Administration Rejects New York Health Insurance Plan To Expand SCHIP

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CMS on Fridaydenied New York's request to expand SCHIP coverage to children infamilies with incomes up to 400% of the federal poverty level, whichwould have provided health coverage to an additional 70,000 children inthe state, the New York Times reports (Pear, New York Times, 9/8). The decision "sent a clear signal" that the administration will enforce new rules that limit SCHIP enrollment to the lowest-income children, according to the Times. The decision is the first time that the rules have been applied (Alonso-Zaldivar, Los Angeles Times, 9/8).

Theadministration's decision on New York, announced in a letter fromacting CMS Administrator Kerry Weems, said that the state "has failedto provide assurances that the state has enrolled at least 95% of thechildren in the core targeted low-income child population," as requiredunder the new rules (Evans, Long Island Newsday,9/8). New York officials have said that state covers 88% of children infamilies with incomes below 200% of the poverty level who are eligiblefor Medicaid or SCHIP (New York Times, 9/8). CMS also saidthat the state "has not demonstrated that its program operates in aneffective and efficient manner with respect to the core population oftargeted low-income children" (Johnson, CongressDaily, 9/7).

TheBush administration maintains that expanding SCHIP would encouragepeople to switch from private insurance coverage to the public program(Long Island Newsday, 9/8). The state had requested asix-month period of uninsurance to deter residents from droppingprivate coverage. However, Weems wrote, "I cannot find that New Yorkmeets the requirement for reasonable procedures to prevent substitutionof coverage" (AP/Boston Herald, 9/7).

Eligibilityfor the program in New York currently is set at 250% of the povertylevel. The state has 60 days to ask CMS to reconsider its decision(Wayne, CQ Today, 9/7).

Response

New York Gov. Eliot Spitzer (D) said that the decision is a "cruel blowto New York's uninsured children and to uninsured families across thecountry." Spitzer said the state is preparing a lawsuit to contest thenew guidelines, which claims that the rules violate the intent ofSCHIP, as created in 1997, and that policy was adopted without therequired period for public notice and comment (New York Times, 9/8).

House Ways and Means CommitteeChair Charles Rangel (D-N.Y.) said the administration's decision is"unconscionable," adding that New York has "made every effort toincrease the number of children with health care, starting with thelowest-income families" (CongressDaily, 9/7). Rangel said,"It is clear the administration is spoiling for a fight, and it'sunfortunate (President Bush) has chosen children's health care" (Los Angeles Times, 9/8). He added, "We have a moral imperative to work to overturn this arbitrary and mean-spirited policy."

House Energy and Commerce CommitteeChair John Dingell (D-Mich.) said that he was "saddened to see theadministration taking another step that would deny affordable coverageto the most vulnerable among us" (New York Times, 9/8).

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CMSspokesperson Jeff Nelligan defended the letter, saying the agency is"confident that we have the legal authority and acted appropriately inusing it" (CQ Today, 9/7).

Senate Finance Committeeranking member Chuck Grassley (R-Iowa) said, "I'm glad theadministration has used its authority to enforce coverage levels inkeeping with congressional intent. We don't have unlimited funds.Setting limits keeps the program going for the children who need it" (CongressDaily, 9/7).

SCHIP Progress

In related news, talks to reach a compromise on SCHIP legislation "havestalled over a dispute on whether to pay for the program with cuts toMedicare," the Washington Timesreports. Grassley said, "The House bill is more expensive by billionsof dollars and contains cuts to Medicare Advantage -- both of thoseitems are poison pills for some Senate Republicans."

However,House Democrats said they have little incentive to compromise becauseHouse Republicans have not said that they would support a bill thatdoes not include MA plan cuts. "This is a complete red herring forHouse Republicans to talk about wanting Medicare cuts taken out of thebill," a House Democratic aide said.

Even without the cuts to MAplans, the bill still faces a veto threat from Bush. White Housespokesperson Tony Fratto said that removing the MA provision "wouldremove one flaw, but there are lots of others" (Lengell, Washington Times, 9/10).

Lawmakers are not yet considering a short-term extension of the program, according to Rangel. Headded, "There are some major differences, but the choices areexpiration of the childcare bill, not putting anything on thepresident's desk -- that would be a total embarrassment for the Houseand the Senate -- or the Senate and the House making major adjustmentsfor Medicare reform and SCHIP" (Johnson, CongressDaily, 9/7).

Editorial

The rejection of New York's application to expand SCHIP "shows theWhite House at its most ideological and intransigent," according to a New York Timeseditorial. The editorial continues, New York "probably should" petitionfor CMS to reconsider its decision, although the "likelihood that theadministration might change its mind is vanishingly small."

States officials "should also consider a legal challenge," the New York Timesstates. According to the editorial, "The best guarantee of success --and protection for America's children -- would be for Congress to blockimplementation of the White House's arbitrary and destructive newrequirements, perhaps in SCHIP reauthorization bills that are nowbefore a conference committee," concluding that if that "can't be doneby a veto-proof margin, voters will have to elect more legislatorscommitted to solving the health care crisis afflicting middle-classfamilies" (New York Times, 9/8).

Reprinted with permission from kaisernetwork.org. Youcan view the entire Kaiser DailyHealth Policy Report, search the archives, and sign up for email deliveryat kaisernetwork.org/email. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, afree service of The Henry J. Kaiser Family Foundation.

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