Implications of the August 17 th Directive Jocelyn Guyer Center for Children and Families Georgetown University Health Policy Institute ccf.georgetown.edu March 31, 2008

THE CONTEXT

2007: Wave of Support for SCHIP Reauthorization

Americans Support Covering Children 91% July 23, 2007 Source: Poll conducted by Lake Research Partners and American Viewpoint, national survey of 1,002 American voters from June 26 - July 1, 2007 for the Center for Children and Families

Source: As of January 31, 2008 based on a review by the Center for Children and Families of state initiatives in 2006 and States Were Moving Forward ( ) Implemented or Recently Adopted Legislation to Improve Children’s Coverage (29 states including DC) FL NC SC GA LATX AL AR KS OKAZ TN MS NV UT CO NM CA WY ID WA OR ND SD NE MT MN IA MO IN MI WI IL ME OH KY HI AK NY PA WV VA CT NJ DE MD RI NH VT DC MA

But A Showdown Nonetheless The White House Congress

A Large Majority of Congress Supported The Reauthorization Bill (Vote on first major SCHIP reauthorization bill) Source: Roll No. 906 in the House of Representatives (September 25, 2007) and Record Vote No. 353 in the Senate (September 27, 2007) which sent H.R. 976, the Children's Health Insurance Program Reauthorization Act of 2007, to President Bush who vetoed it on October 3, 2007.

AUGUST 17 TH DIRECTIVE

Background on Directive Issued August 17 th, 2007 without notice In effect, makes it difficult or impossible for states to cover more moderate-income children Major shift in longstanding SCHIP policy Highly controversial and already a source of litigation

Details on August 17th Directive Eliminates SCHIP funding for children above 250% of the FPL UNLESS – 95% participation rate for low-income children – No significant decline in employer-based coverage Even if a state can meet the criteria, it must impose new limits on children’s coverage – 12-month waiting period – Maximum cost sharing No new tools with which to increase enrollment of low-income children

COVERAGE OF MODERATE-INCOME CHILDREN

States Have Increasingly Raised Eligibility Levels Number of states that cover children in Medicaid/SCHIP with family income above 200 percent of the FPL Note: In 2008, 200% of the federal poverty level (FPL) is equivalent to $44,000 for a family of three. Source: Based on surveys of Medicaid/SCHIP officials by the Center on Budget and Policy Priorities for the Kaiser Commission on Medicaid and the Uninsured; the most recent report is D. Cohen Ross, A. Horn, & C. Marks, “Health Coverage for Children and Families in Medicaid and SCHIP: State Efforts Face New Hurdles,” Kaiser Commission on Medicaid and the Uninsured (Jan. 2008).

Most Children Covered by SCHIP Have Family Incomes Below 200% FPL At or Below 200% FPL Above 200% FPL Note: The reporting classification of a child with family income above 200% FPL who is determined to be eligible at or below 200% FPL due to deductions or disregards (i.e., a net income test) is up to the discretion of the state and constrained by their reporting systems. Source: C. Peterson, “Estimates of SCHIP Child Enrollees Up to 200% of Poverty, Above 200% of Poverty, and of SCHIP Adult Enrollees,” Congressional Research Service (March 17, 2008). 7.1 million children enrolled in SCHIP, 2007

Growth in the Uninsured Driven by Low & Moderate-Income Children 31% have incomes below 200% FPL Source: Urban Institute tabulations of 2006 and 2007 Annual Social and Economic Supplement to the Current Population Survey from J. Holahan & A. Cook, “What Happened to the Insurance Coverage of Children and Adults in 2006?,” Kaiser Commission on Medicaid and the Uninsured (September 2007). Of the 710,000 Newly Uninsured Children in 2006: 21% have incomes at or above 400% FPL 47% have incomes from 200% to 399% FPL

The Growing Affordability Gap Between 200% FPL and the Cost of Private Coverage Note: This data represents the cumulative growth in employee premium contributions for employer-sponsored family coverage and the federal poverty level for a family of three. Source: Agency for Healthcare Research and Quality estimates of Medical Expenditure Panel Survey Insurance Component Tables, generated using MEPSnet/IC (August 21, 2007); and CCF analysis of Federal Poverty Guidelines.

The Cost of Living Varies Widely Note: In 2007, 200% of the federal poverty level for a family of three was $34,340 annually. Source: Center for Children and Families analysis of ACCRA cost of living index for the first quarter of The cost of goods and services worth $34,340 in the average city, adjusted for the cost of living. 200% FPL for a family of 3

ISSUES RAISED BY THE DIRECTIVE

23 States Are Affected by the “August 17th” CMS Directive Expansion states already negatively impacted (6 states) FL NC SC GA LATX AL AR KS OKAZ TN MS NV UT CO NM CA WY ID OR ND SD NE MT MN IA MO IN MI WI IL ME OH KY HI AK NY PA WV VA CT NJ DE MD RI NH VT DC MA Source: Center for Children and Families, “Moving Backward: Status Report on the Impact of the August 17 SCHIP Directive To Impose New Limits on States’ Ability to Cover Uninsured Children,” (December 2007) States with approved plans that must comply by August 2008 (14 states including DC) Expansion states with 2008 implementation dates (4 states) WA

The 95% Participation Rate Target Has Not Been Achieved in Public Programs Source: Kaiser Commission on Medicaid and the Uninsured, “SCHIP Reauthorization: Key Questions in the Debate,” (August 29, 2007); and K. Cunnyngham, L. Castner, & A. Schirm, “Reaching Those in Need: State Food Stamp Participation Rates in 2005,” U.S. Department of Agriculture, Food and Nutrition Service (October 2007).

Few States Meet Employer-Sponsored Coverage Criteria FL NC SC GA LATX AL AR KS OKAZ TN MS NV UT CO NM CA WY ID OR ND SD NE MT MN IA MO IN MI WI IL ME OH KY HI AK NY PA WV VA CT NJ DE MD RI NH VT DC MA Note: Change in employer-sponsored coverage for children under 18 from 2000/2001 to 2005/2006; the overall U.S. decline in ESI coverage for children was 4.9 percentage points. Source: E. Gould, “The Erosion of Employment-Based Insurance,” Economic Policy Institute (November 2007). Decline in ESI for children equal to or less than two percentage points (10 states) WA Decline in ESI for children greater than two percentage points (40 states + DC)

Options Just wait… Litigate… Or Legislate.