Enrolling Low-Income Children In SCHIP Before Expanding Coverage Is Unenforceable

Armen Hareyan's picture

The Bush administrationviolated federal law last year when it issued a policy directive that restrictsstates' ability to expand their SCHIP programs, according to a Government Accountability Office legal opinion released Friday, the NewYork Timesreports (Pear, New York Times, 4/19). The new guidelines, issuedin an August 2007 letter, state that before expanding SCHIP eligibility tochildren in families with incomes greater than 250% of the federal povertylevel, states must demonstrate that they have enrolled at least 95% of childrenin the state below 200% of the poverty level who are eligible for Medicaid orSCHIP.

States seeking to expand SCHIP eligibility also must establish a minimum of aone-year period of uninsurance for individuals in families with incomes greaterthan 250% of the poverty level to prevent them from switching from a privateinsurance plan to a public program (Kaiser DailyHealth Policy Report, 8/21/07).

In the legal opinion, GAO states, "The Aug. 17 letter from CMS to statehealth officials is a statement of general applicability and future effectdesigned to implement, interpret or prescribe law or policy with regard to theSCHIP program. Accordingly, it is a rule under the Congressional ReviewAct" (Young, The Hill,4/18). The Congressional Review Act establishes the formal rule-making process,which includes submission to Congress and a public review period. According toGAO, the directive is invalid because it did not follow this process(Armstrong, CQ Today, 4/18).

GAO's findings are in line with a Congressional Research Service analysisreleased in January. Neither GAO nor CRS has authority to rescind the policydirective, but Sens. John Rockefeller (D-W.Va.) and Olympia Snowe (R-Maine),who requested the GAO opinion, said that the agencies' conclusions should leadthe administration to do so (Johnson, CongressDaily, 4/18).


CMS spokesperson Jeff Nelligan said that despite GAO's opinion, the directivewill remain in effect (AP/Lexington Herald-Leader, 4/19).

State Lawsuits

An aide to Rockefeller said that while the GAO report is not legally binding,states could use the report to bolster their case in a lawsuit against thefederal government that seeks to block the new policy. The aide said, "Theanticipation is that the states will now have a much stronger hand when they goto court." Several states have sued to prevent enforcement of the policydirective. Many states have "argued administration standards wereimpossible to meet, saying the 95% participation requirement was toohigh," according to CQ Today. CMS has said at least nine of17 states affected by the policy directive eventually will be in compliance withits requirements (CQ Today, 4/18).

In addition, the opinion "strengthens the hand of at least 22 states ...that already provide such coverage or want to do so," according to the Times(New York Times, 4/19). House Democrats also have "hintedthat legislation addressing" the policy directive will be on the floorthis summer, according to CongressDaily (CongressDaily,4/18).


"The directive is a bold-faced attempt to subvert the law and preventstates from implementing their plans to provide health insurance coverage tomillions of uninsured children nationwide," Rockefeller said in astatement (CQ Today, 4/18). Snowe said, "CMS chose tocircumvent the rules and go their own way," adding that "this isclearly the wrong approach" (CongressDaily, 4/18). Rockefellerand Snowe in a release wrote, "CMS now has a critical choice to make:rescind the rule or continue to spend taxpayer money defending a growing listof lawsuits it is unlikely to win" (AP/Lexington Herald-Leader,4/19).

Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.