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State Children’s Health Insurance Program Focus of House Subcommittee Hearing

On March 1, the House Energy and Commerce Subcommittee on Health held a hearing entitled, “Covering the Uninsured through the Eyes of a Child.” The subcommittee heard testimony from health providers and states on the need to expand the State Children’s Health Insurance Program (SCHIP). SCHIP was created by the Balanced Budget Act of 1997 (P.L. 105-33) and provides health insurance to low-income children who are ineligible for Medicaid but unable to obtain private health insurance coverage. SCHIP’s current authorization expires at the end of FY2007. This is the second of two hearings on SCHIP (see The Source, 2/16/07).

Kathryn G. Allen, director of health care at the Government Accountability Office, testified on states’ SCHIP programs, including eligibility criteria and prior year expenditures. “SCHIP spending was initially low, but now threatens to exceed available funding. Since 1998, some states have consistently spent more than their allotments, while others spent consistently less…By FY2002, however, states’ aggregate annual spending began to exceed annual allotments,” she said. Ms. Allen said that SCHIP’s reauthorization “occurs in the complex debate on broader national health care reform and competing budgetary priorities, highlighting the tension between the desire to provide affordable health insurance coverage to uninsured individuals, including low-income children, and the recognition of the growing strain of health care coverage on federal and state budgets.” Ms. Allen named several issues the subcommittee should consider in reauthorizing SCHIP, including state flexibility, funding formulas, state equity, and enrollment-related performance measures.

“My overarching message to you is that the tremendous success and bipartisan popularity of this program is directly tied to its flexible, federal structure,” said Alan R. Weil, executive director of the National Academy for State Health Policy. Mr. Weil explained that at the outset of the SCHIP program, “states were under great pressure to spend [federal] resources, and the federal government was actively encouraging states to draw down SCHIP dollars to meet the needs of children in families with incomes above twice the poverty level as well as low-income adults…Today the picture looks quite different. We speak of shortfalls and states are criticized for the choices they were encouraged to make just a few years ago.” He said that states have embraced the flexibility in the SCHIP program and made decisions based on their local economies, health care systems, and overall fiscal health. He warned Congress against “substitut[ing] its judgment for those of the states,” saying that making major changes to the program “carr[ies] substantial risk.” Mr. Weil concluded, saying, “States need prompt reauthorization so they can plan for the future the expiration of the current authorization is only seven months away and states are already well into the process of setting their budgets for next year. And, ultimately, states need an expanded federal financial commitment of resources so they can continue making progress meeting the needs of their citizens who would otherwise go without health insurance.”

Dr. Phyllis Sloyer, division director of children’s medical services at the Florida Department of Health, described the challenges of trying to reach an estimated 220,000 eligible but uninsured children in her state: “We have many communities who may face cultural, social, and language barriers who we cannot reach through traditional outreach efforts. Because of that, we know it is not enough to market our programs through television and radio advertising.” Instead, the state relies on physician offices and community health centers, partnerships with community leaders, and peer trainers to reach the families of uninsured children. “However,” she said, “the resources available for critical outreach efforts are often times limited by federal caps on administrative expenditures…As a result of federal limitations, we have had to support outreach through limited state-only funds.” Dr. Sloyer asked that Congress allocate resources for outreach and administrative expenses above the current 10 percent cap on such activities. She also asked that Congress “consider changes to procedural [application] requirements” imposed by the Deficit Reduction Act of 2005 (P.L. 109-171), lift the restrictions on state public employees’ eligibility for SCHIP, and “align coverage for pregnant women to ensure that it is consistent with the coverage of infants provided under the SCHIP program.” She said she was “concerned that a state like Florida [that] has remained true to the intent of the program will be penalized in reauthorization. While Florida today may have an unused allocation of SCHIP funding, we are working to reach a continually growing number of eligible children in our state…The redistribution of SCHIP dollars without careful consideration of the original purpose of the SCHIP legislation will simply shift funding challenges from one state to another.”

Dr. Lolita McDavid, a medical director of child advocacy and protection at Children’s Hospital in Cleveland, testified on behalf of the National Association of Children’s Hospitals. She shared the stories of two of her patients with the subcommittee: Rhonesha, aged six, is enrolled in SCHIP and has successfully managed her asthma with regular visits to a pediatrician and pulmonologist. The second patient, Nick, was uninsured and admitted to the hospital with pneumonia because he lacked preventative care and a regular health care provider. Dr. McDavid urged the subcommittee to fully fund SCHIP, to protect Medicaid’s “safety net for children,” and to invest in the development of quality performance measures. She also recommended that the subcommittee improve outreach and enrollment by allowing parents to declare their incomes, saying that a 12-month study conducted in Cuyahoga County, Ohio found that “self-declaration of income by parents resulted in at least 24,000 eligible children being enrolled, with a 98 percent accuracy rate.”

New Jersey State Senator Joseph Vitale described his state’s implementation and expansion of their SCHIP program. New Jersey allows children with family income up to 350 percent of the federal poverty line (FPL) ($58,100 for a family of three) to enroll in SCHIP. It also offers coverage to the parents of eligible children with incomes at or below 133 percent of the FPL ($22,078 for a family of three). Sen. Vitale explained that New Jersey “uses a higher percentage of the federal poverty level for eligibility for its SCHIP program than other states [because] we also have one of the highest costs of living in the nation. Simply put, it costs far more to be poor in New Jersey than in almost all other states.” New Jersey has regularly outspent its annual SCHIP allotment and turned to reallocated funds to meet the shortfall; however, Sen. Vitale said that reallocated funds “have been diminishing over the years.” Describing the program, he said, “This collaboration between the federal government and the states, and with premium sharing by consumers where it is possible, allows the kind of partnership in health care that is a model for success. Without this continuing alliance, millions of children and families will simply be unable to access the kind of care that the rest of us have and some take for granted.”

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