From the Health Policy Consensus Group
* The primary focus of the State Childrenâ€™s Health Insurance Program should be to cover children in families with incomes at or below 200 percent of poverty. States that wish to expand sCHIP to cover children and adults in higher-income families are free to do so with their own state funds.
For those above 200 percent of poverty, the appropriate federal mechanism for support is through a combination of tax reform and direct financial subsidies to help families purchase the private health insurance of their choice.
* The programâ€™s subsidies should be re-structured to encourage the purchase of private health insurance. sCHIP subsidies could be used to allow parents to purchase the health coverage that they believe is best for their children, including adding them to policies that may be offered at their workplaces. Research shows that children and their parents benefit if the whole family is covered.
* The federal-state matching ratio for sCHIP funding should be changed to eliminate the distortions that exist in todayâ€™s system. States receive a higher federal matching rate for covering sCHIP recipients (which today include many adults) than they receive for covering children eligible for Medicaid, even though these Medicaid children are in families with lower incomes. Congress should focus on fixing the perverse incentives that reward states at a higher level for enrolling higher-income sCHIP children over poorer Medicaid children. The current funding formulas also mean more federal sCHIP dollars will go to wealthier states that can afford to expand the program than to poorer states that do not have sufficient state funds to expand their programs.
* sCHIP must not be turned into another entitlement program modeled after Medicaid, with unlimited federal funds matching state spending on benefits. That would add to the taxpayersâ€™ already-overwhelming burden of tens of trillions of dollars in unfunded entitlement liabilities. It also would encourage states to use accounting tricks to inappropriately increase federal payments, as they have done for years in the Medicaid program. sCHIP must remain as a capped funding program to the states, and Congress must require states to live within their allocations.
Here is the complete Consensus Group statement:
Two-thirds of uninsured children are eligible for either sCHIP or Medicaid under current law, including many children under 200 percent of poverty who are not yet enrolled. Expanding sCHIP to children in higher-income families would mean shifting the focus away from these children who most need help and would grow the program into a middle-class entitlement that goes far beyond its current mission of helping near-poor children. Reauthorization of sCHIP should concentrate on reducing the number of near-poor children who are eligible for coverage.