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The Debate Ahead on SCHIP

By Mary Agnes Carey, CQ HealthBeat Associate Editor

February 9, 2007 -- Funding levels, outreach activities, and coverage of adults are all among the major issues in the debate over reauthorization of the State Children's Health Insurance Program (SCHIP), experts said at a forum Friday.

Battle lines already are emerging over SCHIP provisions in President Bush's fiscal 2008 budget proposal. The president's plan would increase SCHIP funding by $675 million, to $5 billion in fiscal 2008. The president also proposes transferring unspent money within SCHIP so the program could spend $1.2 billion more in fiscal 2008. But Democrats have argued that it will take an additional $12 billion to $15 billion over the next five years to fully fund the program.

Gayle Lees Sandlin, director of the Alabama Department of Public Health, said Bush's proposal would reduce the size of her state's SCHIP program by 25 percent.

Bush's proposal also would encourage states to scale back coverage of all adults and children from higher-income households. Eligibility would be capped for new entrants at 200 percent of the federal poverty level, offering lower federal matching funds for those above that threshold. Such curbs could reduce SCHIP enrollment.

As of 2005, about 600,000 adults received coverage through the program, with 12 states covering parents of SCHIP recipients and six states covering childless adults, said Diane Rowland, executive vice president of the Henry J. Kaiser Family Foundation and executive director of the Kaiser Commission on Medicaid and the Uninsured. In addition, 15 states cover pregnant women through either waivers or an option to cover "unborn children."

Created in 1997 as part of the Balanced-Budget Act (PL 105-33), SCHIP provides coverage to more than six million children each year, yet two million children remain uninsured despite being eligible for the program, said Genevieve Kenney, a principal research associate and health economist at the Urban Institute. "That suggests that more work needs to be done. The job isn't finished," she said.

The program, Kenney said, is "on the verge of a funding crisis," with 14 to 17 states projected to face funding shortfalls in May. Georgia is slated to run out of SCHIP funds even sooner, which could affect coverage for 270,000 children. At the same time states are facing funding shortfalls, about $4 billion in unspent SCHIP funds have accumulated in other states, with Texas accruing 25 percent of the unspent funds, she said.

Speakers at the forum, hosted by the Alliance for Health Reform and the Kaiser Commission on Medicaid and the Uninsured, said that key issues in the SCHIP debate will include how much flexibility and funding states should receive and how excess SCHIP funding should be redistributed.

Lawmakers also must debate whether or not to promote higher enrollment among children eligible for Medicaid and SCHIP, which includes finding ways to overcome enrollment barriers, such as streamlined applications processes or a review of current documentation requirements that may be hindering enrollment. Possible expansions to cover low-income families and low-income groups are another vision for the program, Kenney said.

Finding more funding for SCHIP will be difficult under "pay as you go," or PAYGO, budget restrictions, which require new entitlement spending or tax cuts be accompanied by tax or spending offsets. Sen. John D. Rockefeller IV, D-W.Va., chairman of the Alliance for Health Reform, said PAYGO rules are "terrific for the budget and terrible for people" and he urged broader thinking and greater funding to help solve the nation's health care woes.

"How important is health care?" Rockefeller asked. "Everything is getting worse and constantly will continue to do so."

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