By Alex Wayne, CQ Staff
November 16, 2007 -- A dispute over Medicaid eligibility is now the major sticking point in negotiations on children's health legislation, two Republican senators said Friday.
One of them, Orrin G. Hatch of Utah, said the Medicaid flap threatens to "blow up the bill"—a bipartisan measure that is intended to renew and expand the State Children's Health Insurance Program (SCHIP).
SCHIP covers about 6 million children whose families are low-income but not poor enough to qualify for Medicaid, the larger state-federal health care entitlement program for the poor. A bipartisan group of lawmakers from the House and Senate has been talking for about two weeks about changes to a bill (HR 3963) that would expand SCHIP by $35 billion over five years, to $60 billion—changes that might garner enough House Republican votes to overcome a promised presidential veto.
Lawmakers have not previously mentioned Medicaid as an issue in the talks, much less a major point of contention. But SCHIP and Medicaid are closely related. Efforts to find and enroll children in SCHIP often result in increased Medicaid enrollment, and some states operate the two as a single program.
On Thursday, House Republicans delivered a proposal to Senate Finance Chairman Max Baucus, D-Mont., and Sen. Charles E. Grassley of Iowa, the senior Republican on Baucus' committee, asking that the bill cap eligibility for Medicaid at three times the poverty level, or about $62,000 for a family of three.
Hatch and Grassley said that Democrats have balked at that request.
"They say this is a SCHIP bill, not a Medicaid bill," Grassley said. A spokeswoman for Baucus declined to comment.
"It's most assuredly one of the most significant issues," a House Republican leadership aide said.
The House Republicans also want to prohibit states from ignoring some kinds of expenses, such as rent and transportation, when calculating eligibility for SCHIP or Medicaid—a change from current law. Democrats say those proposals would cause states to drop children from Medicaid.
"Democrats feel that the proposals put forward by Republicans would undermine Medicaid and walk away from the bipartisan goal of covering 10 million kids," a House Democratic leadership aide said.
Eligibility Issue
States are allowed wide latitude to set eligibility in both programs. The government requires states to provide Medicaid coverage to children under age 6 from families earning 133 percent of the federal poverty level or less, and to older children in families at or below the poverty level.
There is no cap on eligibility for Medicaid, though few states are willing to go much above the federally mandated minimums because the federal government covers as little as half the cost. The exact federal share varies from state to state.
The government covers up to 85 percent of the costs of SCHIP, according to the Congressional Budget Office, as an incentive for states to enroll people in the program. Eligibility for SCHIP is also uncapped, although states must seek permission from the federal government to extend coverage to families above 200 percent of poverty or more than 50 percentage points above their Medicaid eligibility limits, whichever is higher.
In the SCHIP legislation, lawmakers have agreed to cap SCHIP eligibility at three times the poverty level. Only one state, New Jersey, allows people from families making more than that to enroll in SCHIP. No state has expanded Medicaid eligibility above 300 percent of poverty.
Grassley said he does not believe Democrats are trying to leave the door open for Medicaid expansions above 300 percent of poverty. He said he does not understand why they object to writing a limit into law.
"They say they don't want to [go above that level], and I believe them that don't want to," he said. "But they're not willing to put language into the bill that the House Republicans want that would guarantee that."
Grassley added, "It seems to me we all agree on the policy; why can't we write it?"
Hatch said he thinks the issue is the most significant remaining obstacle to a deal.
"I think we can get it done if Democrats will not try to expand Medicaid above the 300 percent solid cap," he said. "If not, that will blow up the bill."
Baucus said that talks on the legislation would resume after Congress returns from its two-week Thanksgiving break. Authorization for SCHIP funding will continue at current levels through Dec. 14 under a continuing appropriations resolution President Bush signed Nov. 13 (PL 110-116).