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Legislation Would Block Bush Administration Rules Limiting SCHIP Eligibility To Lowest-Income Children

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State Children's Health Insurance

A bipartisan group of senators -- Olympia Snowe (R-Maine), GordonSmith (R-Ore.), Edward Kennedy (D-Mass.) and John Rockefeller (D-W.Va.)-- have introduced legislation (S 2049) that would prevent theimplementation of new rules announced by the Bush administration that are designed to limit SCHIP enrollment to the lowest-income children, CQ HealthBeat reports (Reichard, CQ HealthBeat, 9/13).

Underthe standards, states must demonstrate that they have enrolled at least95% of children in the state in families with incomes below 200% of thefederal poverty level who are eligible for Medicaid or SCHIP beforeexpanding eligibility to children in families with incomes greater than250% of the poverty level. States seeking to expand SCHIP eligibilityalso must establish a minimum of a one-year period of uninsurance forindividuals in families with incomes greater than 250% of the povertylevel to prevent them from switching from a private insurance plan to apublic program (Kaiser Daily Health Policy Report, 9/11).

Snowesaid, "Health coverage has grown so expensive that even above 250% ofthe federal poverty line, many families simply cannot afford it." Senate Finance CommitteeChair Max Baucus (D-Mont.) also "is looking at ways to stop" the newenrollment rules but has not specifically endorsed the bipartisan bill,according to an aide (CQ HealthBeat, 9/13).


In related news, Baucus and Senate Finance Committee ranking member Chuck Grassley (R-Iowa) on Thursday in a letter to HHSasked the agency to provide information about contracts it has signedfor research on SCHIP -- in particular, studies conducted by Mathematica Policy Research -- and to quickly release any findings, CQ Todayreports. Baucus and Grassley wrote, "To the extent that HHS hasoutstanding research projects that provide additional insights into howthe [SCHIP] program is working, we would hope the administration wouldbe forthcoming with such information."

One report, titled"SCHIP at 10: A Synthesis of the Evidence on Substitution of SCHIP forOther Coverage," is expected to discuss "crowd-out," the phenomenon ofpublic coverage substituting for private insurance. The crowd-outtheory is one of President Bush's grounds for vetoing SCHIPlegislation, indicating that the report "could have significant impact"on the SCHIP discussion, according to CQ Today.

CMSspokesperson Jeff Nelligan in an e-mail said that the agency is "awareof the senators' letter and [is] working on the expedited release ofthe report." Baucus and Grassley said they want copies of any draft orcompleted Mathematica reports by Sept. 17. HHS has until Sept. 24 todeliver information about studies contracted to other research firms,according to Baucus and Grassley (Wayne, CQ Today, 9/13).

Pallone Sees Possibility of Separate Bills

Meanwhile, House Energy and Commerce Health SubcommitteeChair Frank Pallone (D-N.J.) on Wednesday said that separating Medicarerevisions from House SCHIP legislation, as requested by the Senate,remains a possibility, CongressDaily reports. Pallonesaid, "Obviously, we want to get [an SCHIP] bill passed by the end ofthe month, and we want to avoid a presidential veto. So we'll do whatwe have to do to get there."

Pallone said that separating theHouse SCHIP bill into two separate bills is unwise because thelegislation, as written, would halt a scheduled 10% cut in Medicarephysician reimbursement rates -- an issue almost all members ofCongress believe is important, according to CongressDaily."Undoubtedly, Congress will want to deal with this doctors' paymentissue. It certainly would be more efficient to combine these all in onebill," Pallone said during a conference call sponsored by Families USA.

Separately,Acting CMS Administrator Kerry Weems reaffirmed Bush's veto threat forthe House and Senate SCHIP bills. Weems said, "From what I see insidethe administration, there's no rethinking of the veto threat" (Johnson,CongressDaily, 9/13).

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Democrats have acknowledged that a stopgap funding bill for SCHIP willbe needed before the end of the month to continue funding for theprogram, but they want the extension to result from a presidentialveto, rather than a stalled conference committee, according toDemocratic aides, CongressDaily reports. Under theassumption that Bush will veto any significant expansion of SCHIP,House leaders "will have little choice but to play ball with" Baucusand Senate Majority Leader Harry Reid (D-Nev.) "to compromise on themore ambitious House bill," according to CongressDaily.House Democrats "are clearly limited by the reality of the Senate,"which lacks support for cuts to Medicare Advantage plans as well as theHouse's higher funding level, CongressDaily reports.

Accordingto a senior House Democratic aide, "We are not going to allow Bush togo after us for not getting something in time, but there is adiscussion about how to overcome the differences in the House andSenate bills." The aide added, "Some people feel we need to fight forthe House bill, and there are some whose view is that no matter what,it is going to get vetoed, so let's send him the smartest politicalproduct rather than the best product" (Johnson/Bourge, CongressDaily, 9/13).

New Jersey

New Jersey Gov. Jon Corzine's (D) letterto Bush and HHS Secretary Mike Leavitt that said the state would suethe Bush administration over the new SCHIP eligibility rules "escalatedthe growing confrontation between a number of states and theadministration," the Washington Post reports.

According to the Post,the rules have been characterized as "unfair and overreaching bychildren's advocates and politicians of both parties," but Corzine'sletter "marks the first time a governor has openly vowed to defy them."Corzine in the letter wrote that FamilyCare,the state's version of SCHIP, "will continue to provide health care tochildren in families with incomes up to 350%" of the poverty level.

WhiteHouse spokesperson Tony Fratto said, "New Jersey is free to use its ownfunds to cover children who are not eligible under the federalguidelines," adding, "It's premature to say what CMS would do if theyare not in compliance. ... We hope that New Jersey would focus on thecore mission of this program" (Lee, Washington Post, 9/14).


McClatchy/Charlotte Observeron Friday examined "the obscure but inevitable phenomenon known as'crowd-out,'" which "has emerged as the strongest criticism ofexpanding SCHIP." According to Congressional Budget Office estimates, for every 100 children who enroll in SCHIP, 25 to 50 previously had private health coverage.

CBOestimates that under SCHIP expansion proposals being considered in theHouse and Senate, by 2012, one in three children will have beenpreviously covered by private insurance and more than two millionchildren would be the product of crowd-out, McClatchy/Observer reports. According to McClatchy/Observer,the estimates "have bolstered the Bush administration's claims that[SCHIP] bills are an ill-advised detour from SCHIP's original intent:serving low-income children." However, some experts say the CBOestimates might be overstated, McClatchy/Observer reports (Pugh, McClatchy/Charlotte Observer, 9/14).


It was "tactical overreach to combine" Medicare revisions with SCHIPlegislation because the Medicare provisions "are clouding the debate"over the program, according to a Boston Globeeditorial. The editorial continues, "No doubt Congress will keep thispopular program limping along with temporary extensions at the currentlevel," but "now is the time to pass a significant expansion of theprogram."

It concludes, "The House leadership has a choice: Itcan stick with the House bill, and blame the Republicans for blockingit, or move toward the Senate version and try to achieve a consensus onexpansion this fall that will prevail over Bush's veto. More than threemillion children would thank the House Democrats if they sought acompromise" (Boston Globe, 9/14).

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.