Wyden Calls for Repeal of New S-CHIP Restrictions
Asks: "Is this the best we can do for our nation's children?"
Washington D.C. -- Calling the administration's policy a "cruel choice" for states that are working to expand coverage to the millions of children currently living without health care, U.S. Senator Ron Wyden (D-OR), a member of the U.S. Senate Committee on Finance, today sent a letter asking Secretary of Health and Human Services Michael Leavitt to repeal the Bush administration's recently announced eligibility restrictions for the State Children's Health Insurance Program (S-CHIP). The restrictions would prohibit millions of children from receiving health insurance under an expanded version of S-CHIP.
"The SCHIP program was designed to increase the number of American children who have health insurance and, to date, it has successfully done so," wrote Wyden. "Yet the likely and tragic result of this new policy will be to increase the number of children who must go without coverage and needed health services. I respectfully request that you repeal this policy."
The administration outlined its new S-CHIP standards in an August 17 letter to state Medicaid directors. Wyden asked for the repeal of three specific elements of the administration's restrictions, including a provision that would require a child to live a full year without health insurance before he/she could become eligible for S-CHIP. The full text of Senator Wyden's letter is below.
Today, over 6.6 million children receive their health care coverage through the Children's Health Insurance Program, which is set to expire on September 30. Both the Senate and House are considering legislation that would reauthorize the program and extend coverage to an additional 3.2 million children currently living without insurance.
September 19, 2007
The Honorable Michael O. Leavitt
Secretary, U.S. Department of Health & Human Services
200 Independence Avenue SW
Washington, DC 20201
Dear Secretary Leavitt:
I am writing to express my strong disagreement with the "Dear State Medicaid Directors" letter dated August 17 from Dennis Smith of the Centers for Medicare and Medicaid Services. As you are aware, this letter set forth new standards for the State Children's Health Insurance Program, with a particular focus on certain state eligibility expansions, the level of enrolled low-income children, and the possible substitution of private coverage by SCHIP ("crowd out"). These policies will essentially prevent states, including Oregon, from expanding or continuing to enroll new children from families with incomes above 250% of the Federal poverty level (FPL). This represents an unwarranted restriction on state flexibility under the SCHIP program and will undoubtedly result in more American children going without needed health coverage. Interestingly, these standards conflict with the legislation that recently passed the Senate by an overwhelming majority.
I agree with some of the purported goals of the letter, including the importance of enrolling more children who are eligible for SCHIP and Medicaid coverage. In fact, the recently passed Senate legislation, the "Children's Health Insurance Program Reauthorization Act of 2007," includes several provisions designed to increase outreach and enrollment. I also agree that the SCHIP statute requires states to implement safeguards to prevent families from dropping available private coverage in order to enroll their children in SCHIP ("crowd-out"). For example, Oregon's program includes a premium subsidy option to help families pay for employer coverage when it is available. However, the new policy goes well beyond establishing reasonable "crowd-out" policies and instead introduces perplexing and ill-advised barriers to program expansion for states that cover, or plan to cover, children from families with incomes above 250% of the Federal poverty level (FPL). I've highlighted several of my greatest concerns below.
First, the letter penalizes children who live in states that face declining levels of employer coverage for low-income families. If private employer coverage has declined by more than 2% for certain low-income children in the state--whether due to an economic downturn, private employer choice, or increasing unaffordability-- their state will not be able to offer SCHIP coverage to other low-income kids who may be suffering from uninsurance at the same time. A majority of states (thirty-eight) saw reductions in employer coverage above 2% from 2000 to 2004 and the country as a whole saw a decline of 4.8% over that same period. This is certainly the case in Oregon, where private group coverage declined by 4% during that time frame. Many states may face similar coverage trends among low-income families—why punish these families further by making it harder for states to insure more children?
Secondly, by requiring that certain children go without insurance for a full year before they can be covered, the new standards prevent parents and states from doing the right thing. Instead of encouraging children to receive preventive health care, along with prompt treatment for illnesses, they will have to go without insurance coverage—and likely will go without health services—until their conditions worsen to a point where the human and financial costs are even higher. Oregon was considering a short, two-month waiting period before children could receive SCHIP coverage. The new standards would prevent them from moving forward with this change.
The new policies thereby present states with a cruel choice. If they seek to expand coverage—as Oregon is hoping to do—they must require that the very kids they want to cover go without insurance for a year. If, on the other hand, the states fail to expand insurance, they will certainly see kids go without insurance and health care. Is this the best we can do for our nation's children?
Thirdly, by requiring that the state enroll at least 95% of eligible children prior to expanding eligibility above 250% FPL, CMS is essentially eliminating states' ability to enact such expansions. To date, no state has reached this level of enrollment—the closest is Vermont with 92% enrollment. It is very unlikely that more than a handful of states—if any—could meet this standard.
Finally, as a matter of process, these new procedures represent a significant policy change and state officials and the public should be provided with notice and the opportunity to provide comment prior to such a policy going into effect.
The SCHIP program was designed to increase the number of American children who have health insurance and, to date, it has successfully done so. Yet the likely and tragic result of this new policy will be to increase the number of children who must go without coverage and needed health services. I respectfully request that you repeal this policy. Should the agency choose to implement new procedures in this area, I ask that they be issued as a proposed regulation with the opportunity for public comment.
Thank you for your consideration and I look forward to hearing from you.
United States Senator