Big Questions Loom in SCHIP Fight

Congressional efforts to create a bigger and more generous State Children’s Health Insurance Program (SCHIP) could have repercussions for states beyond getting millions of kids to a doctor’s office.

Competing plans just approved by the U.S. House and Senate will reshape the 10-year-old government program and could end state-subsidized health care for 639,000 adults, allow more legal immigrants to qualify for public health benefits and complicate state initiatives to raise money by taxing smokers.

Also at stake are efforts in at least 16 states to grow SCHIP rolls to cover more of the nation’s uninsured, including Illinois’ and Pennsylvania’s recently created programs to cover all uninsured children and California Gov. Arnold Schwarzenegger’s (R) universal health insurance proposal.

States share the costs of the $5 billion-a-year SCHIP program with the federal government and are counting on more federal dollars. But the amount of increase is what has the Republican White House and Democratic-controlled Congress at impasse. The House voted Aug. 1 to invest $50 billion more over five years, while the Senate Aug. 2 approved $35 billion over five years. President Bush, who panned the plans as “Congress’ attempt to federalize medicine,” is holding out for an increase of only $5 billion.

States that beefed up their SCHIP programs in recent years could be left in a financial lurch if federal SCHIP dollars run short, which would leave them with the options of paying a greater share of the bills of those in the program or limiting the number of people who could sign up..

Pennsylvania Gov. Ed Rendell (D), who spearheaded his state’s plans to offer state-run coverage to all kids in the Keystone State, told Stateline.org he could “live with” either the House or Senate expansions, but not the president’s proposal to limit SCHIP to families living at less than twice the poverty level.

“If the Bush administration plan goes through, we won’t be able to cover all children. Flat out,” he said.

Despite threats by Bush to veto either version of the bill, Senate and House negotiators will meet next month to resolve differences to continue the program after its current expiration date of Sept. 30.

Both chambers are trying to vastly expand the program, which covers 6.1 million Americans in families that make too much to qualify for Medicaid, the government’s health insurance program for the poor, but who can’t afford private coverage.

The plans on the table would pay for a big boost in the SCHIP rolls. The Senate plan would add 3.2 million people, and the House would go even farther, adding 4.2 million kids, according to the Congressional Budget Office.

Smokers could see the price of a pack of cigarettes jump by 45 to 61 cents, more than doubling the current federal tax of 39 cents a pack. That comes on top of state tobacco taxes, which states also have been increasing to boost their own revenues. Six states hiked their cigarette taxes just this year.

Taxpayer-financed health insurance for 639,000 adults in 15 states is at risk. Although the program’s chief aim is to cover kids, federal law allows some states, especially those that already offered generous Medicaid benefits for kids when SCHIP was created, to cover parents. A handful of states also cover childless adults, although Congress last year barred any new states from doing so.

Under the current proposals, the House would let the 15 states continue to cover parents, but the Senate wants to phase out the perk. For four states, in particular, ending the benefit could radically change their S-CHIP program’s. Arizona, Michigan, Minnesota and Wisconsin cover more adults under SCHIP than children.

Legal immigrants would fare better under the House version, because it would let states’ SCHIP programs begin covering immigrants who’ve lived in the United States for fewer than five years. The Senate proposal goes the opposite direction, by requiring SCHIP applicants to prove their citizenship with specific documents. Congress already has enacted a similar requirement, which took effect last summer, for Medicaid recipients.

Another flashpoint is over whether to let middle-class families qualify for SCHIP’s subsidized medical coverage. This spring, New York passed the highest income thresholds in the country, allowing families making up to four times the federal poverty level to qualify. That’s $82,600 for a family of four. Previously, the cut-off was two and a half times the poverty level. The Senate measure would limit how much the federal government pays for middle-class subsidies. Normally, it would pick up 65 percent of New York’s SCHIP tab (the percentage varies by state).

The Senate plan, unlike its House counterpart, would restrict that to 50 percent for families making more than three times the federal poverty level, or $61,950 for a family of four.

Neighboring New Jersey had the most generous eligibility levels before New York leapfrogged it. New Jersey Gov. Jon Corzine (D) said either the House or Senate bills would allow his state to insure half of its 250,000 uninsured kids, plus more than 10,000 adults, according to The Bergen County Record.