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Bill Introduced to Block New SCHIP Limits

By John Reichard, CQ HealthBeat Editor

September 13, 2007 – Two Democratic and two Republican senators have introduced legislation to nullify new restrictions imposed by federal officials August 17 on the ability of states to enroll children in the State Children's Health Insurance Program (SCHIP). The rules would essentially prevent state SCHIP programs from enrolling uninsured children from families with household incomes above 250 percent of the federal poverty level, the senators said in a joint statement late Wednesday.

"Health coverage has grown so expensive that even above 250 percent of the federal poverty line, many families simply cannot afford it," said Republican Senator Olympia Snowe of Maine, who introduced the legislation (S 2049) along with Democrats Edward M. Kennedy of Massachusetts and John D. Rockefeller of West Virginia, and Republican Gordon H. Smith of Oregon. "In my state of Maine, a family faced with purchasing a policy on the individual market could face a cost well in excess of $24,000 a year," Snowe said. The federal poverty level for a family of four is $20,650; 250 percent of that level is $51,625.

The restrictions also appear to reverse previous administration policy, which allowed states to use waivers to expand their SCHIP programs to cover children from families making as much as 3 1/2 times the federal poverty level, or $72,275 for a family of four.

Dennis G. Smith, director of the Center for Medicare and Medicaid Services' Center for Medicaid and State Operations, said in his letter that among other requirements, states seeking to expand SCHIP will first have to assure the government that they have covered 95 percent of children in families earning less than 200 percent of the poverty level before covering those from families making 250 percent or more. The requirements "do not interfere with the effective and efficient provision of child health assistance coordinated with other sources of health benefits coverage to the core SCHIP population of uninsured targeted low income children."

The restrictions infuriated advocates of wider coverage of uninsured children, who say the rules set conditions that can't be met for covering children above 250 percent of the poverty level. Advocates say reaching such high enrollment percentages in government programs assisting lower-income Americans is extremely difficult, if not impossible, because of the difficulty of identifying and enrolling them all. Denying coverage as a result to children whose families have higher incomes but still can't afford health insurance is unconscionable, they say, especially without the population of uninsured children on the rise, they add.

"These new policies put forth by the Bush administration without Congressional approval are unjust, increasing barriers to child health coverage at a time when we need to be breaking down those barriers to cover more uninsured children—not fewer," said Marian Wright Edelman, president of the Children's Defense Fund, in a statement.

"The policy would stop states from moving forward with expansion plans, as well as force a roll back in states that have covered uninsured children in this income range through SCHIP for years," according to an August 30 analysis by the Center for Children and Families at the Georgetown University Health Policy Institute. "The federal SCHIP law has always granted states the authority to set their income eligibility levels for SCHIP. The new policy was not prompted by any change in statute or regulation."

The analysis said that 23 states "would clearly and directly be affected by the new rules," including 11 states that already have income eligibility thresholds above 250 percent of the federal poverty level and eight states that have adopted but not yet implemented such eligibility thresholds. "Hundreds of thousands of children with family incomes above the new threshold, as well as children with lower incomes could lose coverage as a result of the directive," the analysis said.

Senate Finance Committee Chairman Max Baucus, D-Mont., and the panel's senior Republican, Iowa Senator Charles E. Grassley, are leading efforts in the Senate to negotiate a final SCHIP conference agreement with the House. Asked whether Baucus supports the legislation nullifying the new rules, a Baucus aide said her boss "is looking at ways to stop" the restrictions, but hasn't explicitly endorsed the bipartisan measure that would block the administration's new SCHIP restrictions.

However, it's reasonable to expect that an SCHIP conference report or a shorter-term measure extending the program would include language nullifying the restrictions. But President Bush has threatened to veto SCHIP expansion and some legislative analysts don't rule out the possibility that the White House might choose to veto even a shorter-term measure that continued spending at current levels but contained language to overturn the restrictions. A group of 44 senators led by Oregon's Smith and Democratic Senator Robert Menendez of New Jersey sent a letter to Bush September 10 urging withdrawal of the restrictions.

The restrictions also could face legal challenges, with the governors of both New York and New Jersey saying they may go to court to overturn them.

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