On February 1, the Senate Finance Committee held a hearing on the State Children’s Health Insurance Program (SCHIP). SCHIP is a program jointly financed by the federal and state governments that provides health insurance to children from low income families who are ineligible for Medicaid.
Chair Max Baucus (D-MT) said, “Since 1997, the share of American children without health insurance dropped by a fifth. For the poorest children, the uninsured rate has dropped by a third. CHIP has made a dramatic difference. During this same decade, private health coverage has eroded. Today, nearly 47 million Americans lack basic health care insurance. Nine million of these Americans are children. CHIP’s success is thus even more significant.” Sen. Baucus praised the accomplishments of SCHIP, but said “we cannot turn a blind eye to its shortcomings.” The number of children without insurance has grown in recent years, he said, to 37,000 in Montana one in every six children. Sen. Baucus concluded his remarks, saying, “Congress has simply not given CHIP enough funds to meet the current demand for services. Over the next five years, the program will need $12 billion to $15 billion in federal funds just to maintain services for those now receiving coverage…There is no greater priority for the Finance Committee in the health arena this year than CHIP reauthorization. Millions depend on this program. Millions more are eligible but not covered. Together, we can increase coverage.”
In his opening statement, Ranking Member Charles Grassley (R-IA) said, “I am hopeful that we can continue to work together to find common ground so we can reauthorize and improve this important program this year. The SCHIP program has significantly improved the health and well-being of low-income children. More than 6 million children receive their health coverage from SCHIP. SCHIP and Medicaid have helped reduce the percentage of uninsured children from 13.9 percent in 1997 to 8.9 percent in 2005. That’s a 36 percent drop in the number of uninsured children.” Sen. Grassley described the challenges facing SCHIP, including financing, state flexibility, and whether or not to expand coverage to adults. On the last point, Sen. Grassley said, “The issue is not whether or not coverage for adults is desirable: it is. The issue is not whether or not coverage for adults is beneficial for the family: it is. No one would argue with that. The issue is whether SCHIP funds used to cover adults has drained resources targeted by Congress for kids.”
Kathryn Allen, director of the health care division at the Government Accountability Office (GAO), shared recent data on SCHIP: “SCHIP enrollment increased rapidly during the program’s early years, but has stabilized over the past several years. SCHIP programs reported total enrollment of approximately 6 million individuals including about 639,000 adults as of FY2005, the latest year for which data were available, with about 4 million individuals enrolled in June of that year. Nevertheless, about 11.7 percent of children nationwide remain uninsured, many of whom are eligible for SCHIP or Medicaid.” She told the committee that the majority of states 41 had opted to provide coverage to children in families with incomes at 200 percent of the federal poverty line ($34,344 for a family of three in 2007) or higher. Ms. Allen said that SCHIP’s initial costs were low, but with increased enrollment more states are outspending their annual allotment. “In the first years of the program,” she said, “states that overspent their annual allotments over the three-year period of availability could rely on other states’ unspent SCHIP funds, which were redistributed to cover excess expenditures. Over time, however, spending had grown, and the pool of funds available for redistribution had shrunk. As a result, in at least one of the final three years of the program, 18 states were projected to have ‘shortfalls’ of SCHIP funding.” In reauthorizing the program, Ms. Allen recommended that Congress consider ways that maintain flexibility without “compromising the primary goal to cover children,” and examine the program’s funding, including the “sustainability of public commitments.”
Kim and Craig Bedford, a family from Baltimore, Maryland, testified, as did their 13-year-old son, Job. Mrs. Bedford explained that their family had health insurance through Mr. Bedford’s job until they started their own business; for a while, she purchased private insurance for the family, but the costs proved too great; Mr. Bedford said the premiums rose 18 percent in one year, to a third of their gross income. In describing the effect that SCHIP coverage has had on her family, Mrs. Bedford said, “Perhaps the greatest impact MCHIP [the Maryland Children’s Health Insurance Program] has had on our family medically is that we no longer have to make impossible health choices based on a financial perspective. We no longer have to decide whether a child is ‘really sick enough’ to warrant a doctor’s visit. We no longer have to decide whether a child ‘really needs’ a certain medication prescribed by his pediatrician.” Mr. Bedford said, “The face of CHIP is families such as ours, families that work hard and play by the rules, trying to live the American dream. Providing quality health care to our children should be a congressional budgetary item requiring no debate or major decision making. We urge you to continue to fund the Children’s Health Insurance Program.”
Cindy Mann, executive director of the Georgetown University Center for Children and Families, said that the greatest challenge facing SCHIP was financing: “The SCHIP funding level for 2007 $5 billion was picked ten years ago before Congress had any experience with the program. This level of funding falls far short of what is needed when measured against what states are spending now and particularly in light of the growing interest in covering more children and the compelling need to do so.” Enrollment in SCHIP is rising, Ms. Mann said, because “over the past decade, health care costs rose sharply, and many fewer families had access to employer-based insurance. As a result, according to data collected by the Centers for Disease Control and Prevention, between 1997 and 2005, the number of uninsured adults grew by more than six million. During this same time period, however, SCHIP and Medicaid more than offset the declines in job-based coverage for children, and the portion of low-income children who were uninsured declined by one-third, from 22.3 percent in 1997 to 14.9 percent in 2005.” Ms. Mann argued against restricting coverage to children, saying, “Coverage of pregnant women promotes healthy babies, and several members of Congress, including members of the Finance Committee, have offered legislation to explicitly permit states to use SCHIP funds to cover pregnant women without a waiver…Parent coverage also benefits children, by helping parents stay or become healthy, allowing them to work and take better care of their children. In addition, there is considerable evidence that when states cover families parents as well as children eligible children are more likely to enroll.” She concluded her remarks with several recommendations, including “[providing] greater federal assistance with coverage costs if a state adopts and maintains policies aimed at promoting participation of eligible children,” and addressing the “citizenship/identity documentation requirement imposed in Medicaid by the Deficit Reduction Act of 2005.”
Governor Sonny Perdue (R-GA) testified on behalf of the Southern Governor’s Association (SGA). He said SGA strongly believes the reauthorization should make children the priority, saying, “CMS [the Centers for Medicare and Medicaid Services] has allowed some states to make changes to their programs to include health insurance coverage for pregnant women and adults with children; arguably, these populations are directly connected to the targeted population of children. However, some states also have been allowed to expand coverage to include childless adults under their SCHIP program…Respectfully, if we had unlimited funds to put toward this program, this might not be an issue. I recognize though, as a governor who has a constitutional requirement to balance a budget, that this is simply not the reality.” He urged the committee to fix the funding formulas in SCHIP, most especially the way in which children are counted. Currently, he said, allotments for the program are based on data averaged from a three-year period; “in a state like Georgia,” he said, “where the population growth is twice the national average, this kind of lag has significant consequences.” In closing, he said, “America is a compassionate nation and we must continue to take care of our most vulnerable citizens. As we focus on new ways to reach the nation’s uninsured, I ask you, distinguished members of Congress, to preserve, secure and improve the State Children’s Health Insurance Program because it is already making great strides in meeting the needs of our most vulnerable population.”
Anita Smith, chief of the Bureau of Medical Supports at the Iowa Department of Human Services, also testified.
