ACTION NEEDED:

During re-authorization of the State Children’s Health Insurance Program, Congress should preserve the core population of the program to cover children only, and it should retain the current block-grant financial structure.

BACKROUND:

SCHIP is a federal-state matching program that was created in 1997 to cover targeted low-income children with no health insurance in families with income that is above Medicaid eligibility levels. Under the program, states can enroll children in Medicaid, create a new state program, or use a combination of both. All 50 states and the District of Columbia have established SCHIP programs. Nearly $40 billion has been appropriated for SCHIP from FY1998 through FY2007. However, at the end of this fiscal year, funding runs out which means the program must be re-authorized by the 110^th Congress. During the re-authorization process, Congress has the ability to make structural changes to the program including redefining the core population and changing the financial structure. NAHU opposes both of these changes.

Expansion of SCHIP

NAHU opposes the expansion of SCHIP to cover parents or other adults. This was not the intent of the original legislation which was clearly written to target low-income children

``TITLE XXI--STATE CHILDREN'S HEALTH INSURANCE PROGRAM
 
``SEC. 2101. <<NOTE: 42 USC 1397aa.>> PURPOSE; STATE CHILD HEALTH 
 PLANS.
 
 ``(a) Purpose.--The purpose of this title is to provide funds to 
States to enable them to initiate and expand the provision of child 
health assistance to uninsured, low-income children in an effective and 
efficient manner that is coordinated with other sources of health 
benefits coverage for children. Such assistance shall be provided 
primarily for obtaining health benefits coverage through--
 ``(1) obtaining coverage that meets the requirements of 
 section 2103, or
 ``(2) providing benefits under the State's medicaid plan 
 under title XIX,
 
or a combination of both.
 
One of the key problems associated with publicly sponsored health coverage assistance programs like SCHIP is the substitution of public program coverage for private health insurance coverage. Expanding SCHIP beyond is intended core population would only exacerbate this problem of crowd-out.
 
 

Financial Structure of SCHIP

When SCHIP was created by Congress, it was intended to be a capped federal block grant to states, not an open-ended entitlement program. NAHU opposes any efforts to change the financing structure to be a federal entitlement program. The block grant structure has

allowed beneficial state program innovations that include cost-saving partnerships with the private insurance market, and that ability would be lost if the program became a federal entitlement.

NAHU feels that it is very important that SCHIP retains its ability to partner with the private insurance market. It is the Association’s goal to make it even easier for private market integration by removing some current restrictions that have hindered premium subsidy efforts of private market employer-sponsored coverage. Many parents of SCHIP eligible children have access to employer-sponsored health insurance coverage but cannot afford their portion of the dependent premiums. NAHU would like to see the process for states to use SCHIP dollars to subsidize such employer-sponsored coverage made much simpler so that more families can be covered together.

According to the U.S. Census Bureau, in 2005, 46 million Americans were uninsured including 9 million children under the age of 18. NAHU believes that there is no one magic answer to the problem of the uninsured but that a multi-faceted approach will be required because no one solution will fit the needs of all of our citizens. NAHU feels strongly that any attempt to expand coverage to the uninsured should preserve the private health insurance market. Other countries have experimented with government-run health care systems, and this has only resulted in higher-cost, lower-quality, rationed care. Americans should be able to access a competitive health insurance marketplace with a wide range of health plan choices.