U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

32–112—PDF 2006

S. HRG. 109–744

CHIP PROGRAM FROM THE STATES’ PERSPECTIVE

HEARING

BEFORE THE

SUBCOMMITTEE ON HEALTH CARE

OF THE

COMMITTEE ON FINANCE

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

NOVEMBER 16, 2006

(

Printed for the use of the Committee on Finance

COMMITTEE ON FINANCE

CHARLES E. GRASSLEY, Iowa, Chairman

ORRIN G. HATCH, Utah

TRENT LOTT, Mississippi

OLYMPIA J. SNOWE, Maine

JON KYL, Arizona

CRAIG THOMAS, Wyoming

RICK SANTORUM, Pennsylvania

BILL FRIST, Tennessee

GORDON SMITH, Oregon

JIM BUNNING, Kentucky

MIKE CRAPO, Idaho

MAX BAUCUS, Montana

JOHN D. ROCKEFELLER IV, West Virginia

KENT CONRAD, North Dakota

JAMES M. JEFFORDS (I), Vermont

JEFF BINGAMAN, New Mexico

JOHN F. KERRY, Massachusetts

BLANCHE L. LINCOLN, Arkansas

RON WYDEN, Oregon

CHARLES E. SCHUMER, New York

KOLAN DAVIS, Staff Director and Chief Counsel

RUSSELL SULLIVAN, Democratic Staff Director

SUBCOMMITTEE ON HEALTH CARE

ORRIN G. HATCH, Utah, Chairman

OLYMPIA J. SNOWE, Maine

BILL FRIST, Tennessee

JON KYL, Arizona

CRAIG THOMAS, Wyoming

RICK SANTORUM, Pennsylvania

JIM BUNNING, Kentucky

JOHN D. ROCKEFELLER IV, West Virginia

JAMES M. JEFFORDS (I), Vermont

JEFF BINGAMAN, New Mexico

JOHN F. KERRY, Massachusetts

RON WYDEN, Oregon

(II)

(III)

C O N T E N T S

OPENING STATEMENTS

Page

Hatch, Hon. Orrin G., a U.S. Senator from Utah, chairman, Subcommittee

on Health Care, Committee on Finance ............................................................. 1

Rockefeller, Hon. John D., IV, a U.S. Senator from West Virginia ..................... 2

WITNESSES

Checketts, Nate, director, Bureau of Access, Utah Department of Health,

Salt Lake City, UT ............................................................................................... 4

Carte, Sharon, executive director, West Virginia CHIP State Capitol Complex,

Charleston, WV .................................................................................................... 6

Kohler, Ann Clemency, director, Division of Medical Assistance & Health

Services, Department of Human Services, Trenton, NJ ................................... 8

Drabczyk, Tobi, representing her family, Walkersville, MD ................................ 10

Owcharenko, Nina, The Heritage Foundation, senior health care policy analyst, Center for Health Policy Studies, Washington, DC .................................. 12

Dubay, Lisa C., PhD, associate, Bloomberg School of Public Health, Johns

Hopkins University, Baltimore, MD ................................................................... 13

ALPHABETICAL LISTING AND APPENDIX MATERIAL

Carte, Sharon:

Testimony .......................................................................................................... 6

Prepared statement .......................................................................................... 23

Responses to questions from committee members ......................................... 30

Checketts, Nate:

Testimony .......................................................................................................... 4

Prepared statement .......................................................................................... 34

Responses to questions from committee members ......................................... 42

Drabczyk, Tobi:

Testimony .......................................................................................................... 10

Prepared statement .......................................................................................... 47

Responses to questions from committee members ......................................... 49

Dubay, Lisa C., PhD:

Testimony .......................................................................................................... 13

Prepared statement .......................................................................................... 51

Responses to questions from committee members ......................................... 61

Hatch, Hon. Orrin G.:

Opening statement ........................................................................................... 1

Prepared statement .......................................................................................... 68

Kohler, Ann Clemency:

Testimony .......................................................................................................... 8

Prepared statement .......................................................................................... 70

Responses to questions from committee members ......................................... 74

Lincoln, Hon. Blanche:

Prepared statement .......................................................................................... 81

Owcharenko, Nina:

Testimony .......................................................................................................... 12

Prepared statement .......................................................................................... 82

Responses to questions from committee members ......................................... 88

Rockefeller, Hon. John D., IV:

Opening statement ........................................................................................... 2

Prepared statement .......................................................................................... 93

Page

IV

Snowe, Hon. Olympia J.:

Prepared statement .......................................................................................... 95

Thomas, Hon. Craig:

Prepared statement .......................................................................................... 98

COMMUNICATIONS

March of Dimes ........................................................................................................ 99

Voices for America’s Children ................................................................................. 105

(1)

CHIP PROGRAM FROM THE STATES’

PERSPECTIVE

THURSDAY, NOVEMBER 16, 2006

U.S. SENATE, SUBCOMMITTEE ON HEALTH CARE, COMMITTEE ON FINANCE, Washington, DC.

The hearing was convened, pursuant to notice, at 2:35 p.m., in

room SD–215, Dirksen Senate Office Building, Hon. Orrin G. Hatch

(chairman of the subcommittee) presiding.

Present: Senators Rockefeller and Lincoln.

OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM UTAH, CHAIRMAN, SUBCOMMITTEE ON HEALTH

CARE, COMMITTEE ON FINANCE

Senator HATCH. Welcome to everybody. We are grateful to have

you all here.

I am going to put my opening remarks in the record. I will just

say a few things. We are going to have three votes, and then they

tell me there is going to be a closed session, so you may be stuck

here all afternoon, and I do not want to do that to you if I can help

it.

This year, we are going to be responsible for reauthorizing and

financing one of the most important programs, in my opinion, in

the government, and that is the State Children’s Health Insurance

Program.

Now, let me make one thing clear: CHIP must be reauthorized.

It is an important program. It was the only way we could help the

kids who are really left out of the health care system, and that is

the children of the working poor.

I want to be able to do that. There are literally millions of American children insured through CHIP, 6.2 million to be exact. That

being said, it must be acknowledged that the reauthorization poses

many challenges.

That is why my friend Senator Rockefeller and I have worked

closely together on this program from the beginning, and I feel it

imperative that this subcommittee devote a second day of hearings

to CHIP this year.

So with that, I am going to quit talking and put the rest of my

statement in the record. It is a wonderful statement. I think you

would have all enjoyed it. [Laughter.] As you know, we love to

make statements around here.

[The prepared statement of Senator Hatch appears in the appendix.]

2

Senator HATCH. But I am going to turn to my colleague, Senator

Rockefeller, and then we are going to go to these witnesses as

quickly as we can.

Senator ROCKEFELLER. All right. Will you instruct our colleague,

Senator Lincoln from Arkansas, to come sit over here and not be

so modest?

Senator HATCH. Senator Lincoln, you can come sit even on my

right. [Laughter.]

Senator ROCKEFELLER. You have to instruct her, Mr. Chairman.

Senator LINCOLN. Just keep going, Jay.

Senator HATCH. We are really glad to have you.

Senator LINCOLN. If Senator Jeffords comes, I will move quickly.

Senator HATCH. By the way, I did not mention Senator Lincoln

and what she meant to this issue as well, and so many others. But

this was a miracle that we were able to get the CHIP program

through.

The CHIP program became the glue that really brought about

the first balanced budget. Democrats wanted CHIP, and some of us

Republicans; Republicans wanted the balanced budget, and some of

the Democrats. But this actually became the glue that brought

about the first balanced budget in over 40 years. The reason it was

is, it is an important, good program. So, Senator Rockefeller, we

turn to you.

OPENING STATEMENT OF HON. JOHN D. ROCKEFELLER IV,

A U.S. SENATOR FROM WEST VIRGINIA

Senator ROCKEFELLER. All right. Actually, I am going to put my

statement in the record, too.

You have heard this reminiscence from me before, but I do not

care because I love telling it so much. [Laughter.]

We had a meeting—and you will remember this. Unfortunately,

this was pre-Senator Lincoln—but we were wandering all over the

place on this, John Chaffee, Orrin Hatch, a whole lot of people on

both sides of the aisle. And we happened to have a rectangular

table in the middle of the room. Not this. We were seated at a rectangular table.

Senator HATCH. Right in this room.

Senator ROCKEFELLER. In this room. And there was staff behind

us, and we were not getting anywhere. Somebody, probably you,

came up with the brilliant idea of saying, let us get everybody out

of here but members of the Senate. That is what happened.

I think probably some fairly surly comments emitted from various parts of the room, but nevertheless, an amazing thing happened, which is the Senate at its best, which you do not often see.

That is that, there we were, around a table.

Senator Hatch actually was the first to speak. We were all within about 10 feet of him, but he felt so strongly about getting the

Children’s Health Insurance Program started that he stood up to

make his remarks, which was totally inappropriate physically, but

psychologically, emotionally, and in terms of commitment, it was

just devastating. It was just devastatingly effective.

Then Al D’Amato, who had been not very vocal on these matters,

I do not remember if he stood up or not, but he just let it rip: ‘‘You

can’t do this to children. They’ve got to be insured.’’ And then

3

Frank Murkowski, who usually does energy things, just started

talking about the importance of giving health care to children. It

went right on around.

Virtually, by the end of whatever it was, a couple of hours, there

was going to be a CHIP program. It was not written, but the commitment was so fully there. I have always been intrigued by the

fact that we were cautious in the public setting and we were true

to ourselves in the private setting. That is my statement.

[The prepared statement of Senator Rockefeller appears in the

appendix.]

Senator HATCH. Well, thank you, Senator. I will add to that that

it was written the way I originally said it would be written, and

it has worked amazingly well. I hope that all of you feel that way.

If you do not, you have to tell us where we have to change it.

Senator Lincoln, we will put your statement in the record. Is that

all right?

Senator LINCOLN. Absolutely. Yes.

[The prepared statement of Senator Lincoln appears in the appendix.]

Senator HATCH. We are very pleased today to have the witnesses

before this committee. I am just going to read you off from left to

right.

I am really proud to have Mr. Nate Checketts here, the director

of Bureau of Access, Utah Department of Health in Salt Lake City;

Ms. Sharon Carte, who is the executive director of the West Virginia CHIP State Capitol Complex in Charleston; Ms. Ann C.

Kohler, director of the Division of Medical Assistance & Health

Services, Department of Human Services in Trenton, NJ; Mrs. Tobi

Drabczyk. Is that how it is pronounced?

Mrs. DRABCZYK. Drabczyk.

Senator HATCH. All right. I am sorry. I was, at one time, living

in Pennsylvania, and we pronounced it Drabczyk. But Drabczyk.

All right. I stand corrected. Mrs. Drabczyk represents her family

from Walkersville, MD.

Ms. Nina Owcharenko.

Ms. OWCHARENKO. Very good.

Senator HATCH. I got one! [Laughter.] She is from The Heritage

Foundation, a senior health care policy analyst, Center for Health

Policy Studies. We get so many good ideas from The Heritage

Foundation in these areas, and many other areas as well, so we are

proud to have you here.

Dr. Lisa C. Dubay. We are proud to have you here. She is an associate, Bloomberg School of Public Health at Johns Hopkins University.

I do not think we could have a better group of people who could

help us to know what we should do about reauthorization of CHIP.

So we will start with you, Mr. Checketts, and we will go right

across. If you could limit your statements, we might be able to get

through this hearing. If you do not, we are going to be gone for a

long time and you will just have to wait. So if you could summarize, that would be even better.

Mr. Checketts, we will turn to you.

4

STATEMENT OF NATE CHECKETTS, DIRECTOR, BUREAU OF

ACCESS, UTAH DEPARTMENT OF HEALTH, SALT LAKE CITY,

UT

Mr. CHECKETTS. Members of the Subcommittee on Health Care,

my name is Nathan Checketts and I am the Director of the Utah

CHIP program. Thank you for this opportunity to speak about

CHIP in Utah.

I appreciate the invitation of Senator Hatch and this committee

to come and speak. Senator Hatch has put a lot of effort and leadership into bringing CHIP into existence, and it has really benefitted millions of children around this country.

I also want to acknowledge the role that Secretary Leavitt played

in the development of CHIP in Utah. As governor, he helped determine what flavor of CHIP we were going to implement in our

State.

In my remarks, I am going to provide a brief sketch of how CHIP

looks in Utah, what factors have contributed to CHIP’s success in

my State, what is still left to be done, and how CHIP can still be

improved.

CHIP has been a tremendous success in Utah. Since 1999, over

110,000 children in Utah have been on CHIP. Currently, we have

36,000 children enrolled. CHIP in Utah covers children up to 200

percent of the Federal poverty level. Most families pay a small premium and have some co-payments for services. Services are provided through private networks that are contracted with CHIP.

So what has made CHIP so successful in Utah? CHIP is not a

mandate. Expansions in enrollment levels have been funded at the

State’s discretion. In contrast, decision makers in Utah have been

uncomfortable with Medicaid growth, because much of Medicaid is

an entitlement and they feel like they have no choice but to fund

that growth.

CHIP does not feel like a welfare program. CHIP has been able

to sell itself with TV and radio marketing. Reduced eligibility requirements and an online application allow a more streamlined eligibility process; in many cases, applicants can complete the entire

process without setting foot in an eligibility office.

Benefits are structured like private benefits: premiums, co-pays,

provider panels, and market-rate reimbursements for providers.

Better reimbursement rates translate into more physicians and

dentists accepting CHIP, which translates into more access to

health care for children.

Given CHIP’s success to date, can we say ‘‘mission accomplished?’’ Not yet. Despite great strides in enrollment, the number

of uninsured children continues to grow. The need for CHIP today

is as great as it has ever been. In 2001, 11.9 percent of Utah children under 200 percent of Federal poverty level were uninsured; by

2005, this percentage increased to 16.8 percent, or 52,400 children.

If the State enrolled all uninsured children thought to be eligible

for CHIP, which would be an additional 25,000 children, the percentage of low-income children who are uninsured would drop to

8.9 percent. Yet, this increase in enrollment would cost $8.3 million

in State funds and an additional $30.8 million in Federal funds on

an ongoing basis.

5

So how can CHIP be improved for Utah? Current Federal funding for CHIP is not adequate if we hope to reduce the number of

uninsured children. Do Utah’s expenditures exceed its CHIP allocations? Not today. The Federal share of Utah’s current annual CHIP

spending, about $40 million, is approximately equal to its annual

allocation, and Utah has some unspent allocations from prior years.

However, Governor Huntsman is looking to insure additional

children in our State. CHIP will likely be one of the vehicles for

that coverage. If Utah enrolls more children on CHIP, the State

will quickly spend down its prior unspent allocations and will also

acquire additional Federal funding.

Besides increased funding, States can use additional flexibility to

create a better CHIP program. As dictated by Federal requirements, children on CHIP receive very good health insurance and

have limited cost sharing. Yet, discussions for options for families

at higher income levels are stymied because the entire host of

CHIP requirements follows an expansion of eligibility.

Most requirements should stay in place for children at the lower

income levels. However, for children with higher family income,

States should be given additional flexibility, especially in benefit

design and cost sharing when coverage is expanded to these

groups.

Last month, CMS approved a premium assistance option for

CHIP in Utah. Our new program is called Utah’s Premium Partnership for Health Insurance, or UPP. We are excited to have the

opportunity to partner with employees and employers to serve our

clients through their employer’s health plan.

However, enrollment in this option will be limited because we

are required to allow children to elect direct CHIP coverage at any

time. Most families will choose direct CHIP coverage because it is

a generous program.

If the election requirement were lifted for children with higher

family incomes, additional options could be considered, including

only offering a tiered premium assistance option for higher-income

families. A gradual reduction of benefits would eliminate the benefit cliff that families currently face in Utah at 200 percent of the

Federal poverty level.

Another concern for Utah is how the Federal Payment Error

Rate Measurement, or PERM, program is being implemented for

CHIP. We support reviews of claims and eligibility. However,

PERM has imposed a uniform sample size across all States regardless of the number of children covered in the State.

We have been told that the cost will be approximately $500,000

for each State, and that the cost will count against the 10 percent

administrative cap for CHIP. For smaller States like Utah, this

PERM expenditure will have a disproportionate impact on the dollars that we are spending to currently run the program. PERM

sample size and administrative cost requirements need to be reconsidered so that CHIP in small States is not harmed by the effort

to improve accuracy.

Thank you for this opportunity to discuss the CHIP program

with you. CHIP has been a great partnership between the State

and Federal Government, and we look forward to continue working

with you on this.

6

Senator HATCH. Thank you, Mr. Checketts. We will certainly

look into the matters that you have raised.

[The prepared statement of Mr. Checketts appears in the appendix.]

Senator HATCH. We have just had the first vote and it’s halfway

through, so I asked Senator Rockefeller and Senator Lincoln to go

over and vote and see if they can come back. We have three votes

in a row. I am going to stay for you, Ms. Carte, and then hopefully

they will come back and keep going, and then I will come back and

we will just kind of keep rotating.

Ms. Carte, we will turn to you.

STATEMENT OF SHARON CARTE, EXECUTIVE DIRECTOR, WEST

VIRGINIA CHIP STATE CAPITOL COMPLEX, CHARLESTON, WV

Ms. CARTE. Thank you, Mr. Chairman. I do have my written

statement. Considering that time is limited, I will try to hit on the

high points.

[The prepared statement of Ms. Carte appears in the appendix.]

Senator HATCH. We will put all the statements in the record as

though fully delivered.

Ms. CARTE. Thank you.

I would like to focus on some of the high points. West Virginia

is a stand-alone CHIP, very much a program like that of Utah. It

covers up to the 200 percent Federal poverty level, children between birth through age 18. It has a comprehensive package of

benefits, very much like a commercial standard plan. It was

benchmarked on West Virginia’s Public Employees’ Insurance Program.

It has grown in phases. I submitted a number of exhibits to help

illustrate that for the committee. Early on in the first 2 years of

CHIP, it was a Medicaid expansion, briefly. But then, later, the

State plan was amended to make it a separate stand-alone program. For those first 2 years, it was operated at below 150 percent

of poverty income levels.

But when you look at West Virginia CHIP and West Virginia

Medicaid together, as you see in the exhibit I submitted, I am sure

it is similar to most States that in effect you have a stair-step approach where the eligibility levels are much higher for younger

ages for Medicaid.

For example, in West Virginia they go up to 150 percent of poverty for those children under one, and they go to 133 percent for

children in the preschool years. So it was really only later, when

West Virginia was able to expand its program to the 200 percent

level, that we were really able to get more coverage for adolescents

and older children, so we saw this phased-in growth.

Then I have an exhibit that shows the steady enrollment growth

of West Virginia CHIP. The earliest years, of course, when we went

to 200 percent were the most dramatic growth, but we have continued to enjoy a very steady increase in enrollment.

You have detailed there for you the difference between the enrollment in average active enrollment numbers, but also the numbers of unduplicated children who flow through the program in a

year’s time. I think that is important to point out, because CHIP

is continuously enrolling and disenrolling children.

7

Sometimes I am asked, as I was this week before our legislature

when I reported, how many children are left who are uninsured in

West Virginia, and it is not an easy thing to answer.

Currently, I think all the CHIP programs are asked by CMS to

report how many children are uninsured through point of time, or

data, or on any given day how many children, and we use current

population estimates for that.

However, when you look at the unduplicated numbers, you see

that, in fact, there is a much higher number of children served. I

am hoping that, in the future, CHIP and Medicaid can be more

seamless together and that we can work within each State to eliminate gaps in coverage, because, even though in West Virginia we

have 12 months of continuous coverage both for CHIP and Medicaid, in fact, you still see Medicaid children, probably because of

coverage or non-coverage as parents’ income changes, that they go

in and out of the program more frequently. So what I am alluding

to is, there are coverage gaps there that could be closed by closer

coordination.

I addressed the fiscal changes and the fiscal management that

the program has in West Virginia. We started out with a program

of about $11.8 million in expenditures in 2000, and it has now

grown to $41.6 million. That is an increase of over 250 percent.

During this same period, however, the annualized cost per child increased from approximately $924 to $1,600 in those fiscal years,

an increase of 26 percent. It is a substantial increase, but I suggest

to you that that increase is not nearly as great as those that were

experienced by commercial plans.

West Virginia has always had a certain amount of cost sharing.

It was something that our board felt strongly about, that there

should be opportunities for families to cost share, to the extent possible, within the program.

Since we were benchmarked along the lines of our Public Employees’ program, we made sure that there was a lifetime coverage

limit of $1 million, just like our Public Employees’ Insurance Program has. The State plan was also amended to have an annual

limit of $200,000 per child, per year of coverage, and that limit has

posed very few problems for us.

So we have been mindful of trying to be prudent with taxpayer

funds. We constantly review utilization with a third-party administrator in order to manage escalating trends, and we think that that

is our responsibility in order to serve the greatest number of West

Virginia’s children with a health plan of strong value.

Outreach has changed somewhat since the early years. In the

earliest 2 years, there was very little public/private expenditure

that went for program outreach when it was a Medicaid expansion,

but subsequently we were able to form a truly great public and private effort through the West Virginia Healthy Kids and Families

Coalition.

That coalition had received support from local foundations in

West Virginia, such as the Sisters of St. Joseph, the Claude Worthington Benedum Foundation, a major West Virginia foundation,

and of course, the Robert Wood Johnson Covering Kids Project.

This allowed CHIP to be a key player with these foundations and

coordinate a lot of outreach throughout the State.

8

We also received some Medicaid funding for outreach that came

through our primary care clinics, our primary care association,

which includes a number of FQHCs, or Federally Qualified Health

Centers, as well as some other nonprofit and profit clinics.

After the busiest years of outreach, and after a few years when

we felt we had done the business of getting the word out and boosting enrollment, we changed our outreach into a form where it now

takes health prevention and promotion messages, such as the one

in the exhibit with my testimony, that talks about the most important school supply being a healthy pair of eyes, and this is distributed through a nonprofit as a publicly published document for child

care providers throughout the State of West Virginia.

Senator HATCH. Ms. Carte, I am going to have to interrupt you

because I am late for this vote.

Ms. CARTE. Sure.

Senator HATCH. I will try to get back as soon as I can. I will

probably have to vote this time and then vote the next one. So I

can have the 15 minutes, and then we will try to get back to the

rest of you as soon as we can.

Ms. CARTE. All right.

Senator HATCH. So with that, we will just hold the meeting up

until we can get back.

[Whereupon, at 3 p.m., the meeting was recessed and reconvened

at 3:14 p.m.]

Senator LINCOLN. Thank you all. I apologize for the confusion.

But for the sake of time, and with Senator Rockefeller and Chairman Hatch, they will probably vote the next vote and then come

back. I will get started, so then I can leave and go and take that

second vote. So I will resume the committee.

Ms. Kohler, I believe it is your opportunity to offer your ideas to

us.

STATEMENT OF ANN CLEMENCY KOHLER, DIRECTOR, DIVISION OF MEDICAL ASSISTANCE & HEALTH SERVICES, DEPARTMENT OF HUMAN SERVICES, TRENTON, NJ

Ms. KOHLER. Thank you. I would like to thank you, the Chairman, and Senator Rockefeller for the opportunity to be here today

and talk to you about the importance of the CHIP program. I am

Ann Kohler, and I am responsible for both the Medicaid and the

CHIP program in the State of New Jersey.

As chairman of the National Governor Association’s Health and

Human Services Committee, Governor Corzine considers the reauthorization of the CHIP program his top priority for the committee

and looks forward to working with NGA and with you on this important issue.

New Jersey implemented our CHIP program in 1998. It started

as the KidCare Program. While it was very successful, we found

quickly that we could expand the program through the enrollment

of parents, and we did. In 2000, we decided to open the program

up to parents in families with incomes below 200 percent of the

Federal poverty level, and we renamed the program the FamilyCare Program.

Within a few years, the program was so successful that we had

to close enrollment to the adults in the program. But I am happy

9

to say, in 2005, we were able to reopen it, and we now again offer

coverage to the parents of our low-income children, both in Medicaid and in FamilyCare.

We currently are providing health insurance to over 125,000 children through our SCHIP program and over 70,000 adults through

the same program, and at the same time we cover over 450,000

children in our Medicaid program and 350,000 adults. We have almost a million people—that is 1 in every 8 people—in the State

covered under this important program.

While we use a higher percentage of eligibility for our CHIP program than many other States, it is important to note that we have

one of the highest costs of living in the entire Nation.

So in New Jersey, it costs a lot more to be poor than it does in

some other States. We wanted our program to reflect that and to

have eligibility levels that enabled us to reach the working poor

and provide health insurance to their children.

New Jersey greatly appreciates the opportunity that this program has provided to us. We have been able to provide health insurance to our most vulnerable population, our children.

New Jersey has made a strong commitment to our SCHIP program, thus evident in the benefit package that we offer and our attention to simplifying the application. We recently went from an

18-page to a 1-page mail-in application, and you can also apply online through the Internet. We have a website, njhelps.org, and you

can come right in and apply for a program online.

The prospect of eliminating or limiting this program is of significant concern to us. New Jersey has spent its entire CHIP allotment

over the past few years, and we have received redistributed dollars

from other States.

As you know, these dollars have been diminishing over time, and

now there is an urgent need for Congress to increase the allocations that we receive and to allow the States to meet an ever-growing need for health insurance among the working poor.

We recognize that there are long-term CHIP financing and policy

issues to consider as we move towards reauthorization, but we feel

that action is needed now to prevent any kind of shortfalls during

fiscal year 2007.

With your permission, I would like to include with my testimony

for the record a letter from the NGA on behalf of all the Nation’s

governors urging action to address these shortfalls before the end

of the 109th Congress. Failure to fund these shortfalls could cause

some States to reduce or cease coverage for children, and we cannot

allow that to happen.

Both Medicaid and SCHIP have been extremely successful in expanding coverage to children. By promoting the continued success

of these programs, we can ensure that children and their families

get the needed health insurance they need.

Thank you again for your interest in our program. Providing

health care to our children and their families is a top priority for

New Jersey and, we hope, for the Nation. I hope that my remarks

here today will help you fashion a plan to continue the support for

the SCHIP program.

Thank you.

Senator LINCOLN. Thank you, Ms. Kohler. I appreciate it.

10

[The prepared statement of Ms. Kohler appears in the appendix.]

Senator LINCOLN. I have just been notified that they have shortened the votes to 10 minutes now, and they have already started

the second one, so I may have to excuse myself. What I will do is

adjourn the committee and allow one of the other guys to come

back and reopen you all when there is time.

I feel frustrated, because this is a very, very important issue. I

wanted to ask, Ms. Kohler, about your waiver on covering pregnant

mothers, and the prematurity issue. Hopefully, we will have the opportunity to do this.

We apologize for the confusion on the floor, but without a doubt,

I think you heard both Senator Rockefeller and Chairman Hatch

say that it is definitely our desire here to ensure that we continue

and improve on such a valuable program for our States, and for the

Nation’s children.

So if you all do not mind, I am going to recess the committee,

then we will reconvene when they come back. Thank you.

Ms. KOHLER. Thank you.

[Whereupon, at 3:20 p.m., the hearing was recessed to reconvene

at 3:22 p.m.]

Senator HATCH. All right. Enough frivolity around here. [Laughter.]

I understand, Mrs. Drabczyk, we are to you now. So, if you can

keep them short, we have one more vote. These are 10-minute

votes, so I will have maybe 7 or 8 minutes. I would like to finish

this panel. What you have to say is very important to us.

So, we will turn to you.

STATEMENT OF TOBI DRABCZYK, REPRESENTING HER

FAMILY, WALKERSVILLE, MD

Mrs. DRABCZYK. It is an honor to be here.

Senator HATCH. By the way, I want to thank Senator Lincoln for

filling in. It meant a lot to me. Go ahead.

Mrs. DRABCZYK. My name is Tobi Drabczyk. I am from

Walkersville, in Frederick County, Maryland, about an hour from

here. My husband Kevin and I have been married for 18 years. We

have four children: a daughter, Severa, is 14; a son, Mitchell, 12;

daughter, Jocelyn is 3; and a daughter, Arwen, who is 16 months.

I would like to tell you a little bit about why the CHIP program

has been so important to my family. Kevin has had a full-time job

ever since I have known him. Sometimes his job had health insurance, sometimes it did not. The health insurance he gets right now

covers him only. To cover me and the children, it would cost us

over $500 a month. He only makes $36,000 a year. We cannot afford that.

When I became pregnant with my 3-year-old, Jocelyn, I read

about the Maryland CHIP program and I called the Health Department. They helped me sign up and told me that my older children

would also qualify. For me, that coverage became incredibly important when I was diagnosed with gestational diabetes.

I had to monitor my blood sugar several times a day, and just

the cost of the test strips alone would have been more than I could

afford. Because of the CHIP program, I was able to get the care

11

I needed, and Jocelyn, and subsequently Arwen, were both born

healthy, because I ended up having it with her, too.

Kevin and I are very fortunate that our children are generally

healthy, but we have to deal with routine illnesses, like all parents

do. Thanks to the CHIP program, our babies have been able to get

their vaccinations on time, and when the older ones have things

like ear infections, we have been able to get the antibiotics that the

doctor prescribes. On $36,000 a year, we often find ourselves living paycheck to

paycheck. There are truly times when we are short on the gas

money my husband needs to get to work, and there are times when

money for food is even tight.

But because of the CHIP program, we have never had to choose

between those things and our children’s health. I can get the medicine the children need when they need it, as opposed to when we

can figure out how to budget for it.

We are not parents who take our children to the doctor for every

little sniffle. We do not abuse the program. But about a year ago,

we found ourselves in a scary situation with our son, Mitchell.

Mitchell had been having arm tics since he was about 6 years old.

They came and went, but it started to get worse.

Senator HATCH. What were they, again? I missed it.

Mrs. DRABCZYK. Arm tics.

Senator HATCH. Oh. Tics. All right.

Mrs. DRABCZYK. He also started to have other symptoms, vocal

tics, sharp movements of his neck. One day, the next movements

became so disturbing that we were afraid he had a brain tumor or

something, so we took him to the emergency room.

Due to the CHIP program, we were able to do that. After some

exams, we were referred to a pediatric neurologist, something we

definitely could not have afforded without the CHIP program. He

was eventually diagnosed with Tourette’s Syndrome.

Again, we are very lucky. Without the CHIP, we would never

have been able to afford the specialists and all the tests. We would

still be wondering what was wrong with our son. The CHIP program helped allay our terrible fears.

Mitchell is doing just fine now. He has a very mild case of

Tourette’s. With CHIP, we know we can take him for the check-ups

he needs and any help he might need in the future.

I hope that this has explained how important the CHIP program

has been to our family. We are a family that works hard. We do

not use any other form of government assistance. We pay our

taxes, which help to fund this program. We just need a little bit

of help once in a while to keep our children healthy.

I would like to thank you and the other Senators for bringing us

the CHIP program, and for all the work you have done so far.

Please keep it going. Our children need it.

Thank you.

Senator HATCH. Well, I want to thank you for this wonderful testimony, because there are millions of people out there—children,

anyway—who have parents just like you who need the help. This

is a wealthy country. We should do this.

I am going to do everything in my power to make sure this is

reauthorized and strengthened. The testimonies we are getting

12

here today are very, very important. I just want you to know that.

I am very grateful for you being here and for the wonderful testimony you have given.

Mrs. DRABCZYK. Thank you very much.

[The prepared statement of Mrs. Drabczyk appears in the appendix.]

Senator HATCH. Ms. Owcharenko, we are going to turn to you.

I hope I am not messing up your name too badly.

Ms. OWCHARENKO. No, perfect.

STATEMENT OF NINA OWCHARENKO, THE HERITAGE FOUNDATION, SENIOR HEALTH CARE POLICY ANALYST, CENTER FOR

HEALTH POLICY STUDIES, WASHINGTON, DC

Ms. OWCHARENKO. Thank you for having me. I look forward to

addressing the committee today.

SCHIP is unique. Although often discussed in conjunction with

Medicaid, it is a distinctly different program with a different scope,

focus, and approach. First of all, it is not an entitlement program,

but a capped spending program.

Second, unlike Medicaid, which provides health care services to

a very broad and diverse population with multiple eligibility standards, SCHIP has a simpler, more targeted purpose: low-income uninsured children.

Finally, SCHIP gives States greater flexibility than Medicaid in

structuring the benefits to more closely reflect private coverage.

Unlike federally administered programs, the very nature of a joint

Federal/State program results in State variations.

While variations support the principles of federalism, they can

also make it difficult to evaluate and assess the performance of a

program. Thus, it is equally as important for Federal policy makers

to establish clear Federal policy objectives to measure the effectiveness of the program and ensure that it remains focused on its purpose.

Three specific areas come to mind. First, funding in the reallocation process. The current reallocation process is based on whether

or not a State has spent their Federal allotment. The number of

States that have exhausted their Federal allotments has climbed.

In 2001, 12 States exhausted their allotments. By 2005, the number had increased to 27 States.

This raises the question of whether the reallocation process discourages some States from being fiscally prudent, knowing that

any unused funds will be distributed to other States. Also, of the

18 States projected to face funding shortfalls in 2007, 7 of the 18

States have eligibility above 200 percent of poverty, and 4 of the

18 have eligibility below 200 percent of the Federal poverty.

Federal policy makers should consider restructuring the reallocation process to ensure that it is focused on meeting certain Federal

goals and objectives. Specifically, priorities should be given to those

States facing funding shortfalls that have not yet reached federally

established benchmarks.

Second, eligibility. While the law defines the intended population

as targeted low-income children whose families’ incomes are at or

below 200 percent of the Federal poverty line, this definition has

lost clarity. Today, there are 15 States with eligibility above 200,

13

and 9 of those 15 States have eligibility at or above 300 percent

Federal poverty.

Furthermore, eligibility levels are not an accurate measure of

success. A State with eligibility at 300 percent of poverty may only

have a 40-percent enrollment, while a State with eligibility at 185

percent may have an 80-percent enrollment.

Federal policy makers should reaffirm the existing Federal poverty and population eligibility standard and establish enrollment

targets to measure the effectiveness of the program.

Third, benefit design. The SCHIP benefit package, specifically

the separate SCHIP option, references in its fashion to reflect private coverage. However, recent administrative changes by some

States have softened this distinction, for example, reducing or

eliminating any cost-sharing requirements.

Moreover, burdensome regulations and rules discourage approaches, such as the premium assistance model that was previously discussed by Utah. Federal policy makers should bolster

the private coverage model in SCHIP and include a more flexible

premium assistance model.

In conclusion, undoubtedly Federal funding will dominate the upcoming SCHIP reauthorization debate. However, Federal lawmakers have the responsibility to look beyond funding and evaluate

the effectiveness of the program and the policies impacting its implementation.

Thank you. I look forward to the discussion.

Senator HATCH. Well, thank you. We appreciate it. We appreciate

the advice that you are giving us. We will certainly take it into consideration.

[The prepared statement of Ms. Owcharenko appears in the appendix.]

Senator HATCH. Now, Dr. Dubay. Is it Dubay?

Dr. DUBAY. Dubay.

Senator HATCH. They just told me it was Dubay. So, Dr. Dubay,

we are honored to have you with us, and we look forward to hearing you.

STATEMENT OF LISA C. DUBAY, PhD, ASSOCIATE, BLOOMBERG

SCHOOL OF PUBLIC HEALTH, JOHNS HOPKINS UNIVERSITY,

BALTIMORE, MD

Dr. DUBAY. Thank you. It is an honor to be here.

As you all know, the SCHIP program triggered a major expansion in eligibility for public health insurance coverage for children

that built on the groundwork that Congress had laid a decade earlier with the Medicaid expansions for children.

It was designed to sit specifically on top of the Medicaid program

and provide States with resources and incentives to cover uninsured children whose family incomes are too high to qualify for

Medicaid, but too low to be able to afford private coverage.

So, what have we accomplished with SCHIP? Well, in fiscal year

2005, there were 6.1 million children already enrolled in the

SCHIP program, and 3.9 million enrolled on the last day of that

fiscal year. Coverage under the Medicaid program has also increased as a result of SCHIP implementation. Medicaid participaVerDate 11-MAY-2000 09:46 Feb 01, 2007 Jkt 095484 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 32112.000 SFIN1 PsN: SFIN1
14

tion rates for children increased from 74 percent in 1997 to 82 percent in 2002.

Moreover, the number of uninsured children at a point in time

has fallen from 10 million in 1997 to 7.5 million in 2005. When we

focus on low-income children particularly, we can highlight the

achievements of SCHIP. Among low-income children, the uninsurance rate fell from 22 percent in 1997 to 15 percent in 2005. Unfortunately, these figures also illustrate that more progress could be

made towards eliminating uninsurance among children.

So who are the children that remain uninsured? Evidence from

the National Survey of America’s Families shows that in 2002, 49

percent of all uninsured children were eligible for Medicaid and 23

percent were eligible for SCHIP.

Consequently, solving the problem of uninsured children is, in

large part, an issue of increasing and maintaining rates of enrollment and retention in the Medicaid and SCHIP programs.

I think it is important to ask why there are so many children

who are eligible, but uninsured. The first explanation lies, I think,

in a good news story. States have recently expanded eligibilities for

coverage, so, despite the fact that States are far more successful

than they used to be in enrolling eligible children, a significant

share of uninsured children remain eligible for coverage.

While the facts on the eligible but uninsured are disconcerting,

we must keep in mind that the total number of uninsured children

that this is based on has fallen since CHIP’s implementation.

Second, budgetary constraints keep some States from fully embracing or maintaining all of the strategies that are known to be

effective at increasing children’s health insurance coverage.

The reality is that when States enroll more children, they face

higher costs. This makes States particularly reluctant to engage in

aggressive enrollment efforts when either facing economic difficulties or uncertainty about Federal contributions.

Third, some families continue to be unaware that they could secure coverage for their uninsured children through Medicaid or

SCHIP. At the same time, when low-income parents of uninsured

children are asked whether they would enroll their child in these

programs if told their child was eligible, 82 percent of children had

a parent who responded that, yes, they would enroll their child.

These results suggest that parents need more information about

the potential eligibility of their children.

So how can we get to the finish line? Congress has at its disposal

several tools for moving forward. First, a threshold issue is whether the SCHIP program will be fully funded in 2007 and beyond. To

address this issue, Federal matching funds in excess of the amount

set aside for SCHIP under Congressional budget rules for this fiscal year and for future fiscal years will be needed.

There is little doubt that children will lose coverage and the

country will be unable to make progress unless the Federal Government provides the funds needed to be a full partner with the

States.

Second, it will be vital to identify strategies for reaching the

more than two-thirds of uninsured children who already are eligible for Medicaid and SCHIP. Congress should support and encourVerDate 11-MAY-2000 09:46 Feb 01, 2007 Jkt 095484 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 32112.000 SFIN1 PsN: SFIN1
15

age State interest in reaching eligible unenrolled children by offering performance-based assistance with coverage costs.

In addition, it could support efforts to provide families with information about their children’s eligibility for coverage through community-based and other types of outreach efforts.

Third, one of the most effective methods for increasing participation of eligible, but uninsured, children is to cover their parents.

While family-based coverage has costs that accompany it, it is also

associated with a 14 percentage point increase in participation of

children in health insurance programs, and with greater use of curative and preventive care among children.

With the 10-year anniversary of the SCHIP creation rapidly approaching, we are at a crossroads in children’s coverage. The evidence is clear. This program and its partner, Medicaid, have together worked to significantly lower the number and percent of uninsured children.

We should fully fund the SCHIP program to continue this

progress and move forward in finding ways to ensure that all uninsured children secure coverage that provides access to high-quality

care. Our children are our future, and their health is critical to the

Nation as a whole.

Senator HATCH. Well, thank you so much, Dr. Dubay.

[The prepared statement of Dr. Dubay appears in the appendix.]

Senator HATCH. Let me start with you, Mr. Checketts. We only

have a few minutes to go here, but I would like to get a few questions in.

According to our information, Utah is projected to spend $39 million in Federal CHIP funds in fiscal year 2007. Am I pretty close

there?

Mr. CHECKETTS. Yes.

Senator HATCH. And your fiscal year 2007 allotment of Federal CHIP funds is just over $40 million, so you are spending in accordance with your allotment level, 1 of only 14 States poised to do that

in fiscal year 2007.

What have you done in Utah, and are doing about this, to make

it happen this way?

Mr. CHECKETTS. Well, one of the things we have used in the

State is, we have open enrollment periods where we allow individuals to come in and do that. In order to get individuals to apply

during those periods, we have extensive outreach efforts and we

have used radio ads, TV ads. We have our website, which allows

individuals to come in and apply online, and also to be able to get

all the information there through the web.

Senator HATCH. Utah has been pretty effective in getting kids to

be part of CHIP, and families to be part of CHIP, and I think you

have been pretty innovative. I think some of your outreach has

been pretty creative, too.

I remember when CHIP was first implemented, the State advertised for CHIP on city buses. It even went that far. Could you

please talk about the methodologies that you are using to make

outreach successful in our home State of Utah?

Mr. CHECKETTS. Sure. As I mentioned, one of the things that we

found extremely successful is being able to put our applications online. In our last open enrollment period, 50 percent of the families

16

filled out an application online. We have also been able to expand

our outreach through other groups that we partner with.

In our new program, our Premium Assistance Program, we have

partnered with health insurance underwriters, the health insurance brokers in the State, and they will be going out. As they make

contacts with employers, they will be sharing our program materials with them and encouraging them to enroll in our programs.

Senator HATCH. Both you and Ms. Carte mentioned the administrative burdens that the Payment Error Rate Measurement, sometimes referred to as the PERM, would present to smaller States

like Utah and West Virginia.

Has there been an opportunity for State CHIP directors to have

a dialogue with CMS regarding these specific concerns? If so, what

has CMS told you? Do you want to take a crack at that, Ms. Carte?

Ms. CARTE. Yes, Senator. West Virginia was a State that participated in the PERM project, which led to the development of the

regulations. It seemed that there was a major break in the process.

When we participated, we had eligibility samples of 50 or 100. We

had very low error rates that came out of these reviews.

We provided feedback to Federal officials, but when the final regulations came out in September and we had an opportunity to provide comment, I was really startled when I saw the final regulations.

The CHIP programs were being asked to have a sample now of

500 eligibility cases. For example, much of my program’s operations

are carried out by third-party administrators, and I just have a

small staff of eight. So, we will have to retrieve 500 files over the

course of a year.

The cost of doing that and of coordinating work with the Federal

contractors who are doing the payment error review part is going

to be considerable. We are not even clear. CMS has said that

States that have a Medicaid error quality assurance program could

perhaps use that, if it is independent of the CHIP program, for review.

But even looking at that, with Medicaid and CHIP together, each

having eligibility samples of 500 active cases each and then 200 inactive cases, it is going to pose considerable expense. In West Virginia, we have estimated right now—and without some future answers from CMS it is unclear—that that could take as much as 15

percent of our administrative costs in a program that already has

an administrative cap. It has serious implications for us, sir.

Senator HATCH. All right.

Mr. Checketts, do you have anything you would care to add to

that?

Mr. CHECKETTS. PERM was implemented last year for some

Medicaid States. One of our concerns is that they have taken that

methodology and just applied it directly to CHIP this year. The size

of the programs are vastly different. What would be in Utah a $1.8

billion program on Medicaid, that same methodology is being applied to a $50 million program on CHIP. The scale just is not appropriate.

Senator HATCH. Dr. Dubay, I read your written testimony with

a great deal of interest. I felt like you did have some interesting

17

insights, especially about the funding shortfalls of the CHIP program.

Let me make one thing perfectly clear: I agree with you. I do not

want the children who are currently eligible for CHIP to lose their

coverage.

Now, in your testimony, you note that if the budget challenges

of the CHIP program are not addressed, 1.9 million children could

lose their coverage by the year 2016. I think that is your figure.

Dr. DUBAY. Right. Correct.

Senator HATCH. Now, would some adults still be covered through

CHIP under the scenario that you described in your testimony?

Dr. DUBAY. Would some adults still be covered?

Senator HATCH. Yes.

Dr. DUBAY. I believe they would be.

Senator HATCH. You do? All right. I would be interested if you

can submit any further information on that, I would appreciate it.

I think we would all appreciate it. I should not just speak for me.

Mrs. Drabczyk, I want to thank you for testifying before this

committee. You did an excellent job. Your family’s experience with

the MCHIP program was quite compelling, especially your son

Mitchell’s diagnosis.

Many years ago, I was the one who came up with the orphan

drug bill to try to find therapies for population groups of less than

200,000, and Tourette’s Syndrome was one of those. We do have

some pharmaceuticals that have been developed through the orphan drug program that hopefully are helping your son. I am glad

that Mitchell is doing well.

But I am interested in hearing more details on how your family

found out about the CHIP program. Was it difficult for your children to apply, or for you or your husband to apply on their behalf?

How long did it take to have this coverage take effect?

Mrs. DRABCZYK. I found out about it by a print ad in a Frederick’s Child Magazine. It’s a magazine they put out in Frederick

County for parents. They just had a print ad with a chart: if your

income is this and your family size is this, you may qualify.

So when I became pregnant, I called and we qualified. I went to

the health department. They signed me up. But it is very easy to

sign up in Maryland. You do not even have to go in. You can have

them mail the application to you. You mail it back in. I do not

know if it is law or not, but they say 3 weeks is all it is supposed

to take for you to get to know if you have coverage or not.

Senator HATCH. That is pretty good.

Mrs. DRABCZYK. And I knew within about 2 weeks. It is very

easy.

Senator HATCH. That is good.

Let me go to you, Ms. Kohler. I am not trying to embarrass you

with this question, please know that, but I do want to ask this

question because I think it’s important.

Over the past 5 years, New Jersey has received over $600 million, as I understand it, from other States’ unspent CHIP funds,

plus $50 million last year from the Deficit Reduction Act.

Now, your CHIP program covers adults and it covers children up

to 350 percent of poverty, if I have that right.

Ms. KOHLER. That is correct.

18

Senator HATCH. That is the highest level in the country. I have

noted your point in your testimony that New Jersey has a higher

cost of living than in many other States. That being said, however,

your projected fiscal year 2007 spending is 21⁄2 times what you

know to be your allotment. That is your projected spending, if I

have that right, and I think I do.

What is the responsibility of other States, as under the President’s proposal, or the Federal Government under Senator Rockefeller’s proposal, to pay for the shortfalls resulting from the choices

made in your State? Now, that is a tough question. Again, I am not

trying to embarrass you, but I would like to hear what you have

to say about it.

Ms. KOHLER. All right. Senator, New Jersey has long made a

commitment to insure children. As I said, New Jersey has one of

the highest costs of living in the Nation. As a result, what may appear to be an extremely high percent of the Federal poverty level

is a very low cost of living in New Jersey.

The cost is so high to live in the State, that many of the people

living there, even though they have incomes below 350 percent of

the Federal poverty level, they are in the lower economic status.

New Jersey has made a commitment that our children and our

pregnant women are not going to go without health insurance.

As a result, they have made the commitment on the State side

to appropriate additional State dollars needed to bring in the Federal dollars. We have done that both for our SCHIP program, as

well as our Medicaid program. Most of our administrative simplifications have been designed to increase coverage of both Medicaid, as well as our CHIP population.

I think my fellow panelists testified about mail-in applications.

You mentioned a mail-in in Maryland being very efficient. We have

also done that. We have both mail-in applications, as well as an online application which we have found has been very successful.

We are now, for our Medicaid population, starting to experience

a decline in the number of people who have applied because of the

new citizenship requirements. This is of great concern to us, because we want to continue to assure that anyone eligible for our

program can easily come into our program. We are looking for ways

to reduce that burden on the population.

We are very concerned about the citizenship requirements recently promulgated by CMS for newborns, because we think it is

a barrier to these newborns getting their well baby care and needed immunizations, that they have to wait until they have a birth

certificate.

So, we certainly hope Congress, as part of the reauthorization,

takes that into account and does not create another barrier for the

CHIP population.

Senator HATCH. Yes. Well, the question, really, I was asking is,

we are getting some complaints from other States that you are getting more than you should get out of this program. I am not sure

that is accurate. But I just wanted to hear, how do we even this

up? How do we get States to feel like they are being treated equally

when you are getting so much from other States’ allotments?

Ms. KOHLER. I think it is important to note that the reason that

we were able to benefit from the redistribution is because States

19

have not expanded their programs or encouraged as many people

to apply for their program. It is unspent dollars that we receive,

not dollars that they are using to cover children. It is dollars that

are unspent that we receive.

Senator HATCH. I understand. All right.

Well, I personally believe this panel has been excellent. You have

helped us quite a bit.

Senator Rockefeller would like to have me ask a question for

him, and I am happy to do it.

You are the lucky one, Ms. Carte, I will tell you.

Ms. CARTE. Really?

Senator HATCH. Yes. You are really lucky here. [Laughter.]

Ms. CARTE. All right.

Senator HATCH. I am sure this question is very fair. [Laughter.]

And if it is not, I will withdraw it. I am only kidding. [Laughter.]

Senator Rockefeller’s question is this: ‘‘With over 8.4 million uninsured children in this country, I believe we should make it a priority to provide access to comprehensive coverage for more children.

‘‘West Virginia is currently a national leader in health insurance

coverage for children, with 92 percent of the State’s children currently insured either through Medicaid, which is the largest public

insurer, CHIP, or private coverage.

‘‘When fully implemented, I believe,’’ Senator Rockefeller says

here, ‘‘the expansion of CHIP is projected to increase the percentage of West Virginia children who currently have health insurance

to 97 percent from that 92-percent level. This near-universal health

insurance coverage would be among the highest percentage of any

State in the country.’’

Now, Senator Rockefeller goes on to say, ‘‘This is something I am

very proud of. Can you talk a little bit about how West Virginia

has been able to achieve such high levels of health insurance coverage among children?’’

I am interested in that, too, so I am going to compliment my colleague for having asked that question through me.

Ms. CARTE. Well, I think some of that I alluded to earlier in talking about, really, the tremendous outreach that we had. There was

such interest in CHIP coming up in the public generally.

I also had mentioned, I think when you were in the room, that

we had somewhat phased-in growth, and initially the first 2 years

of the program were somewhat slow as things like benefit levels

were determined, and that we just had a very restricted group of

children that were coming in at that point.

But once it took off, there is such strong public support. I am

sure you have seen that when you are back home in your home

State, the recognition by people of the needs, and parents like Mrs.

Drabczyk, having those needs met.

I think it is the expectation that we need to do the right thing

in order to allow all children to access coverage, and that having

coverage and not just accessing the health care system also makes

a difference.

If I might just refer a little bit to your question to Ms. Kohler

a little bit, I think something that happened in that regard, when

20

legislation is passed, sometimes there are unintended consequences.

I think one of the consequences of the Federal funding formula

and having the 3 years out there, because of this slow, phased-in

growth, initially West Virginia was one of the States that had a lot

of public criticism in the early years because we were not growing

fast enough.

Then we did grow fast and we dramatically expanded to 200 percent, and you saw this major growth where lots of children came

in. Then we came to a level where we were spending all of our allotment, and now we have exceeded it.

When I look at the Congressional Research Service reports, West

Virginia is about mid-level in how we have used our allotment. I

think as you heard me say earlier, we are very mindful that this

is a block-granted program. We have tried to be careful stewards

fiscally. But when you have that public expectation driving things,

it is hard to stop.

I think you are probably well-aware of some States that found

themselves in a position where they had to close enrollment. They

later reversed that or found ways to support their programs and

grow them nonetheless.

Senator HATCH. Now, Ms. Owcharenko, I do not want you to

think that you are being ignored here, so I am going to ask you

a question, too, all right?

Shortfall States with Medicaid expansion programs have a fallback to use Medicaid funds for their shortfall, although at a reduced matching rate. Now, shortfall States with a separate CHIP

program have no medical fall-back, that is, except for Rhode Island,

I believe, which had such an arrangement written into the terms

and conditions of their waiver agreement.

Now, should States with separate CHIP programs also be able to

draw down Medicaid funds for their shortfalls? From the other perspective, should States with Medicaid expansion CHIP programs

not be permitted to draw down Medicaid funds through their shortfalls?

Ms. OWCHARENKO. I think it is one of the problems with how

SCHIP has been implemented, because it is very confusing between

having a separate SCHIP program—there are separate rules for

how that program functions, whether it is cost-sharing requirements, the benefit package. If a State simply did a Medicaid expansion, then all the Medicaid rules apply.

So I actually believe that probably the best approach is to make

a clearer separation between SCHIP, regardless of if it is a Medicaid expansion or stand-alone, from traditional Medicaid. I think

that the funding source should stay within the SCHIP funding

source, because those are the intended populations and the intention of Congress of targeting the low-income children who are uninsured.

Senator HATCH. Well, thank you. I think this has been an excellent panel. You have helped us to understand these things a little

bit better.

What I would like to do is ask each of you to consider what we

have talked about here today. We naturally have not covered every

21

aspect of concern with regard to the CHIP program, and we would

like you to write to us and give us your best ideas.

If you think of things you have not been able to discuss today,

we would particularly like to hear from you. Mr. Checketts, I expect to hear from you. How is that? But I would love to hear from

the rest of you, too, and so would others.

Again, I am very grateful to Senator Rockefeller, Senator Kennedy, and Senator Lincoln. We are grateful—very, very grateful—

to them for the work that they have all done, and many people on

my side of the table as well. I could mention them all, but I will

not take the time to do that today.

But I am grateful that you folks would take the time to come,

in this lame duck session, and be willing to help us to understand

how we can make this program better during the next year.

We are going to need all of your support to be able to reauthorize

this program, because there are some who still do not like it. But

my experience is, every State in the Union likes it. There are some

who do not, but I think they are in a distinct minority.

What we are doing here is taking care of families like yours, Mrs.

Drabczyk, clearly wonderful people who would love to be able to do

more for their kids but just cannot do it.

One of the ways this got started is, two couples from Provo, Utah

came to me, and both the husbands and the wives worked, but in

neither case did they make—this is back when we did this program—more than $20,000 combined income. So, they clearly could

not take care of the health care needs of their children.

They were working as hard as they could, doing everything they

possibly could. They were contributing. I do not know that they

were paying taxes at the $20,000 level, but they were willing to do

that. But they just were, frankly, tremendously concerned about

their children because they were left out of the system. That is how

this began, really.

Frankly, this great country should do this. So we need your help.

We need the best advice we can get, because there is always some

bureaucratic ensnarlements or entanglements that make the program more costly than it should be, or more difficult to administer,

or more difficult to apply for, and we would like to have the best

advice you can all give us. That is why you are here, is to help us

to understand, and we have particularly chosen you six folks to

give us a better understanding of this.

So with that, I want to again congratulate you all for your splendid testimonies and tell you we are very grateful to have you here.

We will just adjourn the committee until further notice.

[Whereupon, at 3:58 p.m., the hearing was concluded.]

(23)

A P P E N D I X

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

(99)

COMMUNICATIONS

100

101

102

103

104

105

106

107

108

109

Æ