New Federal Regulations Against Expanding SCHIP Program for Children’s Healthcare

The new federal regulations against expanding SCHIP coverage to children in lower-middle income families are to protect private insurance companies from loosing customers when they switch to SCHIP.

Medicaid changes assailed
Seattle Post Intelligencer, Sept 2, 2007

OLYMPIA — As Washington spends more money to provide health insurance for all its children by 2010, state leaders and child care advocates are blasting the Bush administration over new rules that they say would punish the state for its leadership on the issue.

Dennis Smith, the federal official who oversees state Medicaid programs, recently notified state Medicaid directors that he was setting new standards for states that wanted to increase eligibility for the State Children’s Health Insurance Plan, or SCHIP, above 250 percent of the federal poverty level (which is an annual income of $51,625 for a family of four).

The new rules would:

  • Require those states to include cost-sharing that includes co-payments and premiums that more closely mirror the cost of private insurance.
  • Impose at least a one-year waiting period without insurance for children before receiving coverage.
  • Require states to show that they have already insured at least 95% of children in families below 200% of the poverty level.
  • Require states to show that the number of children in the income range covered by Medicaid and SCHIP who are insured through private employers has not decreased by more than 2 percentage points over the past five years.More than 66,000 children in Washington lack health insurance, according to a Washington State Budget & Policy Center analysis of 2006 data.Those uninsured children risk their health and incur community costs through treatment of routine medical issues in their aggravated and emergency state, the center’s report said.

    Under legislation enacted this year, Washington would expand eligibility for children from families with annual incomes of up to 300 percent of the federal poverty level in 2009.

    The new federal rules could make the state responsible for providing $5 million more than it had anticipated in federal matching funds.

    Last week, Gov. Chris Gregoire said the new federal restrictions would make it harder for Washington to fulfill its commitment to provide all children access to health coverage.

    In a letter to Health and Human Services Secretary Mike Leavitt, Gregoire questioned the legality of setting the rules without going through the formal rulemaking process and pointed out that Congress does not support the administration’s new policy.

    “I, and the vast majority of Americans, expect our government to follow the appropriate process when establishing important new policies,” Gregoire wrote.

    “We also understand the importance of SCHIP to the well-being of our children and hope that the federal government continues to be a partner, rather than a roadblock, to our children’s health.”

    Jon Gould, deputy director of the Children’s Alliance, a state child advocacy group, said that even before the new rules, Washington state had been penalized for expanding coverage to poorer children.

    When SCHIP was created, it allowed federal funding only to states that implemented new programs or expansions. Washington already had a program in place and was ineligible for most of the federal funding — in essence penalized for developing its program before most other states, he said.

    Gould said Washington has already missed out on $200 million of federal participation.

    “And children will continue to miss out unless Congress and President Bush reauthorize SCHIP with a fix for Washington state in September,” he said.

    California and New York are among 23 other states that have expanded children’s health care coverage and stand to lose federal participation because of those policies.

    Govs. Arnold Schwarzenegger of California, a Republican, and Elliot Spitzer of New York, a Democrat, have also objected to the new rules.

    This year, the Democratic-controlled Legislature in Washington approved $30 million for a children’s health care program that:

  • Consolidates several health coverage programs into one program of comprehensive benefits, including medical, dental, vision and mental health.
  • Adds all children in families up to 250 percent of the federal poverty level into the state’s health care budget.
  • Opens up public insurance to all families who need it. Families between 200 percent and 300 percent of the federal poverty level will pay monthly premiums on a sliding scale based on income.Though Washington still qualifies for federal SCHIP dollars, the expansion planned for 2009 would be in question.Other children’s groups said the new waiting period the federal government has added in hopes of preventing an exodus from private insurance would also be harmful.

    “It’s irresponsible to ask a child with cancer or a pregnant woman to wait one full year for health coverage, even if a parent dies or loses their job,” said Bruce Lesley, president of First Focus, a national child advocacy group.

    “To protect the health and well-being of our children, this directive should be put to bed and withdrawn.”

    P-I reporter Chris McGann can be reached at 360-943-3990 or

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