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243 IRET Congressional Advisory 1 (2008)

handle is hein.taxfoundation/iretcgadv0240 and id is 1 raw text is: INSTITUTE FOR RESEARCH ON THE ECONOMICS OF TAXATION IRET is a non-profit 501 (c)(3) economic policy research and educational organization devoted to informing the public about policies that will promote growth and efficient operation of the market economy. September 12, 2008 Advisory No. 243 SCHIP RETURNS FOR ANOTHER VOTE The State Children's Health Insurance Program (SCHIP) is coming up for another vote. Two efforts in 2007 to reauthorize and significantly expand the program were successfully vetoed by President Bush. (H.R. 976 was vetoed October 3, and a slightly scaled back version, H.R. 3963, was vetoed December 12.) Following the second veto, SCHIP was given a simple extension at full funding of existing coverage levels through early March of 2009 (in H.R. 3584, passed and signed into law on December 21, 2007). Now, the Congressional leadership is gearing up for another attempt to pass something like H.R. 3963. SCHIP was originally designed to provide insurance for children in families with incomes up to twice the poverty level. The targeted families had income too high to qualify for Medicaid, but not high enough to make insurance readily affordable. Many states requested and were granted waivers to expand coverage to children in families with incomes up to 300 percent or 350 percent of poverty. Some states included large numbers of adults in their programs. These states have covered additional populations even though they have not fully enrolled the children in the original target group of poorer families. A number of states overspent their allotments due to their more generous eligibility rules, and have received matching funds from Congress to help cover the over-runs. The President had proposed a 20% increase in SCHIP, from $20 billion to $25 billion, over five years. The Bush request was enough to fully fund a renewal of the SCHIP program at a level that would fully cover health cost inflation and the rising number of children in the originally qualifying income categories (families with income up to 200% of poverty). By contrast, the second of the vetoed Congressional plans would have more than doubled the size of the program, expanding it by $35 billion over five years (from $25 billion to $60 billion). It would have paid for a broad inclusion of an additional 4 million children of middle-income families (up to 300% of poverty, or nearly $62,000 for a family of four). To address some of the President's concerns, it would have prohibited use of SCHIP money for families with income above 300 percent of poverty; removed childless adults, other than pregnant women, from the program; and would have required a Government Accountability Office study and subsequent efforts by the states to determine best practices to prevent the substitution of SCHIP for private coverage. (Study to determine best practices does not equal adopt and successfully implement.) The Congressional Budget Office (CBO) estimated that of every additional 100 children enrolled in SCHIP under the Congressional expansion proposal, between 25 and 50 of them would be switching from private insurance. Some would be switched out of their parents' employer-provided plans, and some from their parent's individual insurance plans. This crowding out of private coverage would shift the cost of the insurance from private wallets to the public purse. A * * g6~ I ~ee

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