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New SCHIP Standards Would Keep Program Limited To Low-Income Children

Armen Hareyan's picture

State Children's Health Insurance Program

The Bush administration in a letter to state lawmakers on Fridayoutlined new standards for SCHIP enrollment that aim to limit coverageto the lowest-income children, the New York Timesreports. The new guidelines state that before expanding SCHIPeligibility to children in families with incomes greater than 250% ofthe federal poverty level, states must demonstrate that they have"enrolled at least 95% of children in the state below 200% of thefederal poverty level" who are eligible for Medicaid or SCHIP,according to the letter sent by Dennis Smith, director of the Center for Medicaid and State Operations.

Statesseeking to expand SCHIP eligibility also "must establish a minimum of aone-year period of uninsurance for individuals" in families withincomes greater than 250% of the poverty level to prevent them fromswitching from a private insurance plan to a public program, the letterstates. In addition, Smith wrote that states should impose copaymentsand premiums that are similar to the cost of private health insuranceon middle-income families to prevent them from dropping privatecoverage to enroll in SCHIP.

States that insure children infamilies with annual incomes greater than 250% of the poverty levelalso must prove that "the number of children in the target populationinsured through private employers has not decreased by more than twopercentage points over the prior five-year period," according to theletter (Pear, New York Times, 8/21). In addition, stateswill need to adopt policies "preventing employers from changingdependent-coverage policies that would favor a shift to publiccoverage," Smith wrote (Zhang, Wall Street Journal, 8/21).


The focus on "the core uninsured targeted low-income population" will strengthen SCHIP, Smith wrote (Lee, Washington Post, 8/21). The new guidelines will not affect children currently enrolled in SCHIP, Smith's letter said (AP/Arizona Daily Star,8/21). However, new applications for expansion plans will be consideredunder the guidelines, and states are expected to have implemented thepolicy within a year, according to the letter (Wall Street Journal, 8/21).

Theadministration "may pursue corrective action" against states that failto comply, Smith wrote. The guidelines will continue indefinitely,although Democrats in Congress could attempt to override it, the Times reports (New York Times, 8/21).

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Eighteenstates and Washington, D.C., enroll children in families with incomesgreater than 250% of the poverty level or have recently passedlegislation to do so, according to Cindy Mann, executive director ofthe Georgetown University Center for Children and Families (Washington Post, 8/21). No state has enrolled 95% of uninsured children with incomes less than 200% of the poverty level, according to the AP/Arizona Daily Star. The closest is Vermont with 92% participation (AP/Arizona Daily Star, 8/21).

SCHIP Reauthorization

The policy is an example of the White House "taking action on its ownto advance policies that have not been embraced by Congress," the Times reports (New York Times, 8/21). SCHIP legislation (HR 3162)approved by the House would reduce payments to Medicare Advantage plansand increase the federal cigarette tax by 45 cents per pack to increasefunding for SCHIP by about $50 billion over five years. The bill alsowould make a number of revisions to Medicare.

The Senate version (S 1893)would reauthorize SCHIP and increase the federal cigarette tax by 61cents per pack to boost funding for the program by $35 billion overfive years.

President Bush has proposed a $5 billion increaseover five years for SCHIP, which would raise the program's totalfive-year funding to $30 billion. Bush has said he would veto the Houseand Senate bills (Kaiser Daily Health Policy Report, 8/15).


State officials on Monday said that the guidelines "could cripple theirefforts to cover more children and would impose standards that couldnot be met," according to the Times. Ann Clemency Kohler-- deputy commissioner of human services in New Jersey, which has hadan income threshold of 350% of the poverty level for more than fiveyears, said, "We are horrified at the new federal policy," adding, "Itwill cause havoc with our program and could jeopardize coverage forthousands of children." Stan Rosenstein, California's Medicaiddirector, said that the guidelines are "highly restrictive, much morerestrictive than what we want to do" (New York Times, 8/21).

Democratsand children's advocates said that the guidelines "will jeopardizecoverage for children whose parents work at jobs that do not provideemployer-paid insurance," according to the Washington Post. Senate Finance CommitteeChair Max Baucus (D-Mont.) on Monday called the new guidelines a"drastic change" in policy that "jeopardizes coverage for tens ofthousands of children in low-income, working families. New policieslike this warrant greater transparency before changes are made,"adding, "I hope the administration will reconsider" (Washington Post, 8/21).

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.