Let the CHIPs Fall...
If ever there was a motherhood and apple pie issue, reauthorizing the popular State Children's Health Insurance Program (S-CHIP) is it. Yet the Bush Administration, right-wing think tanks and health insurance companies have managed to turn a no-brainer into a pitched battle over the direction of healthcare reform, jeopardizing the future of S-CHIP itself. The fight over S-CHIP, which must be renewed by September 30, reflects deep divisions in Washington and shows the difficulties of making improvements in the healthcare system.
By every measure, the ten-year-old program--passed during the Clinton Administration as a bipartisan, incremental effort to expand health coverage to millions of poor kids--has been a success. Thanks to S-CHIP, the number of low-income uninsured kids dropped by one-third over the decade, even as the number of uninsured adults went up. Three out of four eligible kids participate, and studies show they receive preventive care and have improved health outcomes and school performance. "It has been the only success story in initiatives to improve healthcare access," says Cindy Mann, who directs Georgetown University's Center for Children and Families.
S-CHIP enjoys broad support among Democratic and Republican governors. Its flexibility allows states to tailor their own programs or build on existing Medicaid arrangements to target children typically in families with incomes of up to 200 percent of the federal poverty level (about $41,300 for a family of four this year). Last year 91 percent of kids on S-CHIP lived in families with incomes at or below that amount. States have stepped in to fill a gap the federal government has refused to address: Nineteen states target or plan to target kids from families whose income is greater than 250 percent of the poverty rate, and some cover pregnant women and parents of eligible kids, a strategy that has proved successful in reaching more children.
What's wrong with this picture? It doesn't square with the right's ideology or the profit goals of the insurance industry, which has the upper hand in Congress. This summer the House and Senate passed bills reauthorizing S-CHIP, but by midSeptember it became clear that the House bill, which added 5 million uninsured kids to the rolls and paid for their coverage partly by cutting government overpayments to Medicare Advantage plans, would lose to the more minimal Senate approach. Giving health insurance to more kids instead of overpaying highly profitable insurance companies seemed like a good trade. But the Senate, lobbied all year by the insurance industry, didn't see it that way.
The Senate bill covers only 4 million uninsured children, paying for the coverage with a 61-cent increase in the tobacco tax. It also retains the government handouts to insurance companies, which receive on average 12 percent more than it costs Medicare to provide benefits to seniors under the traditional program [see Lieberman, "The Medicare Privatization Scam," July 16/23]. Influential GOP senators, targeted by sellers of Medicare Advantage plans heavily marketed in rural areas, are adamantly against cuts to Medicare Advantage. "It's very frustrating to see a phenomenal House bill and then move toward the Senate bill," says a spokesperson for the Center on Budget and Policy Priorities. Negotiators say the issue of overpayments will be taken up later this year, when Congress must consider whether to implement scheduled cuts in Medicare payments to doctors, a fight that will pit doctors against insurance companies. But the insurance lobby has won this round.
Neither the House nor the Senate bill covers all the children in need. Nearly 9 million kids now have no health insurance, and up to two-thirds of them are eligible for S-CHIP or Medicaid. Even so, for the Scrooge in the White House, both bills cover too many children. He has threatened to veto any bill, labeling the expansion a step toward "government-run healthcare." Never mind that S-CHIP kids get care from private doctors or managed-care organizations that contract with the government, just as Medicare beneficiaries do. The Senate bill puts $35 billion more into financing S-CHIP; the House bill would have added $50 billion. Bush would add only $5 billion, not even enough to maintain the 6 million kids who are currently covered.
The Administration is taking no chances. To make sure that more kids will go without health insurance, in August it short-circuited the legislative process, issuing a "guidance" that makes it almost impossible for states to expand coverage to kids in families whose incomes are above 250 percent of the poverty level unless the state can show that 95 percent of children in families under 200 percent are enrolled, a standard that's unachievable for a voluntary program (participation in Medicare Part B is about 93 percent, and enrollment is automatic). The number of uninsured children has started to climb again, as employers continue to drop coverage for their parents. Loss of employer coverage has declined for families at all income levels targeted by S-CHIP expansions.
The guidelines halt expansions already under way in states like Oklahoma and Louisiana, which had approved eligibility for kids from families whose incomes are at 300 percent of the poverty level, and in Vermont, where more than 2,000 children from families with incomes between 225 and 300 percent of poverty will lose their insurance. "It's really outrageous," says Alan Weil, executive director of the National Academy for State Health Policy. "The dirty secret is that the Administration had been approving states to do what they have now told them not to do."
Apparently the Administration prefers to unleash families into the Darwinian jungle of the private insurance market, where only the wealthiest and healthiest can buy a policy. Public programs like S-CHIP, it argues, "crowd out" insurance sold by WellPoint and United Healthcare, depriving them of profits they earn selling coverage to S-CHIP families. Meanwhile, each year medical insurance consumes a greater share of family income. The truth is that most families can't afford those policies. The price for family coverage now averages $12,000, or about 20 percent of income for a family of four with income at 300 percent of the poverty level.
Families can, of course, buy one of the new bare-bones policies, such as the one sold in Ohio by Anthem Blue Cross and Blue Shield with deductibles ranging from $4,000 to $20,000 ($8,000 to $40,000 if the family uses out-of-network providers). The policy covers only two doctor visits per year, and families must pay 30 percent of any hospital bill after satisfying the deductible. Pity the family whose child suffers recurring strep infections or needs an emergency appendectomy. Insurers also have long lists of health conditions people cannot have if they hope to get coverage. If poor kids have asthma, were born prematurely or are prone to ear infections, they're out of luck.
The realities of the health insurance marketplace have not stopped the "educational" efforts on Capitol Hill by right-wing think tanks, which have provided the ideological muscle for the assault on S-CHIP. Their rhetoric has reached the point of silliness; one recent memo on the Heritage Foundation website is titled "The House S-CHIP Bill: Enlisting States as Agents of Government Dependency." The Cato Institute held a briefing called "Sinking S-CHIP: A First Step Toward Stopping the Growth of Government Health Programs." Heritage and the American Legislative Exchange Council called their briefing "S-CHIP Expansion: Bad for Kids, Families, and Taxpayers." They are equating healthcare for poor kids with socialism. If that's the case, our children will be the first casualties on the way to marketplace perfection.