaid/7610.cfm.

Kaiser Commission on Medicaid and the Uninsured. (2007b, November). Children's Health Insurance Program Reauthorization act of 2007 (CHIPRA): The revised CHIPRA bill (H.R. 3963) compared to the original bill (H.R. 976). Retrieved December 12, 2007, from http://www.kff.org/medicaid/7714.cfm.

Loven, J. (2007, December 13). Bush vetoes kids health insurance bill. The Washington Post. Retrieved December 13, 2007, from http://www.washingtonpost.com.

Pear, R. (2007a, July 9). A battle over expansion of children's insurance. The New York Times. Retrieved December 12, 2007, from http://www.nytimes.com.

Pear, R. (2007b, November 2). Expecting presidential veto, Senate passes child health measure. The New York Times. Retrieved December 12, 2007, from http://www.nytimes.com.

Stolberg, S. G. (2007, December 13). President vetoes second measure to expand children's health program. The New York Times. Retrieved December 14, 2007, from http://www.nytimes.com.

State Children's Health Insurance Program (S-CHIP). (2007, September 26). The New York Times. Retrieved December 11, 2007, from http://www.nytimes.com.

The Kaiser Family Foundation (2007, November 9). FY 2008 SCHIP allotments under current law and projected federal SCHIP financing if current allotments are made available through the end of FY 2008 (dollars in millions). Retrieved December 14, 2007, from http://www.statehealthfacts.org/comparetable.jsp?ind=599&cat=4.

The Kaiser Family Foundation (n.d.a) Idaho: Federal Matching Rate (FMAP) for SCHIP. Retrieved December 15, 2007, from http://www.statehealthfacts.org/profileind.jsp?

ind=239&cat=4&rgn=14.

The Kaiser Family Foundation. (n.d.b) Idaho: Total SCHIP expenditures, FY2006. Retrieved December 14, 2007, from http://www.statehealthfacts.org/profileind.jsp?ind=235&

cat=4&rgn=14.