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Study: SCHIP Bills Mainly Benefit Poor Kids

By John Reichard, CQ HealthBeat Editor

September 19, 2007 – Critics of children's health insurance bills passed by the House and Senate (HR 3162, HR 976) say the proposals direct too much federal money toward funding coverage of middle-class children, but in fact most kids covered by the proposals would come from low-income households, according to a new analysis by the Urban Institute.

Both bills reauthorize the State Children's Health Insurance Program (SCHIP) in a way that continues coverage of current enrollees while extending coverage to new enrollees. The Senate bill would boost spending for SCHIP by $35 billion over five years to a total of $60 billion, while the House bill would boost spending by $47 billion to a total of $72 billion. House and Senate negotiators have tentatively agreed to the Senate-passed spending figure, but negotiations continue.

Seventy percent of all children who would gain or retain SCHIP or Medicaid coverage under the Senate SCHIP bill live in households with incomes below 200 percent of the federal poverty level, according to the analysis (the SCHIP program boosts Medicaid enrollment because efforts to recruit enrollees also bring in children with lower household incomes, qualifying them for Medicaid rather than SCHIP). Seventy-six percent of all children who would gain or retain SCHIP or Medicaid coverage under the House SCHIP bill come from households with incomes also below 200 percent of the poverty level, the researchers said.

Those figures include not only uninsured children obtaining coverage under the SCHIP program, but also those with private coverage who switch to SCHIP. Of the four million to five million uninsured children who stand to gain coverage under the House and Senate bills, between 78 percent and 85 percent live in households with incomes below 200 percent of the federal poverty line, the analysis said.

The Bush administration says the House and Senate bills would shift the program too much away from its original intention of covering children whose families have low incomes but make too much to qualify for Medicaid. The administration has set a requirement that 95 percent of children from households with incomes below 200 percent of poverty be enrolled in SCHIP before states can undertake to enroll children at higher income levels. Critics say that standard will cause many current SCHIP enrollees to lose coverage.

New Jersey has boosted SCHIP eligibility to 350 percent of the federal poverty line, the highest income eligibility in the nation. Defenders of that level say the state has the highest cost of living in the nation. The administration recently turned down a request by New York state to raise SCHIP eligibility to 400 percent of the poverty level.

According to the Urban Institute analysis, "very few of the children targeted under both bills have incomes above 300 percent of the federal poverty level."

Galen Institute President Grace-Marie Turner, a conservative critic of the House and Senate bills, didn't dispute the findings of the study that the measures would mainly benefit low-income kids.

"That's fine," she said. "We're saying cover as many kids as you can under 200 percent of poverty, but don't expand it to the higher income categories. They're making my point."

Turner said that both bills are flawed because they contain incentives for states to switch their focus to enrolling children in income categories above the 200 percent mark when there are plenty of kids to enroll below that level. Based on a conversation she had with a senior Medicaid official, the federal government, in some cases, could pay 90 percent or more of the cost of enrolling children in the higher income brackets under provisions of the House bill, she said.

Urban Institute data on the number of uninsured children below 200 percent of poverty who are eligible for the existing SCHIP program have previously stirred controversy. An analysis by the organization's Income and Benefits Policy Center earlier this year found far few SCHIP-eligible uninsured children in that income category than did other analyses, including one by its health policy center.

Genevieve Kenney, the lead analyst for the new study on the children affected by the House and Senate bills, is with the Urban Institute's Health Policy Center.

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