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Healthcare for Children: SCHIP

The time for reform is here, and we want to keep you up-to-date.

As healthcare proposals are introduced, debated and passed at the national level, we’ll break down the legislation, discuss the pros and cons and let you know what folks are saying about it.

The Proposal

After nearly two years of setbacks, people who care about children’s health have reason to celebrate.

We’re pleased to report that both the House and the Senate voted in January to reauthorize and expand the State Children’s Health Insurance Program (known as S-CHIP or CHIP) to cover an additional 4 million uninsured children in this country.

The program works to insure low and moderate-income youngsters by letting them enroll in plans that offer premiums and co-pays at below market-rate.

The Details

Children living in families with incomes of up to three times (300%) of the Federal Poverty Level (FPL) will now qualify for the program. Previously, the program only covered children in families with incomes up to two times (200%) of the FPL, but states were able to make exceptions to accommodate for the high cost-of-living in some places.

To put that in real numbers, children living in a family of four with an income of up to $66,100 will be able to sign up. See our sidebar for FPL income levels.

SIDEBAR: Federal Poverty Level Cut-Offs Based on Annual Income and Family Size (2009)
Family Size
100% = Poverty
133% of poverty or less than:
150% of poverty or less than:
185% of poverty or less than:
2 $14,570 $19,378.10 $21,855 $26,954.50
3 $18,310 $24,352.30 $27,465 $33,873.50
4 $22,050 $29,326.00 $33,075 $40,792.50
5 $25,790 $34,300.70 $36,685 $47,711.50
6 $29,530 $39,274.90 $44,295 $54,630.50
7 $33,270 $44,249.10 $49,905 $61,549.50
8 $37,010 $49,223.00 $55,515 $68,468.50
Family Size
200% of poverty or less than:
250% of poverty or less than:
300% of poverty or less than:
400% of poverty or less than:
2 $29,140 $36,425 $43,710 $58,280
3 $36,620 $45,775 $54,930 $73,240
4 $44,100 $55,125 $66,150 $88,200
5 $51,580 $64,475 $77,370 $103,160
6 $59,060 $73,825 $88,590 $118,120
7 $66,540 $83,175 $99,810 $133,080
8 $74,020 $92,525 $111,030 $148,040

Experts predict that under these new rules, the number of enrollees will increase from roughly 7 million to 11 million at a cost of $32.3 billion over 4 1/2 years. This amount is in addition to the $25 billion needed to run the program presently.

Funding will come almost entirely from a $.61 per pack increase in the federal cigarette tax.

Critics argue that this funding source will not be enough, and that new taxes will be necessary over time as the cost of the program rises.

But:

  • The Congressional Budget Office (CBO) predicts that the legislation will actually lower the federal government’s deficit by $1.1 billion between 2009-2013, and by $1.7 billion between 2009-2018.
  • The CBO argues that the cigarette tax and other, existing revenues should be sufficient to cover the cost of the bill over the next 10 years.

The bill will also allow states to waive a mandatory, 5-year waiting period for pregnant documented immigrants and their children. It’s estimated that 300,000 to 600,000 more children will enroll once this waiver is enacted.

Background

Started in 1997, the SCHIP program provides a vital service to our nation’s low-income children. It could also play a critical role in reducing the ranks of the uninsured and the unhealthy nationally.

When the program came up for renewal in 2007, it received a flurry of news attention as President Bush haggled with Congress over the details. Mr. Bush ultimately vetoed the compromise bill when it got to his desk. (The compromise bill was very similar to the legislation that Congress just passed.) The President feared that middle-income families would be tempted to leave their private insurance plans (a phenomenon called “crowd-out”) and he objected to raising the cigarette tax.

In reality, the majority of children enrolled in SCHIP have no other insurance options. According to independent analyses, the percentage of children enrolled in SCHIP who left their private plans to do so is between 2-14%.

For a full break-down of the political battle, check out our previous article on this topic.

Several attempts by Congress to override the veto in 2007 failed. The program was extended, but not expanded, and legislators decided to hold off on revisiting the bill until after the November election.

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