No-Brainer
By Trudy Lieberman

If ever there was a motherhood and apple pie issue, reauthorizing the popular State Children’s Health Insurance Program (S-CHIP) is it. Yet the Bush Administration, right-wing think tanks and health insurance companies have managed to turn a no-brainer into a pitched battle over the direction of healthcare reform, jeopardizing the future of S-CHIP itself. The fight over S-CHIP, which must be renewed by September 30, reflects deep divisions in Washington and shows the difficulties of making improvements in the healthcare system.

By every measure, the ten-year-old program–passed during the Clinton Administration as a bipartisan, incremental effort to expand health coverage to millions of poor kids–has been a success. Thanks to S-CHIP, the number of low-income uninsured kids dropped by one-third over the decade, even as the number of uninsured adults went up. Three out of four eligible kids participate, and studies show they receive preventive care and have improved health outcomes and school performance. “It has been the only success story in initiatives to improve healthcare access,” says Cindy Mann, who directs Georgetown University’s Center for Children and Families.

S-CHIP enjoys broad support among Democratic and Republican governors. Its flexibility allows states to tailor their own programs or build on existing Medicaid arrangements to target children typically in families with incomes of up to 200 percent of the federal poverty level (about $41,300 for a family of four this year). Last year 91 percent of kids on S-CHIP lived in families with incomes at or below that amount. States have stepped in to fill a gap the federal government has refused to address: Nineteen states target or plan to target kids from families whose income is greater than 250 percent of the poverty rate, and some cover pregnant women and parents of eligible kids, a strategy that has proved successful in reaching more children.

What’s wrong with this picture? It doesn’t square with the right’s ideology or the profit goals of the insurance industry, which has the upper hand in Congress. This summer the House and Senate passed bills reauthorizing S-CHIP, but by midSeptember it became clear that the House bill, which added 5 million uninsured kids to the rolls and paid for their coverage partly by cutting government overpayments to Medicare Advantage plans, would lose to the more minimal Senate approach. Giving health insurance to more kids instead of overpaying highly profitable insurance companies seemed like a good trade. But the Senate, lobbied all year by the insurance industry, didn’t see it that way.

The Senate bill covers only 4 million uninsured children, paying for the coverage with a 61-cent increase in the tobacco tax. It also retains the government handouts to insurance companies, which receive on average 12 percent more than it costs Medicare to provide benefits to seniors under the traditional program [see Lieberman, "The Medicare Privatization Scam," July 16/23]. Influential GOP senators, targeted by sellers of Medicare Advantage plans heavily marketed in rural areas, are adamantly against cuts to Medicare Advantage. “It’s very frustrating to see a phenomenal House bill and then move toward the Senate bill,” says a spokesperson for the Center on Budget and Policy Priorities. Negotiators say the issue of overpayments will be taken up later this year, when Congress must consider whether to implement scheduled cuts in Medicare payments to doctors, a fight that will pit doctors against insurance companies. But the insurance lobby has won this round.

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