The Bush administration has imposed new requirements on a valuable children's health insurance program that look so draconian as to be unattainable. Late on a recent Friday while Congress was in recess, a time fit for hiding dark deeds, the administration sent a letter to state health officials spelling out new hurdles they would have to clear before they could insure children from middle-income families unable to find affordable health coverage. Some 19 states may be forced to pull back programs they have started or proposed.
There is a legitimate argument to be had over how far up the income scale the federal-state partnership known as the State Children's Health Insurance Program, or S-chip, should climb. When it was created, the program focused on children whose family incomes were no higher than twice the poverty level, or about $41,000 today for a family of four. The goal was to cover the near-poor, who earned too much to qualify for Medicaid but not enough to afford private health insurance.
Over the years, the Clinton administration and especially the Bush administration allowed states to extend coverage to higher income levels. Today, New Jersey caps it at 350 percent of the poverty level and New York proposes to go to 400 percent. In reaching out this way, virtually all states have scooped up lots of children who were actually poor enough to qualify for Medicaid but had never been enrolled. The combined result has been a heartwarming drop in the number of uninsured children.
Yet the Bush administration wants to return to a darker age. Its letter to state officials seems intent on virtually eliminating such coverage for middle-income children, or at least drastically reducing it.
Take a new requirement that states must show they have enrolled at least 95 percent of the children with family incomes below 200 percent of the poverty level before they can extend the limit to 250 percent. It is surely appropriate that states do a good job of reaching the poorest children before they embark on anything beyond that. Yet the 95 percent goal seems virtually unattainable in an income group that is notoriously hard to reach, as the administration should know from its abysmal results in trying to enroll the low-income elderly in its Medicare drug benefit. No state has reached 95 percent, so all may ultimately be disqualified.
Another difficult hurdle calls for states that want to insure children from higher-income families to show that, over the past five years, there has been no more than a 2 percent decline in employer coverage of such children. The ostensible goal is to make sure that S-chip does not substitute for coverage provided by employers. But employers have been reducing health benefits for some time, mostly for reasons having little to do with S-chip. Depending on how the murky calculation is made, New York could be rejected on that ground alone.
Other requirements, though attainable, seem just plain wrong-headed. In families with incomes above 250 percent of the poverty level, children must be uninsured for a full year before they can be enrolled in S-chip. There can be no exceptions, even if a parent dies and the child loses coverage under an employer's group policy. New York proposes a far more reasonable six-month wait, long enough to deter people from abandoning their employer's coverage, and would waive that for people who lose their jobs or coverage involuntarily. One year is just too long to leave children uninsured.
The heated political debate over S-chip sometimes leaves the impression that it is a free handout to middle-income Americans. But it is not free: states typically charge premiums that rise as income rises, and there can be deductibles and co-payments beyond that. New York calculates that its proposed premium of $60 per month per child for the higher-income families is essentially comparable to what it costs to insure a child under employer-provided policies in the state.
Families with incomes of $70,000 or more can be hard-pressed to pay for private insurance in high-cost areas. It takes a $70,000 income in Manhattan to buy the same goods and services that $30,000 can buy in Omaha. If you visualize a man earning $70,000 to $80,000 a year at an establishment with good health benefits, you might well question why he needs S-chip for his children. But if you visualize a struggling family stitching together two or three low-wage jobs to reach that income in a high-cost area, the picture changes.
The new requirements not only reverse the administration's original approach to S-chip, they stick a thumb in the eye of Congress. The Senate has passed a bill that would raise eligibility to 300 percent of the poverty level, and the House has gone to 400 percent. President Bush has threatened a veto. If the main goal is to reduce the number of uninsured children, as it should be, the administration is headed in the opposite direction.