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A few months ago, reauthorization of SCHIP seemed like a routine matter. Then Bush decided to single it out as a target of the administration's newfound fiscal discipline. The program was created in 1997 to provide coverage to "targeted low-income children" who are uninsured and not eligible for Medicaid — typically, families with incomes up to 200% of the federal poverty level, or about $41,300 for a family of four in 2007. As the cost of private insurance has increased and the number of employers offering it has decreased, the ranks of the uninsured have grown — by 2.2 million in 2006, including 710,000 children, half of them with a family income between 200 and 399% of the poverty level (see bar graph)1 — and government has tried to fill the gap. While 24 states still use SCHIP to cover children with family incomes up to 200% of the poverty level and 8 states set their income thresholds below 200%, the other 18 states have extended their thresholds above 200% — 16 of them to 250% or above. Through waivers approved by the Bush administration, 5 states cover pregnant women under SCHIP, 11 cover parents of enrolled children, and 14 cover other adults. Yet 90% of children enrolled in SCHIP in 2005 still had family incomes at or below 200% of the poverty level (see pie charts).
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The measure that Bush vetoed was a compromise based largely on legislation drafted by four senior members of the Senate Finance Committee: Democrats Max Baucus of Montana (chairman) and Jay Rockefeller of West Virginia and Republicans Chuck Grassley of Iowa (ranking minority member) and Orrin Hatch of Utah. Senate Majority Leader Harry Reid (D-NV) persuaded House Speaker Nancy Pelosi (D-CA) that her party caucus should acquiesce to the less expansive Senate version because it had passed by a veto-proof majority. What incensed senators about Bush's veto was the administration's failure to work toward a compromise that would reauthorize SCHIP but combine it with some form of Bush's tax credit — an idea promoted largely by Grassley. When the senators cobbled together a bipartisan compromise, the administration offered no realistic alternative, instead attacking the proposal with ideological arguments and dubious interpretations. In mid-August, the administration further antagonized some legislators and many governors when the Centers for Medicare and Medicaid Services (CMS) released a directive placing new restrictions on states that wanted to continue covering children with family incomes above 250% of the poverty level. The directive was issued late on a Friday (August 17, 2007) without any warning to either Congress, which was in recess, or governors.3,4 On September 10, a group of 44 senators wrote a letter to Bush asserting that the directive represented "a dramatic change in administration policy" and urging him to withdraw it, which he declined to do.
In the weeks leading up to Bush's veto, the administration asserted repeatedly that the compromise would expand SCHIP eligibility limits to 400% of the poverty level — an interpretation that the bill's sponsors insist is incorrect. The senators say the measure would have reined in SCHIP by phasing out eligibility for childless adults and by prohibiting any new states from covering parents of enrolled children. It authorized SCHIP expenditures of $60 billion over the next 5 years — more than double the $25 billion appropriated in the past 5 years but well short of the spending level sought by the House ($75 billion). The administration's 2008 budget proposed an appropriation of only $30 billion over 5 years. The compromise also stripped out many contentious House provisions that would have affected Medicare. On September 25, the House approved the compromise bill, 265 to 159. Two days later, the Senate approved the measure 67 to 29 and sent it to Bush.
Of Republican legislators who decried the president's veto, none was more infuriated than Grassley, a five-term senator with a strong conservative voting record. Anticipating the veto, Grassley asserted in an impassioned speech on the Senate floor on September 26 that Bush's interpretation of the measure was simply incorrect. Grassley said, "Screaming `socialized medicine' during a health care debate is like shouting `fire' in a crowded theater. It is intended to cause hysteria that diverts people from reading the bill, looking at the facts." Grassley reminded Bush of a speech he had delivered to the Republican National Convention in 2004 committing to an expansion of coverage for children. ("In a new term, we will lead an aggressive effort to enroll millions of poor children who are eligible but not signed up for the government's health insurance programs.")
Grassley noted that the measure would be financed through a new revenue source, not added to the federal budget as an unfunded liability. However, the administration opposed the source — increasing the per-pack tax on cigarettes by 61 cents to $1.00. The compromise would have required states to prepare a plan to prevent families from enrolling children in SCHIP if private insurance was available to them. The administration was particularly concerned that an expansion of SCHIP would "crowd out" private insurance coverage and be more costly to the federal treasury. But Grassley concluded that "The compromise bill discourages states from covering higher-income kids by reducing the federal matching rate for states that wish to expand eligibility over 300% of federal poverty limits. It rewards states that cover more low-income kids by providing targeted incentives. . . . So there is a very clear message to states . . . don't spend money on higher-income kids unless you can prove that your state is covering your lower-income kids first. It is all there in black and white."
Given the heated rhetoric of the past several months, it may be difficult for Congress to return quickly to the task of reauthorizing SCHIP for the full 5 years. Barring a new compromise, the program would probably continue at its current funding level thanks to stopgap measures that would be enacted as necessary, which could leave many states short of the funds needed to maintain their current enrollments. Many House Republicans discount the possibility that, by upholding Bush's veto, they may have weakened their party's election prospects in 2008.
Democrats, who command a Congress with a public approval rating that, at 22%, is even lower than the president's, are divided over which path to take. Some are inclined to continue working toward a compromise that Bush would accept and to put SCHIP reauthorization behind them. Given her belief that SCHIP should be substantially expanded, the current frontrunner in the Democratic presidential race — Senator Hillary Clinton of New York — may prefer to fight out this issue during the coming campaign. On January 20, 2007, surrounded by children in a New York health center, Clinton simultaneously announced her candidacy for president and proposed extending the SCHIP threshold to four times the federal poverty level. On September 7, the administration announced that it had rejected New York's request to expand its SCHIP to cover 70,000 more children — the first application of the August 17 CMS directive calling for more restrictive enrollment policies.
How prominently SCHIP and the health care needs of uninsured children will figure in election-year debates is anybody's guess, but one thing is certain: However the SCHIP saga ends, it will not lay to rest the larger issue of what level of public support uninsured people deserve as our employer-based insurance system continues to erode.
Source Information
Mr. Iglehart is a national correspondent for the Journal.
An interview with Senator Charles Grassley (R-IA) can be heard at www.nejm.org.
This article (10.1056/NEJMp0706881) was published at www.nejm.org on October 18, 2007.
References
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