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Uninsured Children Subject of House Subcommittee Hearing

On February 14, the House Energy and Commerce Subcommittee on Health held a hearing entitled, “Covering the Uninsured through the Eyes of a Child.” The hearing focused on the upcoming reauthorization of 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.

Chair Frank Pallone (D-NJ) said, “Today, there are nearly 47 million Americans who don’t have health insurance. Millions more are underinsured. What is even more appalling is that approximately nine million of those who are uninsured are children…That is a national disgrace…This disturbing statistic would undoubtedly be worse if it were not for the State Children’s Health Insurance Program. Thanks to SCHIP, the percentage of low-income children in the United States without health insurance has fallen by one-fourth since it was created in 1997.” Rep. Pallone emphasized the need to strengthen the SCHIP program and to fund it fully; he called the current lack of funding for SCHIP an “immediate and glaring problem.” He concluded, “We have a unique opportunity before us this year. Finally we have the chance to do something about the uninsured.”

“Children’s health care is a priority for all of us,” said Rep. Heather Wilson (R-NM). She continued, “About 20,000 more low-income children in New Mexico have health coverage annually because of SCHIP. We know that having health insurance means kids can go to the doctor when needed to get routine check-ups and immunizations. Studies have shown that children with insurance are in better health than children without. SCHIP gives kids a healthy start in life.” Rep. Wilson said that funding for SCHIP is critical: “Earlier this month I joined Congressman Marion Berry [D] from Arkansas in organizing a bipartisan letter asking the House Budget Committee to fully fund SCHIP to prevent any children from losing coverage.” Rep. Wilson closed by recommending the subcommittee “find new, innovative ways to get eligible children enrolled in SCHIP and better integrate the SCHIP program with private health insurance and employer coverage.”

Jeanne Lambrew, a professor at The George Washington University School of Public Health, focused her testimony on three points: “Health coverage for children improves access to care, health outcomes, and the prospects of children and families; the short-run budget cost of covering more children is worth the long-run value to our nation; and the design of the federal investment in children’s health coverage matters specifically, the block-grant features of SCHIP have limited the program’s success and should be modified.” Dr. Lambrew said, “The cost of unmet health needs among children extends beyond the measurable health costs. Problems that could be managed or cured with health care result in lower school attendance.” She told the subcommittee that the average cost of covering a child in 2008 will be $2,875 and the federal share per child is about $1,000. This amount represents “less than the costs of a day in the hospital or a year’s worth of medications for chronic conditions…We spend more to protect children from the threat of terrorism than disease or disability, which statistically are more probable and equally devastating.” Dr. Lambrew recommended that the subcommittee review the funding formulas for SCHIP, including using actual enrollment numbers and eliminating the cap on federal matching payments to states.

Susan Molina, the board chair of Metro Organization for People (MOP) in Denver, testified about her experiences with the SCHIP program. Ms. Molina said, “Almost all uninsured children live in families where at least one parent works. I am a single mom who works. I am uninsured. In September my children lost their SCHIP coverage because my new job paid slightly more than 200 percent of poverty and that made my children ineligible.” She described her enrollment in SCHIP following her daughter’s need for expensive dental care. She told the subcommittee that private insurance is not an option for her family: “When insurance prices are outrageously high, as a parent I have to decide whether to put food on the table or buy health insurance. I cannot afford the hundreds of dollars each month that it would cost me to buy health insurance for my children.”

Chris Peterson, a specialist in the domestic policy division of the Congressional Research Service, said that while the number of children covered by private insurance has fallen, the overall number of uninsured children has not risen because of the increase in public coverage. “The overall simultaneous decline in private coverage and increase in public coverage raises questions about the extent to which these changes are linked, particularly as eligibility was extended up the income scale for SCHIP. Researchers’ estimates of this effect vary widely,” he said. Mr. Peterson said that some of the expected but unrealized enrollment in SCHIP could be due to a “lack of awareness” or a “false perception of enrollment half of low income parents believe their kids are not eligible for SCHIP.”

“Today’s health care system is a mix of public and private coverage,” said Nina Owcharenko, a senior policy analyst with the Heritage Foundation. Ms. Owcharenko outlined the demographics by age, family income, and work status, noting that “68 percent [of children without coverage] were in families with a full-time, full-year worker…Only 17 percent of uninsured children were in a family with no worker.” She detailed some of the obstacles to coverage, including private and public sector shortfalls: “Having a job does not guarantee coverage for workers or dependents. An employer may not offer coverage, as is common in the small business sector…Some workers simply choose not to participate in employer coverage. Sixty-four percent of workers who did not participate in employer coverage cited cost as the reason.” Ms. Owcharenko noted that the “number of doctors who will see new Medicaid patients continues to decline,” limiting access to care. She recommended several strategies to ameliorate the current shortfalls, including: promoting alternatives to employer-based coverage, such as pooling resources to purchase private coverage; increasing choice for insurance enrollees by allowing them to purchase plans across state lines; supporting state flexibility and innovation; and changing the federal law “to remove the distortion of the tax code with regard to the tax treatment of health insurance.” She concluded, saying, “Addressing the lack of health insurance among children is important…Policy initiatives should focus on changes to the private and public health care system that increase coverage options and personal control. Such policy solutions will not only address the needs of children, but improve the health system for all Americans.”

Jay Berkelhamer, president of the American Academy of Pediatrics, told the subcommittee that “one of the important problems with both Medicaid and SCHIP programs is the rate of payment under each. On average, Medicaid reimburses pediatricians at only 69 percent of the rate that would be paid under Medicare, and only 56 percent of commercial rates for an office visit…Low rates of payments seriously impede access to quality health care for children.” Dr. Berkelhamer recommended the subcommittee establish parity between Medicaid and Medicare payment rates in the reauthorization. Beyond payment rates, he said that the subcommittee must address enrollment barriers, including establishing a “performance-based outreach fund to encourage enrollment of all uninsured children who are eligible for public coverage.” He also recommended administrative simplification, expanding the program to adolescents between 19 and 21, discontinuing asset-testing to determine eligibility, providing “buy-in options for children whose family incomes are above their state’s SCHIP eligibility level but who do not have access to or cannot afford comprehensive private health insurance,” and offering coverage to legal immigrant children.

During questions, Rep. Gene Green (D-TX) said he was concerned about enrollment barriers, and in particular the citizenship and identity documentation requirements imposed by the Deficit Reduction Act of 2005. Dr. Lambrew said that continuous, 12-month enrollment, rather than six month enrollment, is less burdensome to states and parents. She said that parents don’t have to gather financial data and “stand in line” for an in-person eligibility interview more than once per year. Dr. Berkelhamer called the documentation requirements “penny wise and pound foolish” and an impediment to timely enrollment and treatment.

“What is the best way to cover middle and upper middle class children without health insurance?” Rep. John Sullivan (R-OK) asked Ms. Owcharenko. She said that middle and upper middle class children are the largest growing group of those without health insurance. Ms. Owcharenko recommended reforming the tax code and providing tax incentives for people to buy insurance for themselves and their children. She further recommended allowing small businesses to pool resources to buy more affordable private health insurance coverage.

Rep. Lois Capps (D-CA) asked Dr. Lambrew about the importance of covering the parents of children eligible for SCHIP. Dr. Lambrew said that children who had insured parents were more likely to see a doctor regularly and receive timely preventative care; she said that covering parents “is simply a matter of priorities.” Rep. Capps also asked Ms. Molina to describe the importance of the SCHIP program to her and her children. Ms. Molina described the “excellent” care her children received from SCHIP for common childhood injuries, such as a sprained ankle. She said that enrollment in the program reduced her family’s emotional and financial stress.

Karen Paz Mingeldorff, a mission volunteer with the March of Dimes, also testified about her experiences with the SCHIP program following the premature birth of her son.

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