Home Find a Health Insurance Plan Find a Health Care Provider For Members For Employers For Health Care Providers
IBC. We're here for you every step of the way.

Federal Legislation

March 2008

State Children’s Health Insurance Program (SCHIP)

Quick facts: President Bush has offered to increase SCHIP funding, but not by as much as Congress has requested. The Centers for Medicare & Medicaid Services (CMS) have also introduced new rules that would make it harder for some families to be eligible.

SCHIP provides health insurance to children in families that earn too much for Medicaid, but not enough to afford private insurance. Congress has twice passed legislation to increase SCHIP funding from the current $25 billion a year to $60 billion, but President Bush vetoed both bills. The president recently proposed to Congress an increase in spending on the program to $45 billion over the next five years, some $15 billion more than in his previous proposal. That figure is still far less than the $35 billion increase sought by the majority of legislators from both parties.

The president also attached a condition to his proposal that the Congress finds objectionable: his proposal would limit eligibility to children in families that earn no more than 2.5 times the national poverty level. Legislators would prefer three times the poverty level.

The White House said the president strongly supports reauthorizing SCHIP but that the long-term extension had to put poor children first. The president believes the version favored by Congress would encourage too many families to replace private insurance with government-subsidized insurance.

In another SCHIP issue, CMS has issued a directive that would bar states from using federal dollars to provide coverage to children of families with income more than 2.5 times the national poverty level unless certain criteria were met within the state. The criteria include:

  1. At least 95 percent of all children eligible for SCHIP or Medicaid of families with incomes less than two times the poverty leveled must be enrolled in either SCHIP or Medicaid.
  2. Private-employer insurance coverage for low-income children must not have declined by more than 2 percent in the past five years.
  3. The child must be uninsured for 12 months (a “go-bare” period) before enrolling in SCHIP.

On July 17, 2008, a bipartisan group of 43 senators introduced a resolution stating that Congress disapproves the CMS directive affecting states that extend SCHIP eligibility to children with family incomes above 250 percent of the federal poverty level. Additionally, S.3230, the Labor, Health and Human Services, and Education Appropriations Act for fiscal year 2009, was approved by the Senate Appropriations Committee in late June and would prohibit the implementation of the CMS SCHIP directive before April 1, 2009.

Pennsylvania does not meet the new CMS requirements. The commonwealth calculates that only 93 percent of eligible children in families whose incomes are less than two times the poverty level are enrolled in Pennsylvania CHIP or Medicaid, and that private-employer coverage for low-income children has declined by approximately 10 percent in the past five years. In addition, the Commonwealth currently has a six-month go-bare period for children older than the age of 2, a waiting period previously approved by CMS. Pennsylvania currently covers children up to three times the poverty level.

If both Congress’ and CMS’ plans were passed, the Congress’ ruling would trump CMS.

Medicaid

Quick facts: President Bush signed H.R. 2642, the "Supplemental Appropriations Act," on June 30, 2008, which included provisions to prohibit the Centers for Medicare & Medicaid Services (CMS) from taking action before April 1, 2009 to implement seven separate sets of Medicaid regulations the agency had published. The bipartisan support of those provisions was large enough to prevent a threatened presidential veto. CMS’ new rules would have limited states from spending funds on doctor training, reduce the amount paid to hospitals, and reduce rehabilitation services for the disabled.

The CMS regulations were scheduled to take effect in the next few months. Medicaid provides health insurance to more than 60 million low-income people, including 30 million children.The proposed changes included the following:

  1. Federal Medicaid funds would no longer be used to pay to train doctors, even though this has been the practice since Medicaid began in 1965.
  2. Medicaid payments to hospitals run by state and local governments would be reduced.
  3. Payments for rehabilitation services for disabled citizens would be limited.

Adminstration officials argue that many states use federal Medicaid money for things outside the scope of Medicaid, such as paying for graduate medical education. The Bush Administration maintains the new rules are necessary to end what it considers creative financing techniques that states have used to tap excessive amounts of federal Medicaid funds, while holding down the use of state and local revenues.

However, the National Governors Association has strongly criticized the changes, saying the new rules will shift billions of dollars of costs to the states and force deep cuts in services. The administration estimates the new rules will save the federal government $15 billion over five years, but California alone says it could lose $12 billion over that period.