S-chip complements Medicaid by providing health insurance for children in families not poor enough to be eligible for Medicaid, but too poor to afford private insurance, which for a family of four can easily cost $10,000 or more a year. Currently, under S-chip, most states provide health insurance to children in families with incomes of at least 200 percent of the federal poverty line. President Bush, unfortunately, wants to restrict S-chip eligibility to that low level. He proposes an inadequate increase of $5 billion a year between 2008 and 2012. This amount would entail a loss of coverage even for 1.4 million needy children already enrolled, with nothing added for others who are also eligible because of their families low-income status.
Some states have used the flexibility they now enjoy under S-chip to raise the eligibility levels well above the 200 percent cut-off line that the administration wants to establish. New Jersey, for instance, where the cost of living is one of the highest in the nation, covers children in households with incomes at 350 percent of the poverty level. And the New York State Legislature recently proposed an increase to 400 percent of the poverty line. But in mid-August, the president set stricter limits on household income, requiring states to prove that they have enrolled 95 percent of children below the 200 percent limit before expanding eligibility to higher-income working poor families. No state meets this standard, and health advocates see such a level of participation as virtually impossible. New Yorks Gov. Eliot Spitzer and others, like Senator Edward Kennedy (Democrat of Massachusetts) have said that they will challenge the new federal rules.
Congress, to its credit, promised $50 billion in its budget resolution in March to cover more children under S-chip and Medicaid. Both houses of Congress passed bills in early August that represent a move in the right directionenough to cover four to five million children as yet uncovered and to ensure that those currently covered under S-chip would retain their coverage.
The House bill is the more generous of the two. It would increase spending over the next five years by the full $50 billion Congress promised. The Senate bill is more modest but still offers much more than the administration. Congress now faces the task of reaching a compromise before the Sept. 30 deadline. Both legislative measures would pay for the increase in S-chip funding by raising the tax on tobacco. Some advocates, like Edwin Park, a senior fellow at the Center for Budget and Policy Priorities, have pointed out that linking it with other means-tested programs, like free or reduced-price school lunches or food stamps, could make it easier for low-income children to benefit from S-chip as well. Eligibility for food stamps, for example, could automatically mean eligibility for S-chip. The so-called express lane approach, he added, is a provision of both the new House and Senate bills.
The president has threatened to veto any measures that exceed his inadequate $5 billion annual increase or give states the funds and tools they need to enroll more children, a position that falls well short of the goal of reaching the nine million children who still lack health care coverage. At least $50 billion over the next five years is what must be forthcoming. With the cost of the Iraq war running to $200 billion a year, and with ongoing tax cuts for the wealthiest placed ahead of the needs of low- and middle-income Americans, it is not surprising that important domestic programs like S-chip are being squeezed in ways that are bound to hurt the most vulnerable among us. Congress should be ready to override any veto aimed at derailing the increased funding needed for S-chip.