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Here's the Deal on SCHIP . . . Er, CHIP

By John Reichard, CQ HealthBeat Editor

Sept. 21, 2007 – House and Senate negotiators finally came together Friday on an agreement blending provisions passed by their respective chambers to reauthorize the State Children's Health Insurance Program. When and whether the provisions will ever take effect is unclear in light of the pledge by President Bush to veto the package as well as the difficulty, particularly in the House, of overriding the expected veto. But even if Bush prevails and SCHIP is extended by a year or two without any expansion, the provisions of the agreement could eventually be dusted off and become the starting point for new efforts to expand the program after Bush leaves office.

As expected, the agreement calls for added spending of $35 billion over five years in addition to current spending levels of some $5 billion a year, making a total of $60 billion in spending on the program. It would no longer be known as "SCHIP," but rather as "CHIP," or the Children's Health Insurance Program. According to a summary released by the Senate Finance Committee—legislative language isn't expected to be available until Monday—the agreement also would:

  • Preserve coverage for 6.6 million children currently covered by the program. The agreement also would reduce the number of uninsured children by almost four million, pending final estimates from the Congressional Budget Office.
  • Require dental coverage for all children enrolled in the program. "The agreement also ensures that states will offer mental health services on par with medical and surgical benefits" covered under the program. In addition, it protects "EPSDT" benefits, which stands for Early Periodic Screening Diagnosis and Treatment benefits that advocates for low-income patients are essential to quality care.
  • Modify populations eligible for coverage. States would have the option to cover pregnant women as well as to cover them through other approaches, such as seeking approval of waivers from the Centers for Medicare and Medicaid Services (CMS). Coverage of childless adults would be phased out after a year, with temporary Medicaid funding provided to cover those now enrolled in SCHIP through waivers. States also would be permitted to apply for a waiver to cover these adults in Medicaid.
  • Give states enrollment incentives. The agreement would allow "additional up-front funding for states planning improvements to their" CHIP programs. "States that face a funding shortfall and meet enrollment goals will receive an adjustment payment to ensure that no child who is eligible for Medicaid or CHIP is denied coverage or placed on a waiting list." But "the formula also sets in place new overall caps on federal funding to ensure the program's expenditures do not exceed the amounts authorized."
  • Replace CMS restrictions on enrollment announced Aug. 17. Instead of the provisions in the letter meant to prevent "crowd out"—substitution of private coverage with government-funded coverage—the agreement "gives states time and assistance in developing and implementing best practices" to prevent substitution. The agreement also would phase in a requirement for covering low-income children first as a condition for funding coverage of children above 300 percent of the poverty level.
  • Strengthen enrollment efforts. The deal would provide $100 million in grants to states, local governments, schools, community organizations, safety-net providers and others to enroll children in CHIP programs.
  • Expand premium assistance programs. The agreement would make it easier for CHIP programs to enroll children in employer-provided private coverage by helping families with their premium payments.

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