Lawmakers divided on children’s health insurance

Lawmakers divided on children’s health insurance

by Deborah Nelson
October 9, 2007

As efforts to renew Federal health insurance for low-income children continue, Florida’s Congressional delegates are divided over how far to expand the program’s scope and funding.

Established in 1997, the State Children’s Health Insurance Program (SCHIP) matches state funding for low-income children. It’s designed for families who make too much money to qualify for Medicaid, but not enough to afford private insurance.

The U.S. Census Bureau estimates 771,000 Florida children – about 19 percent - were uninsured in 2006.

But SCHIP legislation expired this year, and lawmakers disagree over how far to expand its replacement. Currently, the program authorizes $5 billion per year to states.

At the end of September, the House and Senate approved a bipartisan compromise bill that would expand SCHIP by $34.9 billion (to total $60 billion), and add 4.4 million participants to the rolls, over five years.

It would expand enrollment to children in families with incomes three times the poverty level (currently, $20,650 for a family of four). The current cap is 200 percent of the poverty line, although some states have raised that limit.

Earlier this year, New York state tried to raise its SCHIP income cap to 400 times the poverty level ($82,600 for a family of four), but the administration refused to approve it, according to a September 7 New York Times report. New York’s current limit is 250 times the poverty level, according to NYT.

President George W. Bush vetoed the bipartisan expansion bill, October 3.

Bush said he fears expanding the program would encourage the growth of public health coverage at the expense of private insurance companies.

Veto override is unlikely

Although it garnered enough bipartisan support to pass the House and Senate, the SCHIP bill is not expected to have enough House support to override the President’s veto.

Citing its success in reducing the ranks of uninsured children in America, Senator Bill Nelson (D) was among the bill’s backers.

“…if we can attack poor health at a child's age, ultimately, not only is it going to benefit the quality of life of that individual, but it is going to be less of a cost to society in the long run…,” he remarked during Senate hearings, September 27. “This is a simple economic fact, preventive health care.”

Between 1996 and 2005, SCHIP reduced the national rate of uninsured children (at or below 200 times the poverty level) from 22.5 percent to 16.9 percent, according to the nonpartisan Congressional Budget Office (CBO).

About 6.6 million children and 670,000 adults were enrolled in 2006; and CBO estimates five to six million more low-income children are currently eligible, but going uninsured. Pregnant women are also eligible for coverage.

“Think back 10 years ago and what has happened since,” Nelson remarked.

“The number of uninsured adults has increased, while the rate of low-income, uninsured children has decreased, and decreased not by a little but by a third, largely due to this program we are going to pass today.”

Congressman Jeff Miller (R-Chumuckla) and Senator Mel Martinez (R) opposed the bill that went to the President; instead advocating a limited program expansion.

“I voted against the Democratic SCHIP Bill for several reasons,” Miller said in a statement.

“First, I do not believe that increasing taxes and discouraging free markets is the appropriate strategy to pay for a giant expansion of the program.

“Second, the annual cost to taxpayers of covering an uninsured child under this plan would increase from $1,418 to $2,859 -- that’s about two and a half times the cost of comparable private insurance.

Legislators have proposed adding 61 cents to the Federal tobacco tax, to pay for the changes.

“This reauthorization is going to provide $35 billion of additional funding over the next five years,” Nelson remarked on the Senate floor. “Now, of course, that is a bone of contention for some people.

“If you are going out and finding $35 billion extra to fund something -- at a time there is not that money out there,

“particularly when we are going to have a supplemental request for Iraq of some $200 billion, under that circumstance, that context, where are you going to get 35 billion new dollars over five years to fund a program such as this? The tobacco tax.

“There are those who do not want to tax tobacco,” Nelson added. “But where else would you like to get it…This is the place that can withstand that additional tax.”

The SCHIP expansion bill has bipartisan support – something proponents point to as evidence of the program’s success.

“In my previous life as the elected State treasurer and insurance commissioner in Florida, I chaired the board of directors of the Healthy Kids Corporation,” Nelson noted at the Senate hearing.

“It was Florida's pioneering effort to insure low-income children well before this Children's Health Insurance Program started at the Federal level. We did it through the schools. We had tremendous success. It works.”

Opponents say it’s not the program they object to, but the eligibility scope.

“The Democrats’ reauthorization of SCHIP is changing from a once-limited block grant program into a large, welfare entitlement program with no fiscal prudence,” Miller remarked.

Some opponents also objected to portions of the bill that let states decide whether to require proof of citizenship for signups.

“The Democratic SCHIP bill still allows illegal aliens to get Medicaid and SCHIP benefits,” Miller said.

Martinez supports expanding the program to cover uninsured low-income children, but opposes coverage that pulls business away from private insurers.

“We must work harder to insure those in need. What we should not do is push children who already have private coverage into a government-run system,” according to an opinion by the Senator, dated September 30 on his website, and published in the Orlando Sentinel.

“Let's be clear: This is not a debate over whether we're going to provide health insurance for our nation's low-income children, because we all agree that we will do that,” Martinez’ opinion reads. “This is a debate over whether we should move to nationalize health care.”

Taking a bite out of Big Insurance:

CBO affirms that SCHIP has taken business from private insurers…because it’s cheaper and offers better benefits.

Indeed, government research suggests that what’s good for working people may not be good for Big Insurance.

“SCHIP provides an alternative source of coverage that is less expensive and that often provides a broader range of benefits than private insurance. As a result, some parents who otherwise would have enrolled their children in private coverage may prefer instead to switch their coverage to SCHIP,” according to a May CBO report.

Access to affordable insurance may also expand job choices for working people:

“To the extent that SCHIP makes private coverage less important for some low-income families, parents might be more inclined to take jobs that offer higher cash wages rather than health insurance,” the report notes.

Public insurance may also reduce costs to private businesses: CBO suggests it could cause employers to drop insurance coverage if it becomes less valuable as a hiring incentive. That could end up reducing benefits for other employees, the report points out.

Overall, however, CBO predicts a majority of the vetoed bill’s SCHIP enrollees (about 80 percent) would come from the ranks of the uninsured, rather than from private insurance company rolls.

“The President has…said this expansion is going to bring us down a path toward the federalization of health care,” Nelson remarked. “Well, that is simply not so. There is wide latitude in this law to give that latitude to the States.

The bill’s supporters have urged lawmakers to put aside politics to make the program work.

“I believe, simply, children are too precious to be held hostage to an ideological debate. This program is more important than the rhetoric about government-run health care,” Nelson notes.

Working on a compromise

Although it’s still possible supporters can negotiate the votes to override Bush, lawmakers must likely now work out a compromise.

The President’s plan calls for a $5 billion spending increase over the next five years. According to a March CBO estimate, it will cost an extra $7.8 billion just to maintain current enrollment levels during that time.

Nelson plans to continue working with Senate leadership to help support the measure’s original goals, says Press Secretary Bryan Gulley.

Miller says he supports the alternative bill H.R. 3584, which extends the existing program for 18 months until a new compromise can be reached.

“It provides the necessary time to allow Congress to work in a bipartisan manner in order to craft a bill that will provide benefits to those low-income, uninsured children for whom the program was originally created,” he notes.

Martinez advocates reauthorizing SCHIP, but limiting eligibility to 200 percent of the poverty line; and creating child health-care tax credits for families between 200 and 300 percent of the poverty level, according to his website.

H.R. 676: National Health Insurance

As Democrats and Republicans alike stress their commitment to lowering children’s health insurance costs, one proposed policy that would eliminate insurance companies, entirely, has been languishing in Congressional committees for years.

H.R. 676 would radically change how American health care is managed – by replacing the insurance industry with Medicare-style universal public coverage.

Titled ‘The United States National Health Insurance Act,’ Rep. John Conyers (D-MI) introduced the bill in 2003. It’s available at: The Library of Congress

It would do away with most private health insurance. Instead, all individuals residing in the U.S. or territories would be covered by a national, ‘single-payer’ policy -- envisioned as an extension of Medicaid and Medicare.

The insurance would cover “all medically necessary services,” according to bill verbage, including:

Primary care and prevention, inpatient and outpatient care, emergency care, prescription drugs, durable medical equipment, long-term care, mental health services, dental care, substance abuse care, chiropractic services, basic vision care and correction, hearing and hearing aid services.

There would be no deductible or copay costs for consumers.

The benefits would be available through any licensed, qualified non-profit health care provider, according to the bill.

Private health insurance companies would be prohibited from selling coverage that duplicated available benefits.

The government would negotiate standard fees and prescription drug costs with providers.

Conyers predicts that by 2010, the program would cost the same amount as the current system ($2,776 billion) – but would reduce out-of-pocket consumer expenses 75% – by eliminating insurance premiums, deductibles, and co-pays.

Instead, National Health Insurance costs would be spread across a range of sources, according to the bill.

It would be funded through existing programs like Medicaid; a 5% income tax for the top 5% bracket; a 10% income tax for the top 1%; a 4.75% payroll tax (including the current 1.45% levy); closure of ‘corporate welfare’ loopholes, and a one-quarter of one percent tax on stock and bond transactions. The plan also assumes repealing Bush tax cuts for the highest income earners.

Proponents argue that consolidating health care administration would simplify the bureaucratic process, streamline purchasing, save money, and create employment (the bill stipulates displaced insurance and medical industry workers receive priority hiring placement and two years of unemployment benefits).

H.R. 676 has bounced between various committees since its initial debut.

It currently has 82 co-sponsors.