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Managing America: SCHIP Conference Report

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Week Ending October 19, 2007

H.R.976 An act to amend title XXI of the Social Security Act to extend and improve the Children's Health Insurance Program, and for other purposes.

This is the House / Senate compromise on the SCHIP bill that was vetoed by the President. SCHIP was created by President Clinton and the Republican Congress in 1997 to provide health insurance to children from families who earned above the poverty level but did not earn enough to purchase health insurance for their children.

The bill was reauthorized in 2002 and the level of income below which a family qualified was increased. The 2007 bill would expand the program to cover approximately 4.5 million children, bringing the total coverage to about 10 million children. The President vetoed the bill due to the $35 billion additional spending and his conclusion that expanding the bill was moving in the direction of expanding government-funded health care. The President proposed a $5 billion increase.

How much does the bill spend?

For fiscal year 2008, $9,125,000,000; for fiscal year 2009, $10,675,000,000; for fiscal year 2010, $11,850,000,000; for fiscal year 2011, $13,750,000,000; and for fiscal year 2012, for purposes of making 2 semi-annual allotments--$1,750,000,000 for the period beginning on October 1, 2011, and ending on March 31, 2012, and $1,750,000,000 for the period beginning on April 1, 2012, and ending on September 30, 2012. An additional, one-time appropriation of $12 billion is authorized.

Where will the funds come from?

The bill provisions will be supported by an excise tax increase on tobacco products including cigarettes, cigars, cigarette papers and tubes, pipe tobacco, roll-your-own tobacco. The use of excise taxes to pay for the program expansion makes the bill budget neutral. Does not increase the deficit. The taxes sunset in five years.

How is the money spent?

For the most part, beneficiaries are those who earn at about 200% of the poverty level (approx. $40,000 yearly) but States can petition for a waiver to cover families earning up to 300 % ($61,000 yearly)

States are allotted certain amounts of funding based on the population of children in need and the overall cost of health care. The allotments are in the form of block grants that bring with them various requirements including that the States may ask for any amount of increase in the percentage over poverty income level but are not assured approval. The amount can increase if the State’s child population grows.

The bill also establishes the Child Enrollment Contingency Fund. The Fund is financed with a $3 billion dollar transfer of unobligated funds from the Treasury and will sustain itself by investing the money in US interest bearing securities. The interest will replenish the Fund. The Fund is tied into performance bonuses to States to offset additional enrollment and retention costs. States would be paid additional money when the average monthly caseload exceeds target number of enrollees and the projected per capita expenditures in National Health Expenditures increases.

SCHIP children, should the State wish to do so, will be provided with dental services necessary to prevent disease and promote oral health, restore oral structures and treat emergency conditions. States must meet benchmarks in the plan they offer.

Where States provide mental health benefits the financial requirements for those benefits may not be any more restrictive than requirements for any other medical benefit.

Who is covered?

Children, to age 19, of families or single-parents whose income is no greater than 200% of the poverty level (approx. $40,000) based on their expenses, age and immigration status.

States may opt to cover targeted low-income pregnant women providing the State:

Requires that the woman earns at least 185% of the poverty level applicable to the size of the family.

Does not cover higher-income pregnant women without covering lower income pregnant women.

Does not exclude pregnancy-related benefits due to a preexisting condition.

Does not impose any enrollment cap or other limitation on enrollment, a waiting list or any other procedures designed to delay an application being considered.

Coverage for pregnant women will extend through the entire pregnancy and up to 60 days after birth. The child, when born, is automatically enrolled in SCHIP.

Children born in the US to mothers eligible for Medicaid will automatically be enrolled for health care coverage.

Non-pregnant, childless adult coverage.

The Secretary shall not ‘approve or renew a waiver, experimental, pilot or demonstration project that would allow funds to be spent to provide child health assistance or other such benefits to a non-pregnant, childless adult’ after October 1, 2008. In general, funds currently being spent for that coverage will end on September 30, 2008, An existing waiver that would expire before October 1, 2008 can be extended to that day.

There is made available a transitional one-year block grant to continue coverage for childless adults already covered if they were covered in fiscal year 2008. Those covered before that fiscal year will not be covered. Spending for that population must be budget neutral.

Citizenship

The bill does not provide coverage for illegal aliens, although opponents assert that illegal aliens have entered the program by providing false identification. The bill, as created and as reauthorized in 2002 did not give explicit direction on confirming immigration status of applicants.

Under HR 976, States will submit the name and social security number of the family member to the Social Security Administration. If the name of number is invalid an effort will be made to determine if the disparity is due to a typo or other administrative error. The applicant will then be given the opportunity to explain or provide further documentation. If the information proves to be invalid, the State will notify the applicant and if no further documentation can be provided, the applicant is removed from the program in 30 days.

Substituting SCHIP coverage for private health insurance

Most of the insurance coverage for eligible SCHIP beneficiaries is provided and administered by private insurance companies who have negotiated the premiums and coverage offered to beneficiaries.

Congress agrees with the President that substituting SCHIP coverage for private coverage occurs more frequently for children in families at higher income levels thereby creating what is called ‘crowd out”. Crowd out refers to the private insurance companies being 'crowded out' of the market by parents who drop that insurance and enter SCHIP to avoid paying the private insurance premiums. It is a matter of splitting hairs, though, because insurance companies are the primary providers of insurance for the SCHIP children but do so at a lower premium rate. Crowd out does actually crowd out the insurance companies but transfers customers to a lower premium status and maybe to a different company participating in the SCHIP program.  A higher-income family is one whose income up to 300% of the poverty level. Congress agrees that states that States expanding coverage to higher-income children should have first achieved a higher level of health benefits coverage for the lower-income children. States that do not increase coverage for lower-income children first, will find a reduction in their overall SCHIP allotment. The GAO is directed to study and report on the phenomena.

States may opt to cover premiums for employer-provided health care that will cover the low-income child. The child’s parents do not have to agree to that option but can otherwise enroll the child in the SCHIP coverage. The employer may opt not to participate. The premium coverage only applies to policies to which the employer pays at least 40% and is offered to all employees in a nondiscriminatory way and does not cover high deductible policy premiums.

Outreach and enrollment

A $100 million grant program is available to various entities including schools, hospitals, Indian tribes and community-based organizations to educate targeted populations on SCHIP availability. Some funds can be used for language translation services where necessary.

Miscellaneous

States may not require an in-person interview with the applicant unless there are discrepancies or individual circumstances justifying one. Children will automatically be renewed unless the State is given additional information. The State may verify through several means information provided.

The Secretary is directed to develop the Initial Core Set of Health Care Quality Measures for Children Enrolled in Medicaid and SCHIP. The measures will include preventive services, treatments, services for acute conditions, healthy birth, prevention of premature birth and detecting physical or mental conditions that could adversely affect growth and development. An assessment of available treatments and resources is also ordered.

A demonstration project is ordered to develop a comprehensive and systematic model for reducing childhood obesity through grants to eligible entities. Entities include city, county or Indian tribe, educational and health care agencies, community-based organizations and accredited universities and colleges. Another project would target diabetes prevention among children.

Family members of a service member “who is undergoing medical treatment, recuperation, or therapy, is otherwise in medical hold or medical holdover status, or is otherwise on the temporary disability retired list, for a serious injury or illness” can be granted up to 26 weeks of leave from employment to attend to the service member’s needs. Some or all of the leave time can be substituted for paid leave if the employee or employer requires.

A related provision provides that “A family member of a recovering service member shall not be denied retention in employment, promotion, or any benefit of employment by an employer on the basis of the family member's absence from employment for a period of not more than 52 workweeks unless the employer can prove that the action would have been taken in the absence of the absence of employment of the person.”

The original House bill was substituted for the Senate bill S 1893. 

Vote: Passed House 360 to 45 February 16, 2007 (RC 102). The bill passed the Senate amended (to include the text of S 1893) August 2, 2007 68 to 31 RV 307 The Conference Report was agreed to in the House 265 to 169 RC 906. Cloture was agreed to in the Senate  69 to 30 RV 352 and the conference report was agreed to in the Senate 67 to 29.RV 353. The House failed to override the President's veto by a vote of 273 to 156 RC 982 October 17, 2007

Cost to the taxpayers: $60 billion over five years.  When considered in the Senate, the text of this bill was substituted with the text of S 1893, the bill reauthorizing spending for the State Children's Health Insurance Program.

Earmark Certification:   Not applicable to this bill.

Senate amendments to the original bill

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