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

35–598 PDF 2007

COVERING THE UNINSURED

THROUGH THE EYES OF A CHILD

HEARINGS

BEFORE THE

SUBCOMMITTEE ON HEALTH

OF THE

COMMITTEE ON ENERGY AND

COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

FEBRUARY 14, MARCH 1, 2007

Serial No. 110–6

(

Printed for the use of the Committee on Energy and Commerce

energycommerce.house.gov

COMMITTEE ON ENERGY AND COMMERCE

JOHN D. DINGELL, Michigan, Chairman

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, JR., New Jersey

BART GORDON, Tennessee

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

DIANA DeGETTE, Colorado

Vice Chairman

LOIS CAPPS, California

MIKE DOYLE, Pennsylvania

JANE HARMAN, California

TOM ALLEN, Maine

JAN SCHAKOWSKY, Illinois

HILDA L. SOLIS, California

CHARLES A. GONZALEZ, Texas

JAY INSLEE, Washington

TAMMY BALDWIN, Wisconsin

MIKE ROSS, Arkansas

DARLENE HOOLEY, Oregon

ANTHONY D. WEINER, New York

JIM MATHESON, Utah

G.K. BUTTERFIELD, North Carolina

CHARLIE MELANCON, Louisiana

JOHN BARROW, Georgia

BARON P. HILL, Indiana

JOE BARTON, Texas

Ranking Member

RALPH M. HALL, Texas

J. DENNIS HASTERT, Illinois

FRED UPTON, Michigan

CLIFF STEARNS, Florida

NATHAN DEAL, Georgia

ED WHITFIELD, Kentucky

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

JOSEPH R. PITTS, Pennsylvania

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

SUE MYRICK, North Carolina

JOHN SULLIVAN, Oklahoma

TIM MURPHY, Pennsylvania

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

PROFESSIONAL STAFF

DENNIS B. FITZGIBBONS, Chief of Staff

GREGG A. ROTHSCHILD, Chief Counsel

SHARON E. DAVIS, Chief Clerk

BUD ALBRIGHT, Minority Staff Director

SUBCOMMITTEE ON HEALTH

FRANK PALLONE, JR., New Jersey, Chairman

HENRY A. WAXMAN, California

EDOLPHUS TOWNS, New York

BART GORDON, Tennessee

ANNA G. ESHOO, California

GENE GREEN, Texas

DIANA DEGETTE, Colorado

LOIS CAPPS, California

TOM ALLEN, Maine

ELIOT L. ENGEL, New York

JAN SCHAKOWSKY, Illinois

HILDA L. SOLIS, California

MIKE ROSS, Arkansas

DARLENE HOOLEY, Oregon

ANTHONY D. WEINER, New York

JIM MATHESON, Utah

NATHAN DEAL, Georgia,

Ranking Member

RALPH M. HALL, Texas

BARBARA CUBIN, Wyoming

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

STEVE BUYER, Indiana

JOSEPH R. PITTS, Pennsylvania

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

SUE MYRICK, North Carolina

JOHN SULLIVAN, Oklahoma

TIM MURPHY, Pennsylvania

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

(II)

(III)

C O N T E N T S

FEBRUARY 14, 2007

Page

Allen, Hon. Tom, a Representative in Congress from the State of Maine,

opening statement ................................................................................................ 15

Baldwin, Hon. Tammy, a Representative in Congress from the State of Wisconsin, opening statement ................................................................................... 16

Barton, Hon. Joe, a Representative in Congress from the State of Texas,

opening statement ................................................................................................ 6

Burgess, Hon. Michael C., a Representative in Congress from the State of

Texas, opening statement .................................................................................... 10

Capps, Hon. Lois, a Representative in Congress from the State of California,

opening statement ................................................................................................ 13

Deal, Hon. Nathan, a Representative in Congress from the State of Georgia,

opening statement ................................................................................................ 3

DeGette, Hon. Diana, a Representative in Congress from the State of Colorado, opening statement ...................................................................................... 9

Dingell, Hon. John D., a Representative in Congress from the State of Michigan, opening statement ....................................................................................... 7

Engel, Hon. Eliot L., a Representative in Congress from the State of New

York, opening statement ...................................................................................... 22

Eshoo, Hon. Anna G., a Representative in Congress from the State of California, opening statement ........................................................................................ 5

Ferguson, Hon. Mike, a Representative in Congress from the State of New

Jersey .................................................................................................................... 8

Green, Hon. Gene, a Representative in Congress from the State of Texas,

opening statement ................................................................................................ 11

Hooley, Hon. Darlene, a Representative in Congress from the State of Oregon,

opening statement ................................................................................................ 20

Matheson, Hon. Jim, a Representative in Congress from the State of Utah,

opening statement ................................................................................................ 17

Murphy, Hon. Tim, a Representative in Congress from the Commonwealth

of Pennsylvania, opening statement ................................................................... 17

Pallone, Hon. Frank, Jr., a Representative in Congress from the State of

New Jersey, opening statement .......................................................................... 2

Schakowsky, Hon. Jan, a Representative in Congress from the State of Illinois, opening statement ....................................................................................... 19

Solis, Hon. Hilda L., a Representative in Congress from the State of California, opening statement ........................................................................................ 18

Waxman, Hon. Henry A., a Representative in Congress from the State of

California, opening statement ............................................................................. 21

Wilson, Hon. Heather, a Representative in Congress from the State of New

Mexico, opening statement .................................................................................. 14

WITNESSES

Berkelhamer, Jay E., M.D., president, American Academy of Pediatrics ........... 29

Prepared statement .......................................................................................... 65

Lambrew, Jeanne M., Ph.D., associate professor, Department of Health Policy, The George Washington University School of Public Health and Health

Services ................................................................................................................. 25

Prepared statement .......................................................................................... 69

Mingledorff, Kathy Paz, mission volunteer, March of Dimes, Springfield, VA .. 32

Prepared statement .......................................................................................... 59

Molina, Susan, community leader, PICO Colorado, Denver, CO ......................... 24

Page

IV

Molina, Susan, community leader, PICO Colorado, Denver, CO—Continued

Prepared statement .......................................................................................... 55

Owcharenko, Nina, senior policy analyst, Center for Health Policy Studies,

the Heritage Foundation ..................................................................................... 30

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

Peterson, Chris L., specialist, social legislation, Congressional Research Service .......................................................................................................................... 27

Prepared statement .......................................................................................... 91

SUBMITTED MATERIAL

America’s Health Insurance Plans, statement ...................................................... 62

MARCH 1, 2007

Pallone, Hon. Frank Jr., a Representative in Congress from the State of

New Jersey, opening statement .......................................................................... 103

WITNESSES

Allen, Kathryn G., Director, Health Care, U.S. Government Accountability

Office ..................................................................................................................... 112

Prepared statement .......................................................................................... 132

McDavid, Lolita M., M.D., medical director, Child Advocacy and Protection,

Cleveland, OH ...................................................................................................... 104

Prepared statement .......................................................................................... 180

Sloyer, Phyllis, R.N., Ph.D, division director, Children’s Medical Services,

Department of Health, Tallahassee, FL ............................................................. 109

Prepared statement .......................................................................................... 175

Vitale, Hon. Joseph F., New Jersey State Senator. Woodbridge, NJ .................. 106

Prepared statement .......................................................................................... 183

Weil, Alan, executive director, National Academy for State Health Policy,

Washington, DC ................................................................................................... 108

Prepared statement .......................................................................................... 184

SUBMITTED MATERIAL

Trautwein, Janet Stokes, National Association of Health Underwriters, statement ...................................................................................................................... 188

(1)

COVERING THE UNINSURED THROUGH THE

EYES OF A CHILD

WEDNESDAY, FEBRUARY 14, 2007

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON HEALTH,

COMMITTEE ON ENERGY AND COMMERCE,

Washington, DC.

The subcommittee met, pursuant to call, at 2:08 p.m., in room

2322 of the Rayburn House Office Building, Hon. Frank Pallone,

Jr. (chairman of the subcommittee) presiding.

Members present: Representatives Waxman, Deal, Eshoo, Green,

DeGette, Capps, Allen, Baldwin, Engel, Schakowsky, Solis, Hooley,

Matheson, Dingell [ex officio], Ferguson, Myrick, Sullivan, Murphy,

Burgess, Barton [ex officio], and Wilson.

Staff present: Jonathan Cordone, Bridgett Taylor, Amy Hall,

Purvee Kempf, Christie Houlihan, Elizabeth Ertel, Ryan Long,

Katherine Morton, Brenda Clark, and Chad Grant.

Mr. PALLONE. I will call this meeting to order. And I wanted to

mention that today we have a hearing on covering the uninsured

through the eyes of a child. But before we begin, I just did want

to mention there was originally a second hearing tomorrow focusing more specifically on SCHIP and the reauthorization. That was

postponed due to the death of our colleague, Charlie Norwood. That

hearing most likely will take place on Thursday, March 1, 2 weeks

from today. But before we proceed if I could, I just wanted to ask

if we could have a moment of silence for our colleague. Needless

to say, he was a great American and someone who cared deeply

and contributed so much to the healthcare debate and if we could

just now have a minute silence.

[Moment of silence observed.]

Thank you very much. I understand that the funeral is tomorrow, Mr. Deal?

Mr. DEAL. Yes, Mr. Chairman. If I could maybe just briefly give

the outline of the details. My understanding is that the Sergeant

at Arms will be coordinating an airplane for those who wish to attend the funeral that will leave the horseshoe at about 10:30 tomorrow morning. The funeral is at 2:00. The plane will fly directly

into Augusta which is where the funeral will be held and then we

will return tomorrow evening about 6:30 is the anticipated return

time.

Thank you.

Mr. PALLONE. Thank you very much.

2

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY

Mr. PALLONE. I now recognize myself for an opening statement.

Today, the subcommittee will examine the problem of the uninsured and how it specifically impacts children. We will also explore

the program Congress established nearly 10 years ago to help alleviate this problem, the State Children’s Health Insurance Program

or SCHIP which must be reauthorized this year.

As a father of three young children, I realize how important it

is for children to have access to quality healthcare. My wife and I

are fortunate that we have the means to provide health insurance

coverage to our three children through the Federal Employees

Health Benefits Plan, the same program that many of my colleagues use to provide health insurance to their families. But not

every family is quite as lucky. For too many American families

they are simply struggling day to day to afford the cost of health

insurance. And as healthcare costs continue to rise, employer sponsored insurance is eroding. Employers are shifting more cost to

workers or they are dropping coverage all together. Nor has the individual market been a viable source of insurance coverage for

most Americans and the result has been a steady increase in the

number of uninsured Americans since 2001.

Today, there are nearly 47 million Americans who do not have

health insurance. Millions more are underinsured. And what is

even more appalling is that approximately 9 million of those who

are uninsured are children. Now I am going to repeat that again

because I think it is worth emphasizing: 9 million children in this

country do not have health insurance. I think that is a national

disgrace in a country as wealthy and compassionate as ours. No

child should be left behind without health insurance, let alone 9

million children.

Now this disturbing statistic would undoubtedly be worse if were

not for the State Children’s Health Insurance Program or SCHIP.

Since this was established by Congress 10 years ago, SCHIP has

helped reduce the number of uninsured children in our Nation.

Thanks to SCHIP, the percentage of low income children in the

U.S. without health insurance has fallen by one-fourth since it was

created in 1997. And more than 6 million low income children,

most of who would otherwise be uninsured are enrolled in SCHIP.

While the program has largely been a success, it is now being

threatened. Last year for the first time since 1998, the number of

uninsured children in the country actually increased. And I think

we have to stop this alarming trend. Part of our effort must include

strengthening SCHIP so it can continue to serve those in need. The

most immediate and glaring problem is the lack of funding for the

program. Simply stated more money is needed in order to ensure

the viability of SCHIP. Various healthcare experts have estimated

that we need additional funding over the next 5 years simply to

help maintain the program for those who are already enrolled. And

if we are going to find the funds, I should say find the approximately 6 million children who are eligible for SCHIP or Medicaid

but who are not enrolled. We would need at least a total of $50 billion over the next 5 years. Now some people may say that this figVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
3

ure is unreasonable or unrealistic and will be difficult to fund given

the budget constraints. But I say how can we afford not to spend

this money on this country’s most vital asset, our children? It is

simply a sound investment in our Nation’s future. Republicans had

no problem spending $534 billion on the Medicare prescription

drug benefit. And aren’t our children worth even a fraction of what

it costs us just to get seniors prescription drugs?

I have to say and I have already said when we had our hearing

with Secretary Leavitt that I strongly disagree with President

Bush who has come up with his own plan for SCHIP reauthorization. In his recent budget, the President proposed a meager $4.8

billion for SCHIP over the next 5 years and would limit eligibility

to 200 percent of the Federal poverty level. His plan shortchanges

America’s children and will do nothing to solve the problems we

current face with SCHIP. In fact, it will make matters worse. I

have little doubt that if enacted, the President’s proposal would result in fewer children with health insurance coverage than there

are today. What is worse is that the administration knows this.

They have to know it. Common sense tells us that restricted funding and limited eligibility is going to result in fewer insured children. Yet the administration and Republicans in Congress try to

shift the debate by arguing about returning to the original objective

of SCHIP by leaving out the parents that are covered today.

The time has come to cut through all the smoke and mirrors. The

truth of the matter is that a mere 10 percent of those covered

under SCHIP are adults including pregnant women. And once you

start to talk about reducing eligibility levels, cutting people from

the roles and under-funding the program, then that is when you

are moving away from SCHIP’s original purpose. We have a unique

opportunity before us this year. Finally we have the chance to really do something about the uninsured. It is no longer good enough

to simply say that we cannot do t his because it costs us too much

money. We as a Nation must choices about how we allocate our resources and I would submit that there are fewer needs more important than those of our children and we should be willing to spend

the money necessary to ensure every child has access to meaningful healthcare. Ten years ago, we were able to come together in a

bipartisan spirit and work together to establish SCHIP. Ten years

later let us work together again to strengthen it. I am committed

to that effort and I hope that my colleagues on both sides of the

aisle will join with me. And I want to thank again our witnesses

for attending today. And with that, I would now recognize the

ranking member of the subcommittee, Mr. Deal for an opening

statement.

OPENING STATEMENT OF HON. NATHAN DEAL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA

Mr. DEAL. I want to thank the chairman for calling this hearing

today and to thank our panel of expert witnesses for attendance at

the hearing. We look forward to your testimony and I am sure that

it will enlighten us as we approach this subject.

I think it is certainly appropriate the committee take this opportunity to examine the characteristics of uninsured children in our

country. This is something we need to understand before we atVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
4

tempt to reauthorize SCHIP. As we all know, the health of a child

without coverage is put at risk by having no health insurance coverage. And we also know that lack of health coverage impacts the

broader society by increasing the cost of healthcare and the cost of

insurance to other people.

One of the biggest barriers preventing the uninsured from receiving coverage is the cost of insurance in this country today. I am

certain that these prices continue to escalate more and more and

more and more families face the difficult decision or the choice of

whether to buy insurance or not. I would hope that on another day

the committee might take an opportunity to evaluate the mechanisms that would lower the cost of coverage not only for children

but for adults as well.

States such as mine have taken some steps to try to make health

insurance more affordable for everyone. They have removed and repealed some of the mandates that they had built up over the years.

And one of the impediments to people buying health insurance we

are told is that State mandates for what the coverage must look

like has driven the price and the cost up. I have seen however firsthand in my State the success of the SCHIP which we call Peach

Care. You would think we would in Georgia in covering low income

children. For instance, almost 70 percent of the children covered by

the program in my State are between the 100 and 150 percent of

poverty. Ninety-five percent of them are less than 200 percent of

poverty, although our eligibility is currently at 235 percent of poverty.

Nevertheless, the variety of different SCHIP Programs across the

country have made it apparent to me that in some States the program has lost its focus; that is to cover low income children. I am

also very concerned about Federal dollars intended for children

being spent on childless adults. Specifically, I look to the four

States where adult enrollment exceeds child enrollment under

SCHIP. While I believe continued flexibility for States is important

as we designed the program to fit their needs. I think this flexibility should have some limits so that the primary focus remains on

low income, uninsured children. Current income eligibility requirements also must be addressed. Coming from a State where the median household income is around $42,000, some of the income levels covered by SCHIP Programs in other States would to us seem

excessive.

I believe the funding allocation formula also deserves attention

through the course of this hearing and I know that Chairman

Pallone and I both come from shortfall States where our block

grant money has not been adequate to see us through this current

fiscal year and we are in a shortfall as is the State of New Jersey.

One of the complaints, a legitimate complaint that my State and

others have voiced is that the funding formula allocation is not appropriate. For example, once you enroll a child in SCHIP, you

therefore lose the ability to count that child in your uninsured population calculations. That seems to me to be contradictory in the

way the formula currently works. I am concerned that it does focus

too much on giving money to States with higher uninsured populations and penalize those States which have done a good job and

they are successful enrolling their SCHIP population.

5

Ultimately though, I fear that SCHIP that if it is expanded it

could have the possibility of crowding out individuals in the private

insurance market. For instance, a family with private coverage

may drop that coverage and put their children on the Government

program. In doing this, the parents may decide to continue without

any coverage. So rather than decreasing the uninsured population,

we would simply shift that into a Government program and might

leave the adults in the family who previously had coverage without

any.

I am sure the committee will closely examine each of these and

other issues as we consider the reauthorization of SCHIP and I

think the chairman for the time.

Mr. PALLONE. Thank you. Thank you, Mr. Deal.

I now recognize the gentlewoman from California, Ms. Eshoo for

an opening statement.

OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Ms. ESHOO. Thank you, Mr. Chairman and welcome to the witnesses that are here today.

I think it is really fitting that in your first hearing as chairman

of this subcommittee that you speak on the issue of insuring children. I think it is a fitting tribute to you and what you have cared

about for so many years.

The fact is that there are nearly 9 million children without guaranteed healthcare in our country. And I do not think that statistic

is synonymous with the word America, so we have work to do. In

the short-term, we are going to have to obviously reauthorize

SCHIP because it does provide coverage for approximately 5.5 million children in our country today. We also have to make sure that

there is appropriate funding that goes along with the policy so that

we cover all children, all eligible children under the law.

I think we also have to look at how we can better enroll those

who are eligible. There are children in my congressional district

and I think in every member’s congressional district that are eligible but for one reason or another have not stepped up to be enrolled and I hope that our witnesses will speak to that. I think it

is encouraging that there is so many groups and entities that are

looking to tackle the program of the uninsured. In California, Governor Schwarzenegger has put out his proposal to cover all the uninsured. That is not just children but adults. His Health and

Human Services director, Kim Belshey, met with some members of

the California Democratic delegation today. So we welcome all

comers to this debate. In the county that I live in, the county is

working to put together a program for insuring all of its residents

as well so this is good news.

But we have a responsibility when it comes to SCHIP. There are

many obstacles. We are not creating a new program. I think the

reauthorization of SCHIP gives us the opportunity to cast some

very important light on it and how we can build on this very important block that is part of the healthcare system, most importantly

for our kids.

6

So thank you for having the hearing. Again, I think it is fitting,

Mr. Chairman, that you are starting with children and I look forward to hearing the testimony and then being able to ask some

questions. And we will be able to submit questions to our witnesses

if we cannot stay for the entire hearing, Mr. Chairman?

Mr. PALLONE. Absolutely.

Ms. ESHOO. All right, thank you very much.

I yield back.

Mr. PALLONE. And thank you. Thank you for those comments, I

appreciate it.

I now recognize the ranking member of the full committee, Mr.

Barton of Texas.

OPENING STATEMENT OF HON. JOE BARTON, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. BARTON. Thank you, Chairman Pallone.

I have a nine page statement. I am just going to submit that for

the record to save us all the grief of listening to that.

I do want to say a few things. I think it is very appropriate that

you have held this hearing on the reauthorization of SCHIP. This

is one of our newer programs. It was created, I believe in 1997 or

1998. And I think people on both sides of the aisle obviously want

to reauthorize it. There will be some differences of opinions about

what we do as we do that reauthorization. I would hope that we

can have a consensus that we should maintain its status a block

grant program that is a State-Federal partnership. I do hope that

we can refocus that it is a children’s health insurance program and

really was not intended to be for adults. I think it is going to be

obvious that we are going to have to take a look at the formula and

how the moneys are allocated between the various States. And we

may want to set some criteria above what percent of the Federal

poverty level do we expect the States to pick up the funds as opposed to the Federal dollars going above a certain level.

There are broader health issues that impinge on this as we look

at our children’s programs. And some of the areas that some of our

friends on the Democrat side may want to bring into the SCHIP,

I think will oppose it within SCHIP but in the broader context we

will not oppose at all. I support additional funding for community

health centers. I support State high risk insurance pools. I think

the President’s idea in terms of using some Medicaid funds for

health insurance and giving a tax credit to the individual for

health insurance as opposed to giving that tax credit to the business is a good idea. And I think small business health insurance

pools are a good idea. I hope we can look at Medicaid reform and

in the context of that create some sort of a permanent long-term

healthcare program for our adults and senior citizens. It would

take a lot of pressure off of Medicaid.

So this subcommittee is going to have many, many issues. I have

not even enumerated half the ones that need to be discussed but

for today we look forward to listening to our witnesses on SCHIP

and we want to thank you. I have not received any complaints

about the lack of minority witnesses so you have obviously worked

well with the minority staff and Mr. Deal and I commend you for

that.

7

On a personal note, I think everybody knows this but Congressman Norwood’s funeral is tomorrow afternoon at 2 o’clock in Georgia. There is a congressional delegation if anyone wants to go, they

need to alert the Speaker’s office and I think we are leaving from

the steps of the Capitol at 10:30 tomorrow morning. Charlie Norwood was a member of this committee. He was a member of this

subcommittee. I have a letter on my desk dated February 8 from

him asking about some issues and his positions. As he was going

home to Georgia, he dictated a letter and said that he wanted some

things done and it is dated February 8 which is the day he left to

go home so we are going to miss him and I yield back.

Mr. PALLONE. Thank you.

Earlier, we had a moment of silence for Congressman Norwood

and we expressed our feelings about him but I do appreciate your

mentioning that letter and all that he has done for the issue of

healthcare and for the Congress in general. Thank you.

I wanted now we will ask the chairman of the full committee,

Mr. Dingell for an opening statement. Thank you.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

The CHAIRMAN. Mr. Chairman, thank you and congratulations on

your first hearing as chairman of this subcommittee and you have

chosen an admirable subject on which to bring to bear your very

fine and able talents.

First of all, this hearing is about a critical and straightforward

subject, one in which there is a great national need, healthcare for

kids. It has been 8 years since this matter was addressed in the

committee and it is time that we should take a careful look at it.

The fact is we know how to provide healthcare for children in a

cost effective way. Medicaid and SCHIP or the State Children’s

Health Insurance Program have been remarkably successfully programs in this regard. Today more than one in every four children

receives healthcare through these programs. This year, the State

Children’s Health Insurance Program will mark a decade since its

enactment. Its success story is that 6 million children are no longer

without health insurance but more needs to be done. Today, seven

out of 10 uninsured children eligible for Medicaid or SCHIP are not

enrolled. We need to give the States the tools and the financial incentives to reach these children. In so doing, we can make significant headway towards ensuring healthcare for children in low and

moderate income families.

Now is the time to reauthorize the program and to build on the

success which we have seen so far. Many may question whether we

can afford to do so, however, the real question is can our country

afford not to do it? The President has provided us with a roadmap

leading us regrettably in exactly the wrong direction. His fiscal

year 2008 budget proposal only preserves one-fifth of the half million children who are expected to lose coverage over the next 5

years. Coverage for pregnant women, parents, and other adults is

at risk under his budget as well. The evidence is clear. Covering

parents helps increase the coverage of children. We know that providing healthcare for pregnant women improves birth outcomes

8

and the health and the wellbeing of the child. Providing healthcare

now will provide greater benefits down the road and prevent greater costs at the same time.

I look forward to the testimony of the witnesses. They will not

only report on what SCHIP has done well but also what can be

done better and how we can improve the program. This is important as we focus on ensuring the youngest amongst us will receive

the healthcare they need.

I would like to just say a word at this point in the time remaining to me. Charlie Norwood was a very valuable member of this

committee. And like his colleagues all across the committee on both

sides of the aisle, I was very fond of him. I greatly regret his loss

and grieve that we will not have him with us to work with us on

important health matters. He was a wise and a good and a decent

man and we will pray to God for his soul and for the comfort of

his family.

And I thank you, Mr. Chairman. You will note I have concluded

in 2 minutes and 5 seconds.

Mr. PALLONE. The gentleman from New Jersey, Mr. Ferguson.

OPENING STATEMENT OF HON. MIKE FERGUSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY

Mr. FERGUSON. Thank you, Mr. Chairman.

Congratulations on your first hearing as chairman of the subcommittee and thank you also for recognizing the passing of Charlie Norwood who was a dear friend to many of us and a committed

public servant and we certainly offer our prayers to his family and

friends today.

Thank you also for holding this hearing. I appreciate the opportunity to speak today on an issue that I think many of us can agree

on. Certainly all of us can agree that taking care of our vulnerable

children in our home States is a huge priority. My home State of

New Jersey and one that I share with our chairman has had a

SCHIP Program up and running since 1998. And the program currently provides health insurance to some 200,000 individuals. I

support New Jersey’s program and believe that our work in this

committee is vital to ensure that SCHIP services are there for the

people who rely upon them.

SCHIP is nearing the end of its authorization. There are many

issues we will face as we work to reauthorize the program. The

hallmark of the program, the flexibility offered to States to provide

a targeted approach to covering children must be maintained, I believe. Proper funding is also vital for State programs to execute

their mission. New Jersey has faced a shortfall in funding each of

the last 3 years and I want to work hard with others on this committee to ensure that my home State receives the money that it

needs to provide this coverage. But most importantly, it remains

clear SCHIP is a good program and it must be funded adequately.

I look forward to hearing from our panelists today. I look forward

to hearing further panelists in future hearings. Their commentary

on what SCHIP is doing right and what can be done to improve

the program is vital as we begin this conversation.

Thank you again, Mr. Chairman, I yield back.

9

Mr. PALLONE. Thank you.

Now we will have an opening statement from the gentlewoman

from Colorado, Ms. DeGette.

OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO

Ms. DEGETTE. Thank you so much, Mr. Chairman and I add my

congratulations on your chairmanship.

I also want to thank my constituent, Susan Molina for coming

out from my hometown of Denver. I apologize we have snow here

as well as in Denver. We had hoped to give you some dry weather.

But she is a compelling witness and she is the chairman of the

board of the Metro Organization for People, MOP, in Denver which

is a fantastic faith based community organization. Any time they

tell me to show up wherever it is I always do because they do wonderful work.

Mr. Chairman, I think there are three primary issues that need

to be addressed in the SCHIP Program; first, ensuring the stability

of the program to continue coverage for those already receiving

benefits; second, improving outreach to those who are already eligible for coverage but who are not yet enrolled; and third, expanding

coverage to those who despite being ineligible for the current program still find access to health insurance difficult if not impossible

to attain.

Since SCHIP’s creation, millions of children have benefited from

the program and many children in some States—adults too,

through waivers from the Bush administration, have access to primary care that catches illnesses early and keeps them out of the

emergency room. The access to care has a profound positive impact

on their health and I think in the end it will save money. But despite the best efforts of States, many children who are eligible for

SCHIP are not enrolled. There are several things we can do to fix

that. First, I think we need to allow verification for eligibility for

one income based safety net program to count for SCHIP as well.

That will simplify the process for recipients and also it will be cut

down on a significant administrative burden to States and make it

easier for children to enroll in SCHIP. We also need to work with

States to limit roadblocks to SCHIP coverage.

Something else that I think we need to look at is how we figure

out a way to score SCHIP so that we understand the significant

savings that preventative care for children can have on our health

system. In my district for example, our public safety net system

Denver Health provides millions of dollars of care to the uninsured

that is covered partially with disproportionate share hospital dish

funds through Medicaid. If we could give more kids coverage

through SCHIP, then we could take the dish money and focus it

on providing care for other serious patients in the hospitals.

So Mr. Chairman, I think that reauthorization of this program

will be one of the two or three most important issues that the Energy and Commerce Committee attacks this year. I look forward to

starting the process today and I hope that we do reauthorize the

program, that we do authorize adequate funding for the program,

10

and that we do it without delay so that everybody can have the assurance that this program will be there for them and will work.

Thank you.

Mr. PALLONE. Thank you.

Mr. Burgess of Texas.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. BURGESS. Thank you, Mr. Chairman.

And like so many of my colleagues up here, I too will miss Charlie Norwood. He was a friend long before I came to this Congress.

He was a mentor on healthcare policy when I was but a simple

country doctor and I too will miss him.

Mr. Chairman, I too, will congratulate you for holding this hearing today. The part of me that studies irony cannot help but notice

that our hearing on global climate change was closed on account

of ice but children are clearly more important and you pressed

ahead and had this hearing so I am grateful that you have done

that.

And I am encouraged to hear the gentle lady from Colorado talk

about what I would call dynamic scoring from a CBO. I agree. I

think that is something that we do need to consider. We all know

that a dollar spent early in the course of a disease is much more

valuable to the dollar spent at the end stage of disease and certainly a dollar spent at the early part of life is going to deliver

more value over time.

I agree with our ranking member, Mr. Barton that there is broad

support for the reauthorization for this program. And the issue of

providing health insurance for uninsured children is indeed critical,

particularly in my home State of Texas. And I am eager to hear

from the witnesses about ways that we can ensure that SCHIP continues to grow and improve. Overall, I believe the program has

been a resounding success but as Chairman Dingell alluded to

there is always more that can be done. So I get 7 minutes, great.

SCHIP was created in 1997 to provide health insurance for children from low income families who made too much money to qualify for Medicaid. When SCHIP was created, each State was given

three options for program funds: No. 1, enroll more children in

Medicaid, No. 2 create a separate SCHIP Program, or No. 3, devise

a hybrid program. Both Medicaid and SCHIP are Federal State

matching programs but rather than being an automatically funded

entitlement program, SCHIP is funded through a block grant with

a fixed annual allotment. This means that SCHIP funding does not

automatically keep up with rising healthcare costs but it also

means that we are not giving anyone a blank check to spend taxpayer dollars and I appreciate that concept as well. No one has

ever solved a problem for the Federal Government by simply

throwing money at it. We have seen multiple examples of that over

the past several years and I certainly hope that we will not be

doing that here. We may choose to expand SCHIP but we should

also be looking for ways to utilize our existing resources more wisely.

I am particularly interested in how private health insurance may

interact with SCHIP. I noticed that Mr. Peterson’s testimony indiVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
11

cates that ‘‘private health insurance among children has declined,

while public coverage has increased.’’ And that is something that

does concern me, Mr. Chairman that we may tend to crowd out or

drive out the private sector and I believe the private sector does

still have something to offer in the coverage of children with insurance. Also, Mrs. Mingledorff with the March of Dimes recommends

that SCHIP be allowed to provide supplemental funds for private

insurance and this concept of premium support sounds like an excellent way to help families help themselves and I am sure we all

agree that having health insurance is a good thing. And I agree

with ranking member Deal that if there were more ways to allow

insurance companies to provide an affordable package to more people that that indeed would help with coverage.

With the capped entitlement nature of SCHIP, States must

prioritize coverage of the neediest children that Medicaid does not

cover. Unfortunately, some States have extended coverage to adults

under SCHIP taking limited dollars away from the needs of children to meet——

Mr. PALLONE. Mr. Burgess, I do not know what is going on with

the clock.

Mr. BURGESS. You are in charge, sir.

Mr. PALLONE. But I think you have gone over 3 minutes so if you

could wrap it up, I would appreciate it.

Mr. BURGESS. I will be happy to wrap it up. I would only say the

inequitable development needs to be stopped even one dollar spent

on an adult is a dollar not spent on a child. And in my initial remarks, we know that those dollars can go farther. To this end, I

have introduced H.R. 1013, the SCHIP Equity Act. This bill would

ensure that every SCHIP dollar is spent on needy children and

pregnant women. It is only a starting point for these discussions

but I believe a necessary one.

Thank you for your indulgence, Mr. Chairman, I will yield back.

Mr. PALLONE. All right, thank you.

I want to apologize. We are trying to work this clock here and

hopefully we will do a better job.

So our next member for an opening statement is Mr. Green of

Texas. And we are going to start the clock at 3 minutes so hopefully it works.

OPENING STATEMENT OF HON. GENE GREEN, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. GREEN. Thank you, Mr. Chairman.

Before I start, I want to say all of us regret the loss of our friend

who served on our Health Subcommittee for many years, Charlie

Norwood. And of course, our ranking member, Nathan Deal’s best

friend in Georgia and I had the opportunity to get to know Charlie

not only on the Education Committee but here on the Energy and

Commerce Committee for a number of years. We may have disagreed on some things philosophically but we worked together on

so many other issues dealing with healthcare.

Mr. Chairman, it is fitting our Health Subcommittee begin this

Congress with analysis of children’s healthcare issue. This is one

of the first items on our agenda and the reauthorization of the

CHIP Program is set to expire. The SCHIP is critical of our health

12

safety network providing comprehensive health insurance for more

than 4 million low income children who do not qualify for Medicaid.

As a part of the reauthorization process, it is clear that we need

to provide more funding for SCHIP. In fact, the estimates show

that States need between $12 and $15 billion in additional funding

over the next 5 years to make sure that children currently enrolled

receiving coverage from SCHIP will remain on those rolls. That figure does not include or count the children who are currently eligible for the program but not enrolled. And unfortunately, the administration’s budget proposes a virtual freeze in SCHIP funding

which the administration estimates will need to enrollment decline

of 500,000 children.

Mr. Chairman, I have a full statement I would like to put into

the record. But during the debate, we need to take a hard look at

the actions of States. And SCHIP is important in my own home

State of Texas but I would be remiss if not noting that SCHIP enrollment fell by more than 500,000 in 2003 to 300,000 in 2006,

while uninsured rates continue to creep up. Too many children are

falling through the cracks with two-thirds of Texas children currently in families earning less than 200 percent of the Federal poverty level. There is no excuse for this dramatic decline in enrollment. We should be adding not cutting kids in the SCHIP roles.

At the same time, Texas and other State cut CHIP from SCHIP.

We unfortunately let SCHIP funds sit in the bank until they are

redistributed to other States and reverted back to the Treasury.

Texas alone is allowed more than $850 billion in SCHIP funds be

diverted to other States over the last 7 years. I am all for State

flexibility but when States use that flexibility to erect burdensome

barriers to enrollment at the same time we leave Federal dollars

on the table, something has to be done. Since this hearing is a

broad overview of the children’s health insurance, we should recognize the access problems faced by newborn children. Thanks to

CMS’s interpretation of the deficit reduction, citizenship documentation requirements. We all know the intent was to ensure that

U.S. citizens only receive Medicaid. But the 14th amendment to the

Constitution is a right of citizenship, it is a right for children who

are born and there is no question and I will repeat, there is no

question a child who is born in a hospital in the United States is

a citizen of our country. To force families of newborns to produce

a birth certificate before they can receive Medicaid coverage only

serves to deny those babies the care they need in the early stages

of their life. If their births are paid for by Medicaid in a U.S. hospital the Medicaid statute guarantees them automatic Medicaid

coverage for the first year of life and Congress should not stand

idly by and let CMS administratively dismantle the statutory benefit.

And again, my son had a child, our second grandchild in south

Texas in Brownsville, right after Thanksgiving and I can tell you

it took 2 weeks to get his certified birth certificate for our grandson. And at the same time in that hospital there were children who

were born who maybe their parents were not citizens but those

children are citizens because they were born in Brownsville, TX in

the United States and I hope our committee will take a hard look

at CMS’s interpretation of that and I yield back my time.

13

Mr. PALLONE. Thank you.

And next is Mrs. Capps of California for an opening statement.

OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mrs. CAPPS. Thank you.

I also will dearly miss our colleague, Charlie Norwood. He and

I introduced legislation on children’s general health not unrelated

to the topic before us so this hearing in my mind is in memory of

our colleague.

I am so proud that this is our first hearing of this subcommittee

in this Congress. I know it is the first step in what is sure to be

a challenging process to figure out how we can ensure access to

healthcare for every child in this country which after all should be

our goal and it is the goal as I know of the legendary Marian

Wright Edelman, founder of the Children’s Defense Fund. I was

also encouraged that during the first days of this new Congress,

Speaker Pelosi emphasized that the agenda of the 110th will have

as its primary focus legislation which has a positive affect on children. Covering all children is not partisan but too often it is not

on the forefront of political debate. After all children do not vote,

it is a harder for them to have a voice in Congress, and that is why

it is so important that we have this hearing today to set the tone

for the work of this subcommittee and affirming our commitment

to reauthorizing SCHIP and ensuring that it is fully funded.

I am please to represent the county of Santa Barbara often noted

for the soap opera of the same name and wealthy families therein

portrayed but the reality is that this county has the highest percentage of uninsured children in California. California offers

SCHIP health coverage to working families and their children

through the Innovative Healthy Families Program. While Healthy

Families has made great strides, the fact remains that 14 percent

of all the children in California still are uninsured which is over

a million, almost a 1.5 million children. One million of those children live in families with incomes below the 200 percent of poverty

level. As a former school nurse, I can tell you that translates into

a million children not receiving proper primary care, not receiving

dental care, being sent to school sick, suffering from preventable

illnesses, unable to learn. Unfortunately, the President’s recently

released budget proposal will not address this huge challenge.

Rather than expand coverage for these vulnerable children, the majority of whom are in working families working hard every day, the

President’s Budget would result in approximately 285,000 children

in California alone losing access to SCHIP at a time when we

ought to be expanding it. Curtailing coverage for the adults in

those families will only serve to further reduce the number of children who receive proper healthcare coverage and ultimately proper

healthcare because if the parents do not have coverage, it is less

likely that the children will actually get the care that they may be

eligible for.

I am confident that today’s witnesses will well explain the need

for expanding SCHIP. I am counting on you to do that. I hope you

will. And ensuring its viability rather than taking the President’s

14

cues and breaking the program apart. And I thank each of the witnesses for your testimony here today.

And I yield back 13 seconds, Mr. Chairman.

Mr. PALLONE. Thank you.

I now recognize the gentlewoman from New Mexico, Mrs. Wilson.

Ms. WILSON. Thank you, Mr. Chairman.

I ask unanimous consent to participate in this hearing.

Mr. PALLONE. So moved, so ordered.

OPENING STATEMENT OF HON. HEATHER WILSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW MEXICO

Mrs. WILSON. Thank you, Mr. Chairman.

Like my colleagues, I wanted to recognize Charlie Norwood and

not only for his work on healthcare but he was such a good

humored guy. Charlie was also a very passionate guy and would

speak very strongly on things that he felt strongly about. And more

than once I would lean over to him after one of his passionate

speeches and say, Charlie, just do not sugarcoat everything. You

cannot tell where you are coming from. You could always tell where

Charlie was coming from and he will be very much missed on this

committee and in this Congress.

I would like to thank you, Mr. Chairman for having this hearing

today. SCHIP has been very important for the children of New

Mexico. And I was actually the cabinet secretary for Children

Youth and Families in New Mexico when the program was put in

place by the Congress. And in New Mexico about 20,000 more low

income children have healthcare now and health coverage that they

did not have before because of SCHIP. I recently joined a colleague

of mine, Marion Barry from Arkansas in organizing a bipartisan

letter to the House Budget Committee asking for full funding for

SCHIP in this year’s budget and also urging the reauthorization of

the program. It was a joint effort, one of the first joint efforts in

this Congress between a Republican mainstream partnership and

the so called Blue Dog Democrats. Those were kind of the unofficial

groups of moderate Democrats and Republicans and I think it reflects the broad consensus that exists about this program. There

were 76 House Members that signed that letter and many members of this committee signed that letter as well and I wanted to

thank my colleagues for their support.

These health insurance issues particularly for children should be

a bipartisan issue and I think it will be as we move forward here.

When we are talking about insurance and particularly preventive

care, children should come first. One of the problems with SCHIP

from a New Mexican’s point of view is that because New Mexico

had a very high percentage of children, we had just expanded our

Medicaid Program and eligibility for Medicaid just before the law

was passed and as a result, we have large numbers of children who

are uninsured who were not eligible for SCHIP because of the way

the program was written. And we have carried over a large amount

of funds from one year to the other in spite of the fact that we have

a large percentage of children who are uninsured in New Mexico.

Today I have introduced legislation that parallels legislation introduced by Senator Domenici and Senator Bingaman to allow perVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
15

manently to carryover these funds so that they can be used. This

legislation will also help States of Kentucky, Hawaii, Maryland,

and Minnesota, New Hampshire, Rhode Island, Tennessee, Vermont, Washington, and Wisconsin. I believe we also in SCHIP need

to find methods to reach out and get eligible children enrolled because reaching children early, particularly with preventative care

makes such a tremendous difference.

And finally, we need to better integrate SCHIP with private

health insurance and employer coverage so that there is a seamless

transition for children and their families.

I look forward to hearing the testimony here today and Mr.

Chairman, thank you again for allowing me to participate.

Mr. PALLONE. Thank you.

Next I would recognize the gentleman from Maine, Mr. Allen.

OPENING STATEMENT OF HON. TOM ALLEN, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF MAINE

Mr. ALLEN. Thank you, Mr. Chairman.

I will give an abbreviated opening statement and submit the balance for the record. Like others, I too, will miss Charlie Norwood

and all that he contributed to this committee. I want to welcome

the witnesses including of course Jeanne Lambrew who is Maine’s

contribution to sensible rational healthcare policy making in this

city.

I just wanted to say a few things about the status in Maine.

Thirty-four percent of children in Maine are covered by Medicaid

or SCHIP. That is about 15,000 children. Together those programs

ensure that otherwise uninsured children have access to regular

health exams, preventative screenings, and other essential

healthcare services. SCHIP and Medicaid provide a vital lifeline to

hired working Maine families who do not have employer provided

coverage or are unable to afford the skyrocketing cost of private insurance. Maine is one of the States with the lowest percentage of

uninsured children, just 7 percent of children in Maine are uninsured, half the national rate of 15 percent. But that is 19,000 children without health insurance in our State.

As we go forward, we have to find ways to build on the success

of this program and ensure that all children have access to health

insurance. I think that is going to be impossible if we do not deal

directly and quickly with the looming funding shortfalls in SCHIP

that will affect 14 States this year, including Maine. We face a Federal shortfall in SCHIP funding of $6.5 million and that could

mean 3,200 children losing coverage this year. Our goal, of course,

has to be to move in the opposite direction to cover everyone. And

as we think about this issue in the context of all the challenges we

face in Congress, it seems to me we have to set our priorities right.

And for me, providing America’s children with health insurance,

healthcare coverage should be at the top of our agenda.

I thank you and I thank the panel for being here.

Mr. PALLONE. I thank the gentleman.

And I now recognize the gentlewoman from Wisconsin, Ms. Baldwin.

16

OPENING STATEMENT OF HON. TAMMY BALDWIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WISCONSIN

Ms. BALDWIN. Thank you, Mr. Chairman.

I really appreciate the fact that you are holding your first hearing on this very important topic.

As we discuss and debate healthcare issues, we all too often focus

on the problems with healthcare and certainly there are many. But

today we are here to talk about a healthcare success story, SCHIP.

Simply put, SCHIP is working. It has been effective in providing

healthcare for millions of children and families and I am delighted

that we are beginning a conversation on how to make this a stronger and even more effective program.

I would like to take a moment to focus on the Wisconsin Program. When creating our SCHIP Program, which we call Badger

Care, Wisconsin strongly believed that family based coverage would

be more effective than child only coverage in providing health insurance to uninsured children. Recognizing that children are parts

of families and recognizing that making the family unit stronger

and healthier is a good thing, we chose to include parents in Badger Care from its inception and this approach has worked. Studies

show that children are more likely to become enrolled in programs

that ensure their parents also. And that has been Wisconsin’s experience.

One of the many benefits of SCHIP is the comparative affordability to the Federal Government of covering this population. And

I believe that we will hear from one of our witnesses, Dr. Lambrew

that it costs the Federal Government about $1,000 a year to provide healthcare for the average child. Therefore, in reauthorizing

this program, I believe we should look for opportunities to expand

and improve SCHIP. The status quo is not good enough. It is great

that SCHIP is providing healthcare to 6 million children but there

are another 9 million who are uninsured. And of course there are

another 38 million adults who are uninsured.

I believe that we should also have a thorough discussion about

covering young adults. Those groups, that group has one of the

highest uninsured rates among all age cohorts. Thirty percent of

Americans between 18 and 24 are uninsured. And these young

Americans just graduating from high school, leaving home for entry

level jobs that often do not provide healthcare or starting up their

college careers too often go without healthcare coverage, yet they

share many of the characteristics of their younger counterparts and

we should consider and thoroughly debate their inclusion in

SCHIP.

We have a unique opportunity to make real coverage, real

progress in covering the uninsured starting with children and expanding to other populations and I believe we must cease this opportunity.

Thank you again, Mr. Chairman.

Mr. PALLONE. Thank you.

Mr. Murphy of Pennsylvania recognized for an opening statement.

17

OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

Mr. MURPHY. Thank you, Mr. Chairman.

I appreciate that and thank you for holding this hearing.

As a healthcare provider who has worked with children for 25

plus years, these issues of making sure that we are here to help

children are extremely important. Every child deserves to have affordable and accessible healthcare and we need to take all the

steps necessary to enroll the children who are eligible but not enrolled in the State’s Children’s Health Insurance Plan or SCHIP.

As the Congressional Research Service will testify, researchers

estimate that 62 percent to 75 percent of uninsured children are

eligible for public healthcare coverage. Almost half of low income

parents believe that their children are eligible for affordable

healthcare coverage and 80 percent stated that if they would, they

would enroll if they were told so.

SCHIP is a program that has a great deal of success and it can

be even more successful. We need to take the steps necessary to

cover all those children that are not yet enrolled in the program.

For example, States could use information technology to link Medicaid and SCHIP eligibility enrollment data, the school lunch enrollment data, and other databases to increase enrollment, or we

can simply be doing a lot more with providing public information

to get kids signed up.

With limited available Federal funds, the priority and congressional reauthorization, SCHIP should focus on America’s children

caught in between the eligibility for Medicaid coverage and those

whose families cannot privately pay for health insurance or afford

coverage through their employer. Our priority must be to identify

the uninsured children by age and income so we can target

healthcare coverage programs to lower the number of children

without health insurance.

Thank you, Mr. Chairman for holding this important hearing and

I look forward to hearing from the various people testifying today

and here about the potential for helping our Nation’s children.

Mr. PALLONE. Thank you.

Now is Mr. Matheson of Utah.

OPENING STATEMENT OF HON. JIM MATHESON, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF UTAH

Mr. MATHESON. Well thank you, Mr. Chairman for holding this

hearing.

My wife is a pediatrician. She has had patients who are covered

by CHIP and so when I am at the family dinner table, I have had

many conversations that have talked about the value of this program. And it is easy to focus on numbers and numbers are important and we have talked about a lot of numbers during these opening statements. But I do not think we should lose sight of the fact

of what it means to every individual child who has access to

healthcare and what it means to them in terms of their quality of

life and their opportunity to succeed in so many ways in life. The

title of this hearing is through the eyes of a child and I think that

is appropriate that the chairman chose that.

18

I also think it is appropriate for us after this program has been

around for a few years, this is a good time for us to take a look

at it and to really scrub it and look through and see what works

because it has been a success in so many ways and ways we can

all try to make it work better. I think we all share that even in

a bipartisan way.

I am glad we have kicked off the first hearing of this Congress

for this subcommittee on this issue and I look forward to being actively engaged in it today and look forward to hearing the testimony today.

I yield back the balance of my time.

Mr. PALLONE. I thank the gentleman.

I now recognize Ms. Solis of California for an opening statement.

OPENING STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Ms. SOLIS. Thank you, Mr. Chairman and congratulations on

holding this first hearing on the uninsured through the eyes of the

child.

And today on Valentine’s Day, I think we should remember our

children and ensuring that they lead happy and healthy lives. And

we can start by the discussion on SCHIP by the reauthorization.

One of the issues that I care most about is the healthcare and

wellbeing of children in my own district. About a third of that population in my district is uninsured. Many of them for the first time

benefit or have benefited from SCHIP. Many, however, do not. I

would say one-third of the population there in my district have no

form of healthcare insurance; a large proportion are from families

of low income working class and speak predominately one language, Spanish. Many of them have barriers before them in terms

of accessing healthcare.

I hope that the discussion on SCHIP will help advance opportunities for expansion of the program making it available to people

in culturally and linguistically competent manner and by using

non-traditional methods such as programs known as Aformatoras

which is existent now. These are I do not want to say social workers but advocates in our community that are not paid very much

and many do this on a volunteer basis but provide information,

preventative information, education, and assistance in enrollment

in SCHIP and in other programs so vitally needed and necessary

for these at risk populations. I hope that that discussion will take

place as we look at reauthorizing SCHIP.

Within the State of California, we have seen many successes

where this program has really helped to go very far for a working

family of maybe four where the average costs on a monthly basis

to cover four children is $27. That is a bargain. We need to continue to expand the program and we need to encourage our Governors from our various States to look at this program in a different way and to draw down this money and to be forward looking

and thinking about how we can cover and expand the program not

just for the children but also as my colleague, Congresswoman

Tammy Baldwin spoke about those individuals that are working as

well 18 to 24 years of age. Many of them in my district are emanciVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
19

pated minors in the foster care program. Many are low income,

underrepresented students and children that are also looking for a

way, not a handout but assistance. And I think that SCHIP can do

that.

Los Angeles County has had its problems with administering

healthcare and access to many. It is a community and count that

continues to grow. We are somewhat viewed as a magnet because

so many people come there and it is hard to turn away folks but

we know that there is an obligation there on the part of our leaders

there to provide assistance. And SCHIP is one of those solutions.

So I hope again that the discussion will continue and that we could

see expansive and new opportunities, innovative opportunities to

bring in more services for those that are currently not enrolled in

the program through non-traditional methods.

So I yield back the balance of my time.

Mr. PALLONE. Thank you.

Ms. Schakowsky from Illinois.

OPENING STATEMENT OF HON. JAN SCHAKOWSKY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

Ms. SCHAKOWSKY. Thank you, Mr. Chairman.

This is my first hearing on the Healthcare Subcommittee. I am

happy to be here and I congratulate you on your role.

I wanted to extend my welcome to Ms. Paz Mingledorff and Ms.

Molina for their willingness to come before us today to talk about

their personal experiences, the problems that they have had with

their children. Putting a face on these issues is always very, very

effective and most important.

We are going to hear from some who argue today for limits for

drawing lines between children and families as we authorize

SCHIP. Some will say that we should cut off eligibility at the 200

percent of poverty level but I think that would set an arbitrary

line. Families with income on one side of that line would get assistance but those with incomes even one dollar above it would not.

Families above 200 percent of poverty would be on their own even

if a basic insurance policy would take about 30 percent of their income or more if one of their family members happens to have an

ongoing health need. And there are some who will argue that we

cannot afford to cover adults, despite the ample evidence we have

that not covering parents results in reduced coverage of children

and lowers their use of healthcare services. They would draw their

line down the middle of a family.

And there are some who argue that we should distinguish between children, immigrant children on one side of the line and citizen children on the other. Even immigrant children born in U.S.

hospitals who are automatically citizens under our Constitution as

Mr. Green pointed out are now being subjected to documentation

requirements and yet all of these children will grow up in America

and represent our future.

Many of those who argue that we cannot afford to expand SCHIP

point to the budget constraints. And I agree that we have to restore

fiscal responsibility to the Federal Government. And I ask how is

it responsible to pass tax cuts, to provide the wealthiest 1 percent

of Americans with an average annual tax cut of $146,000 while deVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
20

nying SCHIP to a family with $34,500 in income. Our country has

the resources to provide healthcare to our children. It is only question of priorities.

And Mr. Chairman, I look forward to this, to our witnesses

today. Thank you.

Mr. PALLONE. Thank you.

Ms. Hooley of Oregon recognized for an opening statement.

Thank you.

OPENING STATEMENT OF HON. DARLENE HOOLEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON

Ms. HOOLEY. Thank you, Mr. Chairman for holding this hearing.

The SCHIP reauthorization is one of the most important pieces

of business Congress will take up this year. I am very excited to

work on this because the creation of SCHIP was one of my first big

bills I worked on as a Member of Congress 10 years ago.

By any measure, SCHIP has been a success. Since its inception

in 1997, it has provided health insurance coverage to millions of

children. In addition, it has lead to improvements and increased

participation in Medicaid. These two programs together have reduced the uninsured rate of low income children by one-third. If a

program can produce those results in just 10 years, imagine what

it can accomplish in the next 10 years.

I think we can credit the success of SCHIP to strong relationships between the Federal Government and States generous matching rates, flexibility for State programs, and strong support by Congress to provide health insurance to our children.

On Friday and yet today I met with a group of healthcare providers and we talked about SCHIP and they all agreed on four points.

One was to reauthorize the program, it had been successful. Two,

that we would save money if we simplified enrollment. Three, that

we continue to give States the flexibility, and four, that we fully

funded or funded as high a level as possible.

But when I talk about an issue, I like to talk about a face because that is what I see in any policy is a face. So I want to talk

to you about the face I see and that is Caitlyn. She is a 6-year-old

from Corvallis. If you visit her home on any of her bad days and

listen to her try to breathe, you will understand that Caitlyn suffers from a chronic respiratory ailment. She is one of State’s 1,117

children without healthcare coverage. Her hardworking parents

make a little too much to qualify the family for our State’s Oregon

Health Plan which is funded by Medicaid dollars. But far too little

to enable her dad to afford the $520 a month it would cost for the

insurance his employer offers. Caitlyn has been ill for several days

with asthma-like symptoms that have plagued her since birth. Finally after a night of trying to help her stop coughing, Nicole and

Alan, her parents considered their choices. Without insurance, the

couple had no doctor, no advice nurse they could call, no emergency

room they could afford but they knew that every Monday the Benton County Health Department offers pediatric services for low income families and for the family the fee would be $30. So that became the plan. They would take Caitlyn to the county clinic Monday, 3 days away, by Sunday though Caitlyn was worse. Through

tears she complained her sides hurt. Her parents went through

21

some rough worrisome hours trying everything they could to think

of to relieve her misery. When Monday finally arrived, it did not

take the pediatrician long to diagnose Caitlyn’s illness pneumonia.

She had probably had it for a week or longer the doctor said and

urgently needed antibiotics. The diagnosis rocked her mother and

dad. They felt guilt over their limited access to healthcare for their

children and they felt bitterness over the fact that if they had been

able to afford insurance, Caitlyn would have been spared hours of

suffering and needless risk to her health.

This story answered my question about how important expanding access to SCHIPS is. The CHIP Program is currently the most

efficient way to provide critical healthcare to our children who do

not qualify for Medicaid.

And again, Mr. Chairman, I am thankful that we had this hearing today and that this was my first one about SCHIP. Thank you.

Mr. PALLONE. Thank you.

I want to recognize next the gentleman from California but if I

could just mention that he was the last Democratic chairman of the

subcommittee and I just want to recognize that fact if you will. The

gentleman from California, Mr. Waxman.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. WAXMAN. Thank you very much, Mr. Chairman, I appreciate

that acknowledgement of my historic role and I must say how

pleased I am to see you as Chair of this committee. And also to acknowledge the fact that our very first hearing of this subcommittee

is on children’s health. It reflects the kind of priorities that I think

are important for this committee.

And as I listen to colleagues on both sides of the aisle, I hear a

sense of bipartisan support for a program that has done a lot of

wonderful things for children in this country. There can be no

doubt that we made important strides in providing healthcare coverage through Medicaid for the children below the poverty line and

under SCHIP for those who have modest means. And between

these two programs, we have provided coverage for more than 30

million children. Well that is good for the children. It is good for

this country. They are all going to be benefiting from this expenditure throughout their lives and it is just the right thing to do.

But the sad fact is that we really are not doing enough and I

hope that we can keep that in mind when we start passing legislation. We have over 9 million uninsured children in America. And

the fact is that two-thirds of them are eligible for either Medicaid

or SCHIP but we are not providing sufficient funds for the States

to find and cover all the eligible children.

Well making sure that we have a strong SCHIP and Medicaid

Program is a no brainer. And I am just stunned when the President proposes a budget provides significantly less than half the

funds that would be necessary to keep the kids we already have

covered in the program. Secretary Leavitt tried to defend this with

the incredible statement that program coverage would only drop

about 400,000 people or so. Well I think that is unacceptable when

22

we know we can be covering more children, we ought not to be

talking about covering less.

I also find it amazing to hear people talking about a ceiling of

200 percent of poverty on the income level for eligibility for SCHIP.

And it is also amazing to hear people say it is terrible that some

of these SCHIP Programs run at the State level decided to devote

some of their funds to covering the parents. How do you think we

are going to ever reach these kids if we do not also cover the parents? And those parents are part of the 47 million uninsured in

this country. They are not going to fix what is wrong with SCHIP

by dropping income eligibility levels, cutting off coverage of parents, or any other uninsured people.

We need to devote the money for this effort. It is one I hope we

can do together on a bipartisan basis and I am so pleased that this

is your very first hearing and I solute you in selecting this issue

for reflecting the priorities that I hope are to come out of this Congress.

Mr. PALLONE. Thank you, Mr. Waxman.

And last but not least we have Mr. Engel of New York recognized

for an opening statement.

OPENING STATEMENT OF HON. ELIOT L. ENGEL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW

YORK

Mr. ENGEL. Thank you, Mr. Chairman.

When it gets down to me, I think of the old adage where that

everything that has needed to be said has already been said but

not everyone has said it but I will try to say a few things that are

important to me.

I want to first of all start by as my colleagues did by saying how

much we will miss Charlie Norwood and what a good member of

this subcommittee and committee he was. And he certainly has a

legacy that we will remember him for the Patient’s Bill of Rights

and other things that he passionately fought for. And I am privileged to have been his colleague.

Mr. Chairman, thank you for convening this important hearing

on expanding children’s health coverage. The reauthorization for

the State Children’s Health Insurance Program is unquestionably

in my opinion one of the most important bills we will pass this

year.

I am proud that my home State of New York has been one of the

true success stories in getting more children covered through the

State Children’s Health Insurance Program. New York operates a

separate stand alone program under SCHIP called Child Health

Plus and as of December 2006, nearly 400,000 children were enrolled and receiving comprehensive healthcare coverage in the program. As the third largest SCHIP Program in the Nation, New

York reduced the number of uninsured children in the State by 40

percent and we are only one of seven States to achieve a decline

of that magnitude. Our SCHIP Program has increased enrollment

by over a quarter of a million children since the start of SCHIP

which is 150 percent increase. And New York State’s aggressive

SCHIP outreach has contributed to a nearly 30 percent increase in

children enrolled in Medicaid.

23

Nationwide, Medicaid covers over 28.3 million children and

SCHIP covers an additional 6.1 million kids. Despite this coverage,

9 million children, 60 percent of whom live in a household with at

least one adult working full-time remain uninsured. It simply

makes economic sense to cover the uninsured. When we fail to provide our children with primary and preventative care, routine

health problems compound into emergency conditions. Improving

coverage reduces racial disparities, unmet needs, and the continuity of care gained is particularly important for managing chronic

conditions. The need to appropriate monitor and treat chronic conditions is something I am all too familiar with. Pediatric asthma

is the most common chronic illness and unfortunately children living in the Bronx where I am from, have an extremely high prevalence of asthma. Ensuring asthmatic children have comprehensive

healthcare makes an unimaginable difference in the number of

emergency, hospital visits, missed school days, and basic quality of

life. It is money re-spent, well spent.

Reauthorizing the State Children’s Health Insurance Program

provides us with a great opportunity to strengthen and reform it

to cover even more children. As has been mentioned by many of my

colleagues, sadly the President’s budget released this month prevents this goal from becoming a reality. The proposals within the

budget strike at the foundation of patient care, assaulting it in my

opinion from every possible angle. The Children’s Health Insurance

Program will see its funding cut from last year and worse the

amount allocated for its reauthorization is less than one half of the

amount required to maintain coverage for current beneficiaries.

Let me conclude by saying that I look forward to the testimony

today.

And I commend you, Mr. Chairman for focusing on this important program.

Mr. PALLONE. Thank you, Mr. Engel.

Now that concludes the opening statements by members of the

subcommittee. I would ask the panel to come forward and take

your seats there at the table.

On the first panel we have Dr. Jeanne Lambrew who is associate

professor at George Washington University; Ms. Kathy Paz

Mingledorff who is a mission volunteer with the March of Dimes;

Mr. Chris Peterson who is a specialist in social legislation with the

CRS; Ms. Susan Molina, community leader with PICO of Colorado;

Ms. Nina Owcharenko, senior policy analyst with the Center for

Health Policy Studies at the Heritage Foundation; and finally Jay

Berkelhamer who is the President of the American Academy of Pediatrics.

We have 5-minute opening statements from the witnesses. Those

statements will be made part of the hearing record. Each of you

may in the discretion of the committee submit additional briefs and

pertinent statements in writing for inclusion in the record. And I

am going to start with Ms. Molina from PICO of Colorado for an

opening statement.

24

STATEMENT OF SUSAN MOLINA, COMMUNITY LEADER, PICO,

DENVER, CO

Ms. MOLINA. As you heard, my name is Susan Molina. I am the

Board Chair for the Metro Organizations for People in Denver, Colorado. MOP is also a part of the PICO National Network. We are

a faith driven I like to say community organization. We work to

empower people on real issues that affect our families, our communities every day.

Oddly enough I am not nervous about this because I am here

today not to speak to you as a Board Chair, but really as a mother.

And I want to just give you a face to my pain. I married very

young, at 17, to a very abusive man. He walked out on us when

my children were 5 and 3. And I was working in a dead end job

cleaning. No one ever grows up saying I want to be a cleaning lady

but that was the reality of my life. I was stuck. And when I met

MOP and began to work with PICO, my life started to change. I

learned that it was OK to face the reality of where I was but knew

that I had to better myself and could do that. I got my GED. I have

also taken classes at the university and I am now taking a new job.

I went from cleaning the building to managing it and I think that

is important to say because I feel like somehow I feel like my family is now punished because I have worked hard and I have done

better for the family and now my children are not eligible for

SCHIP. We are between the 200 and 300 percent of poverty level.

And I want to say that when I was preparing to come here, this

became all too real when my children got sick last week and they

had the flu and I had wait to see if they needed to go the doctor

or not because they do not have insurance. I cannot just take them

to the doctor and waive a card and say my kids need to been seen,

I have to wait and see if they were going to get worse. And I want

to say that we work. We are working families, the ones that are

on SCHIP and that is important to say because we want to be able

to pay our premiums. We want to be able to take our children to

the doctor.

When we talk about 9 million uninsured children, these are real

children that have accidents, that get sick, whose parents cannot

afford to take them to the hospital. It is hard. I am asking you as

a parent to please reauthorize SCHIP and also fully fund it because we are going to lose so many children if we do not fully fund

this program.

Through MOP and the work at PICO I have realized that my experience is not unusual. Throughout our network we have surveyed

thousands of families and have heard such sad real pain around

this issue. In my State, there are 176,000 children that are uninsured. Our State has one of the highest uninsured rates in the

country. But for the first time, things are starting to change in Colorado. In 2005, Colorado spent their full allocation of SCHIP

money. And MOP in PICO Colorado we are working hard with

other healthcare organizations to change State policy to enroll eligible children and expand coverage. And I am happy to say that God

has given me the boldness to be here today and the courage because again this is a very hard issue.

PICO is advocating a roadmap to cover all children by 2012. This

roadmap has five steps to cover all children. One is to fill the existVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
25

ing SCHIP shortfalls that face our States; two, fund proof an outreach program to provide States with financial incentives to cover

all eligible children; three, to provide financial support and incentives for States to expand the eligibility; four, to allow States the

option to cover legal immigrant children and pregnant women; and

five, to provide approximately $50 to $60 billion in SCHIP and

Medicaid financing to support the costs of covering newly enrolled

children.

I really just want to point out and again thank my own Congresswoman DeGette for her leadership in working hard to cover

all children. On March 7, we will be back on Capitol Hill with 400

other parents and clergy members for a PICO Faith and Family

Summit. We would love to have all of you there and that will be

at 8:00 to 9:00 a.m. And we will definitely have some information.

I come here with my children on my mind. It breaks my heart to

know that so many other families need to make hard decisions

every day on whether to put food on the table or buy healthcare

coverage. It would take me $200 to $300 to insure my children with

private insurance. I do not have that. That would take away from

other things. That is 2 weeks worth of groceries. How can we not

work hard to cover our children? We work hard. We are hard working parents. I am a single mother and I am proud of that. And because I am so proud that is why it makes it so difficult but we

must, we must work together to reauthorize SCHIP and we must

find those funds to be able to expand this program because there

are going to be so many other families that have to make hard decisions.

[The prepared statement of Ms. Molina appears at the conclusion

of the record.]

Mr. PALLONE. Thank you so much. Thank you really for being

here and for sharing all of your concerns. I appreciate it.

Dr. Lambrew.

STATEMENT OF JEANNE M. LAMBREW, PH.D., ASSOCIATE PROFESSOR, DEPARTMENT OF HEALTH POLICY, THE GEORGE

WASHINGTON UNIVERSITY SCHOOL OF PUBLIC HEALTH

AND SERVICES, WASHINGTON, DC

Ms. LAMBREW. Thank you very much for having me here today.

My role at this hearing is going to be to try to summarize what

we know about the value of public investments in children’s health.

I am sorry, and to that end, I would like to make three points.

First, health coverage for children does improve access of care,

health outcomes, and the prospects for children and their families;

second, the short run budget costs of covering more children is

worth it in the long run for our Nation; and third, the design of

the Federal investment in children’s health coverage matters. Specifically, some of the block grant features of SCHIP have limited

the program’s success and should be modified in reauthorization.

But to begin, health coverage is the portal to our healthcare system. It removes financial barriers, the seeking, obtaining, and adhering to healthcare. It prevents the cost of essential healthcare

from bankrupting individuals and families. And it ensures that access to the finest healthcare in the world irrespective of income. As

such, children who do not have health coverage are at risk. They

26

are five times as likely to have unmet health needs compared to

children in Medicaid and with SCHIP. Uninsured children are 40

percent less likely to receive medical attention for serious injuries.

And children without coverage are less likely to receive immunizations against preventable childhood diseases.

Access to healthcare matters because it contributes to the health

of children. Sadly, the wealthiest Nation in the world is not the

healthiest especially when it comes to its children. In 2004, the

United States ranked 35th for mortality behind Korea and Cuba.

Our immunization rates while high are below those of Thailand

and Poland among others. But programs like Medicaid and CHIP

can improve children’s health. Increases in Medicaid eligibility

have contributed to reductions in child mortality after the first year

of life. Insured children with congenital heart problems are onetenth as likely to die in their first year of life as children who are

uninsured. Uninsured children with asthma have about half as

many attacks that are severe as children in Medicaid and CHIP.

The benefits for families go beyond though this health impact. It

improves the peace of mind and financial security of families. One

hospital stay for a child with pneumonia can cost $8,000. The total

healthcare cost of childhood asthma in the U.S. is about $6 billion.

It also improves children’s ability to learn. Unaddressed health

problems result in lower school attendance. In 2004, asthma alone

accounted for an estimated 14 million lost school days among children. Failure to address recurrent ear infections among children reduces their ability to communicate, their school readiness, and

their performance. And the unmet mental health needs among adolescents can have lifelong consequences.

In summary, health coverage is as essential to nutrition and education in the development of children. So given these benefits, the

next question is how much does it cost? Well, based on Government

projections, the estimated average spending per child next year will

be about $2,900. That is about 40 percent below what we pay for

our young adults, about one-seventh of what we pay for seniors. Of

this, about 35 percent is publicly financed. This is nearly half the

proportion of the health spending for seniors that is publicly financed. There is also the lower than the share of education as publicly financed. In dollar terms this translates into about $1,000 per

child for healthcare costs less for the Federal Government because

States kick in some money, too.

So is this public investment worth it? No cost benefit analysis exists to put the value of children’s coverage into dollar terms. However, some comparisons can help put this into perspective. This

$1,000 per child is less than the cost of a day in the hospital or

less than the cost of year’s worth of medication for chronic illness.

It is a fraction of what we spend per person in the last year of life.

And the long-term benefit could far exceed the short-term costs of

investing in children’s health. One of the most distressing studies

in recent years found that for the first time in over a century our

children’s life expectancy may be less than our own. This is primarily because our children are not as healthy, the obesity epidemic is taking its toll, and not surprisingly poor child health now

could drive major Medicare costs later. This suggest that not only

27

is the current investment in children’s health coverage worth, but

it may not be enough for our long run needs.

As we look at the proposals in front of this Congress, some would

suggest a real reduction in the public investment in children’s

health coverage. As some of the members have mentioned, the

President’s budget proposes to spend only about a billion dollars

more per year for coverage of children. This amount according to

some experts is not enough to maintain coverage. In other words,

the programs may have to be scaled back, the uninsured could increase. Now this clearly will reduce the Federal costs for children

but doing so is not necessarily free. It would mean increased costs

to States that cannot morally scale back on their coverage for children. It would increase private health insurance costs as costs are

shifted from uninsured kids to privately insured families. Families

themselves would pay the cost of the care for their uninsured children and that cost may be higher because delayed care often is

more expensive care and ultimately the children themselves would

bear the greatest cost in the form of preventable suffering and limitations of their lifelong prospects.

So I will close by saying that I urge you to think broadly about

the value of coverage when you are looking at these budget numbers not just the dollars and cents and the CRS score.

Thank you.

[The prepared statement of Ms. Lambrew appears at the conclusion of the hearing.]

Mr. PALLONE. Thank you, Dr. Lambrew.

Mr. Peterson.

STATEMENT OF CHRIS L. PETERSON, SPECIALIST, SOCIAL

LEGISLATION, CONGRESSIONAL RESEARCH SERVICE

Mr. PETERSON. Chairman Pallone, Mr. Deal, and members of the

subcommittee, thank you for the opportunity to testify about characteristics of uninsured children.

I will begin with current estimates some of which has been cited

already of children’s health insurance and how they have changed

over time. Despite the potential benefits of coverage, millions of uninsured children are eligible for public and private coverage. I will

conclude with some reasons why this might be the case and what

options might be available. The latest estimates from 2005 indicate

that there are 47 million uninsured people in the U.S., 9 million

of who are children. More than half uninsured children are in a

two parent family and most had a parent who worked full-time all

year. Between 1996 and 2005, the percentage of children who were

uninsured has fallen by 30 percent, in spite of declining enrollment

in private coverage. Children’s uninsurance has fallen because the

drop in private coverage was more than offset by increases in public coverage. However, some of the detail gets lost in these national

numbers. As presented in my written testimony for some of the

largest groups of children, private coverage did not decline significantly between 1996 and 2005, but among each of these groups

public coverage increased and uninsurance dropped.

The overall simultaneous decline in private coverage and increase in public coverage raises questions about the extent to which

these changes are linked, particularly as eligibility was extended

28

up the income scale through SCHIP. Researchers’ estimates of this

effect vary widely. Moreover, even for children enrolled in public

coverage with access to private, it is unclear whether in the absence of public coverage these children will be insured or not.

Among currently uninsured children, 42 percent have access to coverage through their parents’ employer. Researchers also estimate

that 62 percent to 75 percent of uninsured children are eligible for

public coverage. Since employer sponsored and public coverage both

tend to be heavily subsidized, why would so many children eligible

for coverage not be getting it? Some suggest there may be a lack

of awareness, particularly for public coverage or that parents have

perceptions of public coverage and the enrollment process that prevent them from seeking it. Among parents of low income uninsured

children half believe their children are eligible for public coverage

yet their kids remain uninsured.

There is still the cost of coverage in private as well as, public

coverage. Public coverage is not always free in terms of enrollees’

obligations. About 30 States have premiums or enrollment fees in

their CHIP Programs for example. And in private health insurance,

the cost of family coverage can be quite large. The latest estimates

are that the total premium for family coverage through one’s job

is $11,500 with workers paying $3,000 of that. This employee contribution is nearly five times the amount required for single coverage.

Research by the California Healthcare Foundation looked into

why higher income uninsured individuals were uninsured. Only 16

percent were considered ‘‘cost constrained’’. That is the individuals

belief health insurance is very important but say they would not

buy existing products at their current prices. For most of the higher income uninsured, this research found that ‘‘health insurance

did not rank high as a spending priority’’. But in terms of children’s health insurance, research as Dr. Lambrew has noted has

found that health insurance is important. Not only as a bill paying

mechanism for when the kids get sick but also because it helps establish a regular source of healthcare such as a physician who

knows the child’s healthcare needs.

Children with health insurance are more likely to have a regular

source of care and therefore have better health outcomes than

those without health insurance. This might suggest a need for outreach that goes beyond informing parents of the availability of coverage but also educates them about the benefits of coverage.

In light of the number of uninsured who are eligible for coverage

besides the multitude of existing carrots to entice people to enroll,

States are beginning to seriously consider sticks as well. For example, Massachusetts residents who are not enrolled in coverage may

be subject to financial penalties from the State. But some of these

efforts raise questions about the role of States versus the Federal

Government in terms of the regulation and financing of public and

private health insurance. In addition, the estimates of the uninsured will also depend on the length of uninsurance one is talking

about Although 9 million children are estimated to be uninsured at

a given point in time, a smaller number 6 million are estimated to

be insured for the entire year. And if you look at the numbers who

were ever uninsured during the year even for a day, the estimate

29

is much larger 15 million. The options that emerge will then depend on how policymakers decide how to reconcile these competing

issues and interests.

[The prepared statement of Mr. Peterson appears at the conclusion of the hearing.]

Mr. PALLONE. Thank you, Mr. Peterson.

Dr. Berkelhamer.

STATEMENT OF JAY E. BERKELHAMER, M.D., PRESIDENT,

AMERICAN ACADEMY OF PEDIATRICS

Dr. BERKELHAMER. Yes, thank you Chairman Pallone for the opportunity and Mr. Deal and other members of the committee.

I am a pediatrician from Georgia, Mr. Deal and I know there

have been many comments made already but the citizens of Georgia have lost a great child advocate and we just would join you in

your remembering and being very fond of his contributions and

thank you.

I am the president of the American Academy of Pediatrics. I am

a general pediatrician and I have devoted the last 40 years of my

career to the practice of caring for children. And I am pleased to

comment on behalf of the American Academy of Pediatrics about

the future for the Children’s Health Insurance Program. It is a program that has been a resounding success. It has been a spillover

as well in terms of identifying additional children who are qualified

for the Medicaid Program and they have also been enrolled. The

eligibility determination processes have been simplified and coordinated between SCHIP and Medicaid and it has become increasingly

infective as a two part program. Despite the program’s widely acknowledged success and popularity, several outstanding challenges

have been identified by participating pediatricians and these challenges pertain to funding, ease of enrollment and benefits related

under the program. And I want to just make a couple comments

about each of those.

In terms of the funding, SCHIP is a block grant which creates

some inherent problems. Because the funding is capped, children

have been denied services, waiting lists have developed, and predictability of care is compromised. My own State of Georgia is

struggling with that issue right now. Congress should strengthen

its commitment to the Federal State partnership that has lead

SCHIP and Medicaid success over the last decade. There should be

a minimum of $12 billion a year more over the next 5 years in the

new SCHIP reauthorization providing SCHIP and Medicaid funding to be able to assure that the children who are eligible for this

program can be included. And as was mentioned in some of the

opening statements, we have the potential with existing eligibility

to cover 6 million of the 9 million children who are currently uninsured. We are almost there. All children have to have health insurance. We have got to get there as a Nation but this would be an

extraordinary positive step to include 6 million of the 9 million children who are not insured.

In terms of payment, one of the things that is an important problem with both the Medicaid and SCHIP is the low rate of payment.

The low rates of payment seriously impede access to quality care

for many children. Pediatricians are forced in many parts of the

30

country to limit the number of patients they see and some cannot

even pay their office overhead when the number of children coming

to their office are in SCHIP and in the Medicaid Program. On average across the Nation, Medicaid reimburses at only 69 percent,

roughly two-thirds of what Medicare reimburses at. And only 56

percent of what the rates are for commercial insurance. The Academy requests that payment rates for pediatric services be at least

at the same level as Medicare giving children the access to the program on an equal footing that they deserve with all other children.

In terms of extending eligibility and enrollment, beyond the payment rates, it is also important to raise the issue of enrollment barriers. And the implementation of SCHIP has had the added benefit

as I mentioned of encouraging Medicaid enrollment and I just want

to make comment though about the unintended consequences of

the Deficit Reduction Act. And I am sorry, Mr. Green left because

when he made his statement I wanted to say yes, we have seen

that problem. And in my own State of Georgia, it has been documented now that over 100,000 eligible children have been dropped

from the roles since these regulations were put in place. And there

is similar situations I understand in Kansas, Wisconsin, and Virginia. And these children are not illegal, but they are citizens in

poor families who are simply finding it too difficult to meet these

requirements in a timely manner. And this state of affairs needs

to be corrected and it is really unacceptable.

In terms of benefits, the need for vision, dental, mental health

services do not disappear with economic changes and economic circumstances. Children in States with stand alone SCHIP Programs

are not guaranteed these services and they should be. Every child

needs comprehensive health insurance, age appropriate benefits.

The benefits for children really need to be programmed to children.

Only one out of every hundred children throughout their entire

childhood ever requires catastrophic care. They all create preventative care. They all require preventative care.

So in conclusion, there is a proud history over the past 10 years.

We can build on it. We can cover 6 million of the 9 remaining million children and that the AAP stands ready to work with you and

supports fully this program.

Thank you.

[The prepared statement of Dr. Berkelhamer appears at the conclusion of the hearing.]

Mr. PALLONE. Thank you, Doctor.

Now we have Ms. Owcharenko.

STATEMENT OF NINA OWCHARENKO, SENIOR POLICY ANALYST, HEALTH POLICY SYSTEMS, THE HERITAGE FOUNDATION

Ms. OWCHARENKO. Good afternoon, Chairman Pallone, Ranking

Member Deal, and members of the subcommittee. I am senior policy analyst at the Heritage Foundation and I appreciate the opportunity to testify before you today on the subject of uninsured children.

Healthcare coverage for children is critical. Without it, children

suffer and society pays. Children without coverage often seek care

in an inefficient and costly manner. Today’s healthcare system has

31

it shortfalls and policymakers should consider ways to improve coverage options for children and their families.

Like adults, the vast majority over 60 percent of children obtain

coverage through the employer based system. Twenty-seven percent receive care through the Medicaid and SCHIP Programs and

an estimated 11 percent of children are considered uninsured.

However, it is important to note as was already discussed there are

a variety of ways of counting the uninsured. The most common figure used is based on a specific point in time however, other calculations include measuring uninsurance for the entire year and

unisurance at any point during the year. In considering duration

of uninsurance, children typically have shorter periods of

uninsurance than adults. Interestingly, by age group and was also

noted in opening statements, children have the lowest rate of

uninsurance than most all other age groups except those 65 and

older. And adults between the ages of 18 and 24 have the highest

with about 31 percent.

By family income, the majority of uninsured children are among

lower income families. But the largest growing segment of the uninsured is among middle and upper income families. By family

work status, the majority about 68 percent of uninsured children

are in families with a full-time full year worker. Only 17 percent

of the uninsured children have no family member working.

There are obstacles to existing coverage. The current patchwork

system of public and private coverage does not work for everyone

including children. In the private sector, not all workers or their

dependents have employer based coverage. Some are not offered

coverage. Some may not qualify for employer coverage and others

simply choose not to participate. Moreover, coverage outside the

place of work can be expensive depending on the State. Some well

intentioned but costly State regulations can make coverage

unaffordable to many families, especially lower income families.

In the public sector, while there are significant numbers of children who qualify for public programs, a good number still do not

participate. First access to quality care is a concern. Fewer pediatricians are accepting new Medicaid patients. Second, these programs are fiscally draining State and Federal budgets. The entitlement financing structure of Medicaid for example is the largest

State budget item consuming more than education, transportation,

and other State priorities. Finally, public program expansions

crowd out private coverage for families. Recent analysis estimates

that the crowded affect of these public program expansions to be

about 60 percent.

Strategies for addressing the shortfalls of the current system

should consider children but should also improve the system as a

whole. For the private sector; one, fix the tax treatment of health

insurance to ensure everyone gets a tax break for purchasing

health insurance; two, promote private sector alternatives for those

without employer based coverage. For the public sector; first add

greater choice for enrollees including enabling them to use public

funds as a way to mainstream them into private family insurance.

This is especially important in SCHIP; second, adopting more patients that are model that expands personal control in the

healthcare decisions for those enrolled in the public programs.

32

Finally, a solid case can be made to encourage States with Federal guidance and assistance to tackle these issues on their own.

There is great diversity among the States. A federalism approach

may be the best way suited, best suited way to address these variations.

Thank you for your time and I look forward to the discussion.

[The prepared statement of Ms. Owcharenko appears at the conclusion of the hearing.]

Mr. PALLONE. Thank you.

Next we have Ms. Mingledorff. Now I understand those are your

children over there?

Ms. MINGLEDORFF. Yes, they are.

Mr. PALLONE. They have been so well behaved. I was thinking

about when mine were that age they would never sit there. In fact,

I think there was one time when I brought them to a Whip meeting

and I served them a muffin and my son threw the muffin at Congressman Bonior who was conducting the Whip meeting.

Ms. MINGLEDORFF. I have had great help with the March of

Dimes staff there.

Mr. PALLONE. Well thank you.

STATEMENT OF KATHY PAZ MINGLEDORFF, MARCH OF DIMES

FOUNDATION

Ms. MINGLEDORFF. And good afternoon, Mr. Pallone, Congressmen and Congresswomen.

My name is Kathy Mingledorff and I am pleased to be here to

testify as a mother and volunteer of the March of Dimes Foundation. I understand in a very person way the importance of health

insurance for women and children and thank the members of the

committee for making access to coverage the focus of the hearing.

A longer and more complex statement will be submitted for the formal record.

Let me begin today by telling you my family story and specifically why Medicaid and FAMIS, Virginia’s State Children’s Health

Insurance Program SCHIP, have been so important to us. In 2001,

I became pregnant while in college and was covered by my parents’

private health insurance. But after my son was born, I was no

longer a student and I lost my coverage because I was no longer

a dependent. My son, Alex who is here with us today was born prematurely at 25 weeks and suffered many complications due to his

early delivery. Fortunately, Medicaid was there to provide health

insurance for the first 3 years of Alex’s life. We had help through

Medicaid with Alex’s enormous medical bills over $800,000 in the

first 2 years alone. And I have attached to my testimony a handout

listing some of my son’s medical expenses.

Had it not been for the support, I am not sure how we would

have survived. By the time Alex was 2, complications associated

with his pre-term birth required a feeding tube, special formulas,

and multiple medications. We took Alex to the emergency room

many times and he was hospitalized on over three occasions. In

January 2005, Alex had surgery to stabilize his reflux condition. I

cannot imagine what life would have been without Medicaid.

In 2005, I married and found an employer who was eager to hire

me. Unfortunately, the employer did not offer health insurance. I

33

attempted to enroll Alex in FAMIS but our income was too high for

him to qualify with my husband’s income of only $32,000 for our

family. At that time, eligibility for the program in Virginia was limited to children whose family incomes were below 133 percent of

the poverty level, less than $22,000 a year for a family of three so

my only option was to turn down a position I really wanted in

order to keep my son insured through Medicaid. I want to emphasize how difficult that was for me.

In July 2006, the State of Virginia changed its eligibility rules

for FAMIS allowing families with incomes up to 200 percent of the

poverty guidelines, a little over $34,000 for a family of three to

qualify making it possible for me to enroll my son. Once Alex had

health insurance through FAMIS, I was able to accept a full-time

position at SCIC, a Government contractor in Virginia. Today, Alex

and I have health insurance through my employer and I work fulltime as a design consultant at Thomasville Furniture and am taking graduate courses at Marymount University for interior design.

The help that my family received at a time when we needed it

most because I was able to work, it was great to have a program

like FAMIS. I know from my experience that other families with

premature babies, that my story is not unique. In fact, it is not uncommon for a family just getting started to face a problem of not

having enough health coverage to meet the needs of a fragile infant.

Given my family’s experience, I am sure you can understand why

I am so committed to the March of Dimes’ goal of using this year’s

bill as an opportunity to strengthen FAMIS and other State children’s health insurance programs. Let me summarize for you the

Foundation’s recommendations.

Using the information provided by the U.S. Census Bureau, researchers have estimated that nearly half of the 9 million uninsured children in the U.S. are eligible for Medicaid and almost 20

percent are eligible for SCHIP. In other words, with adequate funding and more attention to enrollment of those who are already eligible, more than 6 million uninsured children would have health

insurance through these two programs. So for our first recommendation, the March of Dimes urges members of this committee to give States the resources they need. The Foundation is also

calling for changes in law to help State’s make modest but important improvements in their SCHIP Programs.

First, States would be allowed to cover pregnant women age 19

and older who meet SCHIP income guidelines. As many as 24

States have used Federal waivers or special regulatory means to

prove such coverage through SCHIP but waivers are administratively burdensome for States and the regulatory approach does not

allow for payment of the full scope of maternity benefits recommended by the American College of Obstetrics and Gynecologists

and the American Academy of Pediatrics. Both the National Governor’s Association and the National Conference of State Legislature support this proposal. Providing access to maternity coverage

will help reduce the number of infants like Alex who are born with

significant medical needs.

The March of Dimes also recommends that members of the committee allow SCHIP to supplement limited private health insurVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
34

ance for children with special healthcare needs allowing for a combination of public and private coverage would help families like

mine, parents who want to work, are willing to purchase private

insurance, but need a little help to be sure that they policy covers

their child’s serious medical conditions.

Finally, the Foundation urges members to strengthen performance measures that will improve State accountability and quality

of care for individuals who rely on SCHIP for their health insurance.

Thank you again, Mr. Chairman for holding this important hearing and for allowing me to testify on behalf of the March of Dimes.

Children and their families across the Nation are looking for you

and members of this committee to maintain and strengthen

SCHIP, a program central to the health of the Nation’s pregnant

women, infant, and children.

Thank you.

[The prepared statement of Ms. Mingledorff appears at the conclusion of the hearing.]

Mr. PALLONE. Thank you.

And thank all the witnesses for your insight into SCHIP and the

whole problem of covering the uninsured for kids in particular.

We are done with the statements but now we will start with

questions and I will just recognize myself initially for 5 minutes.

I wanted to ask Ms. Mingledorff both you and Ms. Molina. You

have obviously talked about your personal situation of being in the

position of having to force to choose between a chance to improve

your financial situation or keeping your children’s health coverage.

And I know, well I should not say I know, I really cannot imagine

what a tough decision that has to be but your stories illustrate why

it is so important that Congress provide access to affordable health

insurance for children and not restrict in my opinion the available

funding for kids above 200 percent of poverty. The 200 percent is

about $34,000 a year for a family of three. It may seem if you are

making $34,000 a year you should be able to pay for health insurance but both of you have indicated that is not the case. I just

wanted you to comment again maybe dispel the notion that might

be out there that somehow if you are making $34,000 a year you

are going to be able to afford health insurance, if you would comment on that?

Ms. MOLINA. Well yes, $34,000 may sound like it is a good

amount of money but when you have to pay for like myself I just

finished paying $5,500 for braces for my first child and now Joseph

also needs them and so that is going to cost me another $5,500.

School lunches, I pay $70 a month for school lunches. And I will

tell you what, there is so much more that we are paying out. Not

to mention our every day costs, bills. And then too, I want to say

something that I did not say is that SCHIP works. It is a great program. We cannot afford private health insurance. This program

works.

Mr. PALLONE. Mrs. Mingledorff?

Ms. MINGLEDORFF. I have thought about it on several occasions

as to my difficulty in applying for Medicaid, SCHIP, and everything

throughout our time period getting State support health insurance.

There are so many things that are involved in calculating what

35

your poverty level is and why you do or do not qualify. For instance

in my family, we have a car. We pay $250 a month as our car payment. That is $250 that is coming out of my family’s income but

it is not taken into account as to my family’s income. All sorts of

things like that, rent, everything else that goes into what you pay

every month just to survive is not taken into account. They look at

your income. And if your income is $34,000, then it does not matter

if every month you are paying $7,000 of bills, you still do not qualify.

Mr. PALLONE. All right, thank you, I appreciate your comments.

Now one of the things I am also concerned about is the adequacy

of the health insurance coverage that children receive. For example, a family’s employer sponsored coverage might not be the best

place for a child if it does not cover the benefits the child needs or

imposes unaffordable cost sharing or deductibles. We know that is

often the case. So I was going to ask Dr. Lambrew if you could

please comment on Medicaid and SCHIP and the adequacy and affordability of benefits in those programs.

Ms. LAMBREW. Sure. And I think I need to start with Medicaid

because Medicaid is the older program and the program that frankly covers most of the children that we have. And I think that the

statistics are about four times as many children are enrolled, insured by Medicaid.

Mr. PALLONE. Good point.

Ms. LAMBREW. And since the program began there was basically

a provision that said that for children who get screened and diagnosed with a disease they get the care that they need, that is medically necessary. This has been proven over time through evaluation

after evaluation as effective and insuring that low income children

have the types of benefits they need.

With SCHIP which is for higher income population, there are

benefit standards and these standards are linked to things like the

Federal Employees Health Benefit Package, the State Employees

Health Benefit Package which are relatively generous in employer’s

scheme of things. Studies have shown that special needs children

do not really work well or, excuse me, do not necessarily get what

they need through SCHIP, through these benefit packages. There

is a secretarial approved package which has been used by some

States for fairly high cost sharing plans and with the Deficit Reduction Act a few years ago there are question marks about exactly

what the strength is in terms of our Medicaid benefit package as

well.

So the short answer is that the programs do well, they strive to

do well but in recent years we have seen erosion in the types of

benefits that these children have. And we do know that for any low

income families, you have heard these ladies talk about the cost

sharing associated with illness could be a barrier even if they are

covered by these programs.

Mr. PALLONE. OK. Just quickly, a comment on the fact that children are more likely to have coverage when their parents also have

coverage because I know this is a big issue.

Ms. LAMBREW. The statistics are interesting because what we

know is that if a child, the parent is insured, the child is more likely to be insured and vice versa. We know that families come toVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
36

gether so there is a real pattern to that. We also know that children whose parents are insured are more likely to get access to

care. The parents are more in tune with the healthcare system. But

I think some of the statistics that have come out recently are pretty shocking. I think that we know that of the children who are insured through the CHIP, Children’s Health Insurance Program, the

vast majority of them do not have parents who themselves are insured. It is not like we are seeing lots of families who have the parents in employer based coverage and their children SCHIP. In fact,

a study that came out from the Urban Institute just last week

found that of the children in SCHIP, two-thirds of their parents,

two-thirds of those children’s parents do not have employer based

coverage. So only one-third of the parents of these SCHIP children

have employer based coverage. And when you look at Medicaid, it

is basically only 10 percent. So we really do not see kind of the

splitting of families which means the best way to get these children

may be getting their parents because then you really can get the

full family deal.

Mr. PALLONE. Thank you.

I yield to the gentleman from Georgia, the ranking member.

Mr. DEAL. Thank you, Mr. Chairman.

Let me follow up on that because I think we just heard two conflicting statistical statements about the uninsured children and

their availability of insurance through the private sector because I

wrote down that Mr. Peterson said that 42 percent of uninsured

children have access to private insurance. Was that what you said?

Does that conflict with what Dr. Lambrew just said?

Mr. PETERSON. I think she was talking about something different. She was talking about SCHIP enrollees and their parents

and I was talking about uninsured children all together.

Mr. DEAL. I see the total picture?

Mr. PETERSON. Yes. But it is still the case. Really it depends on

one’s perspective is this one-third of SCHIP kids who have a parent

who is enrolled in coverage she said it is not a lot. I bet Nina would

say it is so, it is just kind of a definitional issue at that point.

Mr. DEAL. And back to the point that you made early in your testimony, Mr. Peterson is that as we have seen the number of uninsured children drop, we have likewise seen the number of insured

children under private plans likewise drop. Is that right?

Mr. PETERSON. That is correct.

Mr. DEAL. What do you make of that correlation?

Mr. PETERSON. Again, it is very hard to say because you do not

know what would occur in the absence of that public coverage and

so the most recent estimates I think Nina talked about said that

for every 10 percent increase in public coverage there is a 60 percent decline in private coverage. But that assumes that those are

linked all the way and it is just not clear from our perspective that

you can make that link. The estimates vary widely as I say. Some

say there is no link. As the private coverages drop and public has

expanded, there is no link from that and that those kids would

likely have lost coverage anyway.

Mr. DEAL. Ms. Owcharenko that is what you were talking about

when you said the 60 percent crowd out factor. Elaborate on what

you mean by the crowd out factor just a little more.

37

Ms. OWCHARENKO. Well as was discussed, the idea that as public

programs have expanded, eligibility up the income scale, the private, the number of individuals, families actually not just individuals, it is actually the families is what the study looked at, not the

individual but the impact it had on the family had seen a decline

of about 60 percent. So I think that one of the issues is looking at

the number between when we are looking at individuals between

200 percent of poverty, 300 where this becomes far more critical.

I think that we need to look at alternatives instead of either or is

there some way of kind of blending the two together. So you do not

have the cliff effects that I think was described earlier where it is

one dollar more and you are no longer part of the program, to find

ways of somehow blending this, to try to create a more seamless

system between the public and private sector.

Mr. DEAL. And one of your suggestions I believe was that we

allow some of the say SCHIP funding to be used to buy into a privately available employer plan. Is that right?

Ms. OWCHARENKO. Yes. And I would like to elaborate on that because many times the term premium assistance is used. I would actually take it further because as was noted, a premium does not

take into consideration cost sharing requirements. And so having

a simple stipend given for the child for dependent coverage could

I think also cover things besides the premium. If you have an employer with a higher deductible, then the additional dollars that

they are not spending on the premium could be used to help with

cost sharing requirements with meeting the deductible, et cetera.

Mr. DEAL. One of the problems I think we have with the way

State’s regulate insurance at the State level is that some States

have huge mandates of what an insurance policy must cover and

it drives the cost of that insurance up in that State. Many have

proposed and we have in fact voted on during the last Congress a

proposal in this committee that dealt with the ability of a person

or an employer to buy a policy from another State if it provided a

benefit that was acceptable but at a cheaper price and it was affordable to them.

Now we have great inequity in your comment about the tax

issues relating to health insurance is certainly an appropriate one.

Many of the proposals are that if employers, large employers are

going to be able to deduct their cost of health insurance in a group

plan, then the same benefits should be extended to the private family et cetera because in effect we are squeezing the balloon and it

is coming out in the pricing for the small policy units. Another proposal of course is the ability that we pass in this House a couple

of times I think and that is of small businesses to be able to pool

together so that they could buy more affordable private insurance

plans.

Very quickly, Ms. Owcharenko, would you comment briefly about

those kinds of proposals?

Ms. OWCHARENKO. Sure. I do think that tax equity is very important. I think that it was noted there are people that do not have

employer based coverage and do not qualify for the public programs

who get no tax benefit, no assistance whatsoever. So fixing the Tax

Code to allow individuals to receive a benefit, a tax benefit for purchasing private insurance I think is critical. However, it is not exVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
38

clusive. I think ideas as you mentioned allowing individuals themselves to decide the type of policy and where they want to buy their

health insurance from, I think teams up very nicely with changing

the Tax Code. So that if you are in a State where you find it

unaffordable but you can find coverage in a State, a neighboring

State would make a lot of sense to say well gosh there is a policy

there that I could afford at least to have catastrophic coverage. It

is critical to make sure that we are trying to provide more options

that are more affordable for in some cases with these families to

simply protect them from a catastrophic illness when they are hit

with cancer, or some sort of an illness that costs them a lot of

money. At least then there is some sort of a catastrophic backdrop.

And it gives the individual the choice. It is not a mandate on the

individual one way or the other. If they are happy in the State that

they have the coverage, they can keep it.

Mr. DEAL. Thank you.

Mr. PALLONE. Thank you.

Mr. Green for questions.

Mr. GREEN. Thank you, Mr. Chairman.

It is not on my line of questions but I would love to have the debate on mandated benefits. I have served in the legislative body for

many years in the State legislature. In 1973, the first mandated

benefit we voted on was newborn infant coverage. The insurance

policy did not cover newborn infants for the first seven to 21 days

depending on the State. Now we can list all sorts of crazy things

on mandated benefits but there is also a reason for having State

regulations. And that is why going from if I am at Houston, Texas

and want to buy a policy in Louisiana the State Insurance Commission that regulates health insurance in Texas has no authority over

that insurance policy. So it is great to talk about it in Washington

but until we, if we want to take over health insurance even what

the State does and I do not think either Republicans or Democrats

want to do that yet, but to overrule State mandates, let us fight

that battle at the State because that is where they are the ones

that are responsible for it.

Mr. Peterson, in your testimony you talked about on page 3 for

example the private coverage has not changed significantly between predominately white children or black children because of

SCHIPS but it did change among Hispanics, decline in private coverage was large in 1996 and 2006. Did you find any reason for that

in your work?

Mr. PETERSON. Yes, I have to talk to the folks at the Agency for

Healthcare Research and Quality who had put all that information

together to see because there are other—I do not want to use a statistical term, there are other factors that are going on such as the

jobs that are available that those folks may have access to so there

are a number of things that could be at play here and I can ask

them to follow up with you.

Mr. GREEN. I know in person experience in our district because

we have a 65 percent Hispanic population and of course the children’s population is probably 80 percent is that often times employer based coverage, they may cover the employee but they do

not cover the family. And they do not make enough to pay for the

39

family even though have an option to do that. At least SCHIPS

they can afford it.

You said in your statement and I want to reiterate it on page 6,

importance that you have the children’s healthcare coverage but it

is also the relationship with a physician that is so important and

that is what SCHIPS brings to the table. And I will give you an

example. I have a somewhat suburban district but it is actually

urban. And in the late 1990’s we were so happy getting a public

health clinic in our area because my school superintendent said in

a study in their schools that 80 percent of the children their predominate healthcare provider was the school nurse, so that relationship has to be there somehow and the public health system

through Medicaid or but also through the SCHIPS Program.

And I also like your statement about the need for outreach. I

know often times individual States do not do the outreach and I

think the testimony from a lot of the panel today was that the reason we need the coverage, we can cover more children and we have

to do that outreach to parents so they know this is available to

them.

But now let me get to my other questions. I am concerned about

the increasing barriers to enrollment in CHIPS and I will give an

example. In Texas, you heard my statement about we lost a number of children after 2003 because of enrollment barriers and I

know the sixth month coverage period is overly burdensome and I

think contributed like 200,000 loss of children under CHIPS in

Texas. And I understand Texas was one of nine States that have

the sixth month renewal requirement whereas other States have 12

months. Doctor Lambrew, can you speak to the benefit of the 12

months coverage for continued enrollment in general?

Ms. LAMBREW. Sure. There is lots of good evidence that there are

two reasons why it helps. Number 1 is that it is a reduced burden

both on families and States to have the child come in, only every

once every year rather than every 6 months to do this. It is clearly

easier. We also know from——

Mr. GREEN. And excuse me for interrupting but that also means

they do not have to stand in line but once a year in the huge lines

at some of these agencies.

Ms. LAMBREW. Exactly, if there is a required in-person interview.

Some States have moved to a mail in application which is a little

bit harder with some of the citizenship documentation rules that

have come into effect but that is another way to simplify things.

But that is right we did do a Federal evaluation of SCHIP and

what we found was that when children leave the program they are

not generally going to private health insurance. Only about 14 percent gain private coverage, about 34 percent return to Medicaid,

and then 48 percent become uninsured. So we know if we can keep

these children on for a longer period of time, then we are keeping

these children insured for a longer period of time.

Mr. GREEN. OK. Mr. Chairman, one last question in my 10 seconds I have.

Dr. Berkelhamer, the Deficit Reduction Act and I had mentioned

this in my opening statement, the number of changes in Medicaid

and I am concerned about the citizenship documentation and my

example a child born in our country in a hospital in the United

40

States is considered a citizen and for them not to be immediately

established for Medicaid coverage when they are born here, to wait

for their documentation for their certified copy of their birth certificate, does the American Pediatric Society have——

Dr. BERKELHAMER. Penny wise and dollar foolish and you are

setting up a situation where children will end up not getting enrolled in a timely manner. It will show up when a disease is further along. It will end up in an emergency room or a hospital. Before the Deficit Reduction Act, mothers who went into labor who

were the economic eligibility level were entitled to emergency Medicaid. When their babies were born, they were automatically as you

pointed out in your statement enrolled for the first year of their

life. That does not happen anymore. The way it is being implemented now, the family has to provide documentation and go

through an enrollment process. And it really is putting an impediment in front of people in terms of getting them enrolled in a timely fashion. It is really a problem in the Deficit Reduction Act that

needs to be addressed and needs to be corrected. And I would urge

all of you to do it.

And if I have just a moment, there has been some discussion

here about private versus public but I also think it is extraordinarily important when you think about the interface between the

two that every child as I mentioned needs a comprehensive benefit

package. The benefits the children need are different than the benefits that adults need. And being protected against catastrophic

loss is extraordinarily important but it is not as important in the

long run as an isolated thing without looking at immunizations,

preventative care, well-child care, and all of the things it is going

to take for us to assure that we have a group of children that are

growing up and are healthy. And it is a good investment. You may

think this program is expensive, it is cheap in the long run, it really is. And every dollar you spend on this program is going to come

back in multiples by having a healthy workforce 15, 20 years from

now.

Mr. GREEN. Mr. Chairman, I know that is something I found

from our community based clinics. They get those children on those

immunization schedules and thank you.

Mr. PALLONE. Thank you.

Mr. Sullivan?

Mr. SULLIVAN. Thank you, Mr. Chairman.

I have got a couple of questions I wrote down by listening. I

guess my first one would be to Ms. Owcharenko. You were talking

earlier about the segment, this large segment of uninsured children

are from the middle and upper class and what do you think the

best way, what is the best way to get them insurance? What would

change their behavior or whatever.

Ms. OWCHARENKO. Well it is the largest growing portion of the

uninsured. Meaning it is not necessarily the largest portion, it is

still the largest portion our lower income families but the largest

growing is in the middle income. And to those I think that the concepts that I have talked about such as reforming the tax treatment

of health insurance to give families, middle and upper income families who may not have employer based coverage maybe they are

self-employed and they just cover themselves or they just decide

41

that they would rather deal with that. And I think that there is

an importance of stressing to families that coverage is important

to have. And I think that is something the entire panel agrees that

going without healthcare coverage is really rolling the dice and so

providing incentives and tax incentives work very well in a lot of

these income groups to encourage them to purchase coverage for

themselves, as well as, for their children.

Mr. SULLIVAN. And you also hear people talk about these catastrophic policies and I talked to some people that tried to get some

of those and they are pretty expensive really. They are not as

cheap as one might think. Why do you think that is?

Ms. OWCHARENKO. Well catastrophic, I would like to point that

catastrophic policies, the high deductible options are just one type

of health insurance options that are out there. They are certainly

seen as kind of the extreme of coverage options. In some faces it

is not as comprehensive and up front first dollar coverage as others. And what we see and that is a common factor that we have

seen in some individuals facing just as equally as high of cost for

a high deductible as they would for a traditional PPO, et cetera.

Mr. SULLIVAN. Right.

Ms. OWCHARENKO. And that tends to relate to State regulation

as was earlier discussed. State regulation really does, is an interesting piece that plays a role in the affordability of coverage for individuals.

Mr. SULLIVAN. Well also that made me think of something else

on the mandates. Now Congressman Green mentioned some mandates and I agree. Well he mentioned I think it should be mandated but what do you see as mandates that should not be in

place? Maybe New Jersey for example, I guess that is the reason

why it is high there.

Ms. OWCHARENKO. Well mandates themselves alone are not the

biggest problem.

Mr. SULLIVAN. What mandate would you say you have seen in

a policy at a State that is not, you do not think should be there?

Ms. OWCHARENKO. Off the benefit mandate, probably the largest

cost driver would be the combination of guarantee issue and community rating. Pure community rating which means if you are 18

and you are 64, you pay the same price for health insurance. That

really crowds out a lot of the market for younger and healthier individuals. So I think the combination of that guarantee issue with

community rating is probably the largest State regulation cost factor for the cost of health insurance.

Mr. SULLIVAN. What do you think of mental health parity?

Ms. OWCHARENKO. I think some States have added it. It certainly

is one of the largest cost drivers in the mandate benefit analysis

that has been done. It is larger than other additional benefits one

on top of the other. It is one of the larger ones.

Mr. SULLIVAN. Do you think mental health benefit is a very expensive benefit?

Ms. OWCHARENKO. It does add to the cost of the premium compared to other benefits that are added.

Mr. SULLIVAN. Because I have actually seen studies where it

saved money because——

42

Ms. OWCHARENKO. Well yes, if you looked at a more dynamic system I guess you could look at all benefits. In the larger term does

it help people keep them from going to the hospitals, et cetera. So

in the long——

Mr. SULLIVAN. I am also the coauthor of it so I am supportive

of mental health parity.

Ms. OWCHARENKO. Yes.

Mr. SULLIVAN. Mr. Peterson you might be able to answer this the

best. What is the differential between insuring a child and an adult

and can you explain that, the costs? You were mentioning a little

bit of that at the wellness, all that, the cost——

Mr. PETERSON. Well I will just say first that we have done analyses of—for some of our CHIP projections and on average adults are

60 percent more expensive than children so I will just say that. If

you would not mind, I could comment on the mandated benefits.

Mr. SULLIVAN. OK.

Mr. PETERSON. Maryland is recognized as having the most mandated benefits and they themselves have estimated that that adds

15 percent to the premium.

Mr. SULLIVAN. But what benefits would that be? What mandated

benefits——

Mr. PETERSON. Well there is mental health parity. They have

others as well that——

Mr. SULLIVAN. Why do you say mental parity? Why does that

cost so much? If you look at a dynamic effect of it.

Mr. PETERSON. Well that is true. And that is actually one of the

points that the Maryland Healthcare Commissioners made regarding their own mandated benefits. They said look, the total cost of

these benefits including maternal care all of that, if you look at

that portion it is 15 percent. But most of these plans just looking

at the issue in a slightly different light, most of these plans would

cover these benefits anyway. So if you actually look at the additional impact it is 2 percent. So again, it is one of these issues of

you can take into account different things and come up with different numbers in terms of the real impact of these mandated benefits.

Mr. SULLIVAN. Do these have drug and alcohol in them?

Mr. PETERSON. That is part of the mental health parity often.

Mr. SULLIVAN. OK, Doctor?

Dr. BERKELHAMER. I would want to comment that in the Medicaid Program were half of the enrollees in the Medicaid Program

nationally are children. They represent 25 percent of the cost of the

total program. They are inexpensive. Even with comprehensive

benefit plans like the Medicaid Program, they are very inexpensive

to cover. I would also point out to you that mental health is a

major problem that needs to be addressed and approximately a

third of all the visits to a doctor’s office, a pediatrician’s office is

related to a problem relating to mental health.

Mr. SULLIVAN. That is good, I agree.

Well thank you very much.

Mr. PALLONE. Thank you.

Ms. DeGette?

Ms. DEGETTE. Thank you, Mr. Chairman.

43

Ms. Mingledorff, I wanted to ask you, Ms. Owcharenko talked

about these catastrophic healthcare policies that could be low cost.

This was a legislative proposal in the last Congress so people could

go to other States and buy these low cost catastrophic policies and

they would be low cost because they would not have a lot of mandatory coverages and a lot of other reasons. My question to you is

once if you took that job and you had lost your SCHIP eligibility

for your kid, would one of those type of policies have helped you

with coverage for your son’s myriad of disabilities?

Ms. MINGLEDORFF. I do not necessarily know all that is involved

in catastrophic coverage but I can just speak from everything that

we have experience with him. It has gone from the range of just

basic visits and for him a routine, our routine visits do not just include immunizations, well-child visits, they include occupational

therapy, speech therapy, follows up with neurology and——

Ms. DEGETTE. Did you investigate how much it would have cost

you to purchase a health insurance policy that would have covered

all of those things for him?

Ms. MINGLEDORFF. On a few different occasions we did and——

Ms. DEGETTE. And what was the range?

Ms. MINGLEDORFF. The range privately I think was between

$500 and $700 a month.

Ms. DEGETTE. And what would your income have been if you

would have taken that job?

Ms. MINGLEDORFF. It was a part-time position at the time I think

it would have been maybe $1,500 a month.

Ms. DEGETTE. So at least a third of your income. Ms. Molina, if

you had been able to purchase a catastrophic insurance policy, do

you have any idea whether that would have covered your kids wellchild visits or like last week when they had the flu if they had to

go to the doctor?

Ms. MOLINA. I do not know.

Ms. DEGETTE. OK. Did you investigate purchasing a health insurance policy?

Ms. MOLINA. Yes.

Ms. DEGETTE. And how much would that have cost you?

Ms. MOLINA. It would cost between $100 and $150 per child per

month.

Ms. DEGETTE. So that would be roughly $200 to $300 a month.

Ms. MOLINA. Yes, $200 to $300.

Ms. DEGETTE. If you do not mind if I ask, what was your income

at that time per month?

Ms. MOLINA. It was slightly above the 200 percent.

Ms. DEGETTE. So that still would have been what percentage of

your income then?

Ms. MOLINA. I would say probably—you are making me do math.

Ms. DEGETTE. It would have been too much for you to afford, I

guess.

Ms. MOLINA. Absolutely.

Ms. DEGETTE. OK. Dr. Lambrew, I wanted to ask you a couple

of questions. One of them is that we heard some testimony earlier

about middle and upper income families who do not purchase

health insurance for their children. Is that the largest reason why

children are not insured in this country is because higher income

44

folks are not purchasing insurance for their kids or is the problem

of the lower middle class and the working poor not being able to

afford insurance?

Ms. LAMBREW. Nina did say this in her testimony. It is clearly

a low and middle income problem. Two-thirds of the uninsured

have income below this 200 percent of poverty threshold and it

really is that concentration. But I do want to go back to this larger

point which is the reason why we have a fast growing group among

middle and high income people is because we are talking about this

program in the context of an eroding employer based coverage systems.

Ms. DEGETTE. Right.

Ms. LAMBREW. The percentage of firms offering coverage has

dropped from 69 percent to 61 percent last year. We have uninsured adults growing very rapidly. So I think that we have to really be thinking of the big picture here because at the same time as

CHIP has stabilized and reduced coverage for children and Medicaid but we also have this kind of larger problem going on.

Ms. DEGETTE. Do you have any ideas of how we could address

that larger problem as it respects children?

Ms. LAMBREW. It is actually quite hard to think through. We

could certainly do what the State of Illinois has discussed which is

try to open up the program. I guess CHIP to have higher income

families buy into it. You could consider a larger health reform proposal because as we said earlier children come in families and typically their parents are also uninsured when they are uninsured.

The truth of the matter is I think we need to be talking about covering all Americans at some point because trying to solve the problem through kind of programs like SCHIP presents a challenge.

There is a bigger problem going on out there.

Ms. DEGETTE. Right. Well in fact, I just said to Mr. Green listening to the testimony one thing that Mr. Chairman this committee

might think about is the idea of establishing the SCHIP guidelines

but then also allowing parents with incomes higher than that level

to purchase, to buy into SCHIP. It has been so successful so that

is something I think we should consider as we look at reauthorizing this.

Mr. PALLONE. If I could just comment. I did not want to use up

your time. We are, we will have additional hearings. As I said, we

are going to have another one most likely March 1, the second half

of this SCHIP hearing. But we also will have other hearings on the

issue of the uninsured not just for kids but the larger population

as well as the employer based system and what needs to be done

there.

I yield to the gentlewoman from California, Mrs. Capps.

Mrs. CAPPS. Thank you, Mr. Chairman.

And I want to use my short time to focus on our two star witnesses, our moms. But I first want to say thank you to Dr.

Berkelhamer because we could give you the whole time, this is

your subject and I thought you were so concise in your response to

my colleague, Mr. Green on talking about how we get paid back as

a society in spades by healthy employers if we cover them as kids.

This is just so important that we learn this lesson and also your

comments to the minority ranking member on comprehensive covVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
45

erage including mental health. Pediatricians are psychiatrists most

of the time, I believe in my practice as a school nurse. And also

I wanted to refute or not refute but add to Mr. Green’s saying that

too many kids get their primary care from school nurses. Having

been one, I know that it is an endangered species in a lot of school

districts and woe to those who think they are going to get really

professional help in the school health office and I wish it were not

so.

I did want to before I get to the moms, Dr. Lambrew, our chairman asked you about the importance of covering adults and you

said and there is a growing amount of material of having family

members covered in order to ensure that the kids get good coverage. And without going on there because I do want to get to the

moms, would you just mention briefly the importance of waivers

and should we be dealing with this and letting States waive into

that kind of coverage.

Ms. LAMBREW. Sure. In Medicaid already even without SCHIP

there was an option to cover low income parents and the sad truth

is that right now I think the percentage of poverty that we cover

parents at nationwide is about 63, 65 percent of the poverty level.

So we have options today that some States have not used. What

SCHIP has gone and proven is that if the Federal Government

comes in with a higher matching rate, States will follow. And the

truth is I think waivers help States get access to that higher enhanced matching rate in SCHIP but we do not have to have SCHIP

waivers to basically change the law and allow States the kind of

financial incentives to cover parents. The truth is it is just a matter

of priorities.

Mrs. CAPPS. OK, thank you.

Now I really am impressed that both of you moms would take

the time to come here. It is not easy because you have day jobs,

you have big responsibilities we can see with the little ones but

your teenagers are every bit as challenging as the two little ones

all of us who have had teenagers in our families know that. And

just in the remaining time, and my question was you did not

choose the private sector, maybe you could not but you did not

have time to examine all the policies out there. Maybe just each

of you take a minute and tell us again what we have not heard yet.

Why you think it was so important for you to come and tell us

about the importance of SCHIP or what the program meant for

you. I will start with you, Ms Molina.

Ms. MOLINA. Well again, I want to say that when my children

were on this program, my son and I actually before I came out, we

sat on the bed and we made a list of all the times that I took them

to the emergency room. Both of my kids really sprained their ankles, they both had to be on crutches. My son broke his arm by falling off the slide at school.

Mrs. CAPPS. Very common childhood things.

Ms. MOLINA. And my daughter had a huge third degree burn on

her leg and every time that we would go to the hospital they got

excellent care being on SCHIP.

Mrs. CAPPS. Yes.

Ms. MOLINA. And, yes, it is heartbreaking for me to know that

my kids are not enrolled now but I am here because I think I repVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
46

resent the tens of thousands of parents whose children are either

not insured or are insured with the new SCHIP and it is just so

important for me to come and say this program works. We need to

reauthorize it. We need to fully fund it so we know that all the

children are covered and we are not going to lose children as the

years go by.

Mrs. CAPPS. That was beautiful. And Ms. Mingledorff to you as

well if you want to add anything?

Ms. MINGLEDORFF. Yes, absolutely. For me and my family it has

been just imperative to be able to have Medicaid and SCHIP to

support my family’s health needs. As a volunteer and Ambassador

Family for the March of Dimes, they know well of our situations

that we have gone though in the last 4 and 5 years. And they have

not been the common ailments of a 5-year-old child. He was admitted to the hospital when he was 9 months old after spending 76

days in the NICU after he was born. After that when he was 2-

years-old he stopped eating and had to be admitted to the pediatric

unit at our hospital for over a month and went home on a feeding

tube. After that he had every type of equipment that we needed to

just support his living. And probably seven different medications,

occupational therapy, speech therapy, every specialist under the

sun to just follow him and make sure he was doing OK. My whole

life was consumed by his every day need and every day his medication and therapies were required to keep him living. And the only

way that we were able to do that and provide him with the optimal

care was through Medicaid and SCHIP. And if we did not have

that, I am positive that he would not be here today.

Mrs. CAPPS. Thank you. You have both, all of you have helped

us as we begin to reauthorize.

Thank you.

Mr. PALLONE. Thank you, Mrs. Capps.

Ms. Schakowsky.

Ms. SCHAKOWSKY. Thank you, Mr. Chairman.

Let me just talk a minute since it came up about the dynamic

budgeting, thinking about the kind of long-term savings that we

will have that when we talk about insuring our children we should

be thinking not so much about consuming but investing. And if

there were only a way to figure out how we could calculate those

costs in a much more realistic and sensible way about how it would

actually save money down the road. I think we might take another

look at our priorities and make some different decisions about what

we do.

We have heard about the issue of crowd out and the perhaps

causal relationship and perhaps coincidence of the relationship of

public and private health insurance coverage. But what I am wondering is if there is any evidence base, I want to ask Dr. Lambrew

over the past 10 years of SCHIP and Medicaid have we found a

crowd out problem? For example, employer sponsored insurance

coverage has it disappeared in New Jersey where up to 350 percent

of poverty children are covered? What has been the actual history?

Ms. LAMBREW. Well the good news is that you all in your wisdom

funded an evaluation of SCHIP that was completed a couple of

years ago. And in that evaluation they certainly looked at this

question because it is a critical question as you think about public

47

program expansions. And what they found was that of the recently

enrolled children in the program, 43 percent had been previously

uninsured, 29 percent had been coming into the program from

Medicaid, a family who again the mother went back to work or for

some other reason had too much income for Medicaid, and about

28 percent had previously had private coverage. Of that 28 percent,

a quarter of those parents said they could not afford that coverage,

it was straining their family income so this is an important move

for their economic security. So only a small fraction of the children

in the program are coming from some insured situation and as the

Federal evaluators say in their own words, the program did not

lead to widespread substitution of SCHIP for employer coverage,

even though almost all families enrolling their children had at

least one working parent. So I think that we have to separate out

the larger context of the eroding employer based system from what

is actually happening with SCHIP and for low income families they

are also experiencing the erosion in private coverage but the evaluators are not finding that a significant percentage of those kids

coming into the program are coming in from private coverage.

Ms. SCHAKOWSKY. And you wanted to say something, Mr. Peterson?

Mr. PETERSON. You just mentioned New Jersey and I happen to

be looking at their numbers when I was sitting back there and I

was thinking about that same issue well what is there rate of public coverage among children. And actually the rate of public children, public coverage in New Jersey is the lowest in the country

for children and they have one of the highest employer sponsored

coverage in the country so again there are other factors at play.

New Jersey has a very high income as a State so one needs to control for all of that and take all that into consideration but just in

specific answer to your question that is what the numbers were.

Ms. SCHAKOWSKY. And I wanted to ask Nina if I could so I do

not even try it. When you talk about employer based coverage, I

wonder what that means anymore because so many of the costs

have actually shifted to the—maybe the employer offers it but the

employee has to pay the bulk of that. And in fact, Dr. Lambrew you

had in your testimony in 2006 the average premium for an employer based family insurance policy $11,480 was more than the

full-time full year earnings of a minimum wage worker. So when

we talk about employer based coverages did you take into consideration that it is not realistic for people who make relatively low incomes to actually purchase those employer based, employer offered

insurance. Did you consider that when you talked about crowd out

and all those——

Ms. OWCHARENKO. Well the study was not mine on crowd out. I

will be happy to share it with the committee. It was, I was just

using it as an illustration. But when looking at employer based

coverage, there are a variety of ways as I mentioned of leveraging

those SCHIP dollars to help with the dependent coverage share of

the employer premiums and cost sharing requirements. So the concept is how do we pull the existing resources together and allow

the family to decide whether they would rather have their child in

SCHIP and they remain uninsured or they remain on the employer

based policy or say well I would rather take my SCHIP funds and

48

enroll the child in my family policy through the place of work. At

least then we are giving the families some greater choices and

flexibility. We talk about State flexibility and that is great but

there needs to be some I think attention to also giving families

some greater flexibility in making the choices of where they get

their coverage and just leveraging the existing sources of funding

better there to help them, help those families who find coverage

unaffordable.

Ms. SCHAKOWSKY. Let me just ask another question. Dr.

Lambrew, you noted that an estimated 18,000 adults die each year

because they lack health insurance. Is there any estimated rate for

children?

Ms. LAMBREW. The Institute of Medicine who did that review a

few years ago just focused on adults. We do not have that for children. But I think it is partly what are friend the doctor here has

said which it is not necessarily mortality is lifelong disability that

often is the consequence of children not having health insurance.

It is the sick child having some sort of disability at school, learning

problem, growing into a less productive adult. That is kind of the

long-term chronic problem. And especially in this century where

chronic illnesses are new, a new problem in health system. It is especially important that we get to children early with wellness and

preventative care.

Ms. SCHAKOWSKY. Mr. Chairman, could I ask one short question?

Mr. PALLONE. If you do not mind, we are going to do a second

round so we will get back to you.

Mr. Burgess.

Mr. BURGESS. Thank you, Mr. Chairman. I apologize for having

been out of the room for so much of the hearing and bear with me

if I cover ground that has been covered before but I am sure that

the country will benefit from hearing it again.

Mr. Peterson, if I could ask you is there a difference in the cost

of insuring a child versus insuring an adult?

Mr. PETERSON. Yes. As I said just among SCHIP, out analysis

was 60 percent, adults are 60 percent more expensive than children

on average. There is huge variation by State as well so, that is just

the average overall but other States might differ. But, the other

thing to take into account which we could provide you with numbers is how that varies for adults and children overall. As the doctor had said children are much less expensive to cover.

Mr. BURGESS. What, if you do not mind and I do not mean to ask

you to name names, but can you give us an example of a State that

is higher in cost and a State that is, what would be an example

of lower in cost?

Mr. PETERSON. In terms of the SCHIP?

Mr. BURGESS. Yes.

Mr. PETERSON. That has not been broken down.

Mr. BURGESS. But in general for insurance coverage is does it

cost more to insure someone who lives in the Northeast than it

does in the Midwest?

Mr. PETERSON. In SCHIP or overall?

Mr. BURGESS. Overall.

Mr. PETERSON. Yes, that is the case.

Mr. BURGESS. And what is the reason for that discrepancy?

49

Mr. PETERSON. There is the underlying cost of care and there are

different patterns of utilization in terms of how much care people

use. And there was an analysis done by the Agency for Healthcare

Research and Quality that they found lower holding insurance constant in all these other things utilization was lower in a State like

Texas than in the New England area. And so that is controlling for

insurance and the different characteristics so fundamentally there

are just different uses of healthcare across the country. So utilization and price are both of those factors that then feed into the premiums.

Mr. BURGESS. Does that concept pose any barriers for if someone

wanted to discuss a single payer national system, would that in

itself be problematic, the different patterns of utilization across the

country?

Mr. PETERSON. Well I do not know about that in particular but

essentially and I had raised this in my written testimony this does

provide tensions even with SCHIP and Medicaid in terms of the

different ways that States are doing things with private health insurance as well.

Mr. BURGESS. And would those tensions be magnified if there

were say a payroll tax that provided coverage for a single payer

system throughout the country? Would my constituents in Texas be

covering Mr. Pallone’s constituents up in New Jersey?

Mr. PETERSON. Yes, I do not know.

Mr. BURGESS. I do not know either. I have a suspicion. What

about we always hear about mandates? We had a hearing in this

committee last year or 2 years ago that went on into the wee hours

of the morning discussing mandates. What, to what extent do mandates play a role in the cost of insurance?

Mr. PETERSON. I think Nina had mentioned before that mandates

are a relatively small portion of some of the State level variation

and a lot of it may be more attributable to other practices such as

rating requirements whereas New Jersey has people of all ages pay

the same rate and those are in response to different priorities. It

could be the case that in New Jersey their focus is on people who

are regular users of healthcare and so the priority is to try to make

sure that they can get access to health insurance but that necessarily means that premiums are going to be higher in a case like

that. And so these are State level decisions that have been made

depending on the priorities.

Mr. BURGESS. Anyone feel free to offer an opinion on this. I think

the statement was made when Ms. Schakowsky was asking the

question about the average cost of insurance premiums would be

over $11,000 a year. When you look at products that are available

on the Internet such as HSA products, high deductible products,

the last time I looked which albeit has been a couple of weeks ago

but I think the price is probably still fairly in the ballpark of being

current for a male 25 years of age, State of Texas, non-smoker a

$2,000 deductible, PPO policy with Blue Cross, Blue Shield would

be between the ranges of $55 to $66 a month, significantly less

than an $11,000 a year outlay. What is the reason there? Is it all

the high deductible or are there other factors that come into play?

Does the competition from being up on the Internet does that help

drive the price down?

50

Mr. PETERSON. Well the $11,000 number was for family coverage.

You are referring to single coverage so that is apples and oranges

there.

Mr. BURGESS. Give me a figure if anyone has it of what is a single coverage for that same male 25, non-smoker?

Mr. PETERSON. That is what I would say is $4,000.

Ms. LAMBREW. If I could just jump in for a second. I think that

we have to have, we need to think about three different types of

insurance, group employer insurance in which case this whole issue

of community rating and guarantee issue is not there because

every worker has access to the same plan for the same premium

and basically those plans are fairly generous and the benefit mandates normally apply to most self insured firms. There are small

businesses that are competing in the small group market in which

case some of these rules do play out. And then there is the nongroup individual market which is probably what you were looking

at. And I think that what we know is in the vast majority of the

States there is underwriting in that market. So that rate is probably good if you have a medical screen and a good health history.

It probably is not good if you have any sort of family history or

health issue. And so I think that we have to make sure that we

are comparing apples to apples so that same person might be paying a higher premium in an employer base coverage but they are

also getting different benefits. They are just different systems.

Mr. PETERSON. And the other thing regarding catastrophic coverage and the gentleman from Oklahoma who is here was noting

that he found that catastrophic coverage was not as inexpensive as

he expected it would be. And the reason for that generally that has

been found among analysts is that most of the healthcare costs

that are in the premium are for catastrophic coverage naturally

and it is for ladies like her that drive up the overall premium. Now

when you have people in a group and you have that spread out

that is fine. The issue is when you start doing in the non-group

market and if one then targets where a premium reflects ones own

health those become different. And so all of this begins to break

down and it is tough issues different States do it differently and

it is just really hard. But those are some of the issues at play.

Mr. PALLONE. We better——

Mr. BURGESS. Yes, Mr. Chairman, you have been indulging.

Mr. PALLONE. I was going to let you go on if you wanted to talk

about that single payroll tax proposal but——

Mr. BURGESS. I am merely giving you an opening.

Mr. PALLONE. Oh, I see, OK. Dr. Berkelhamer if you would like

to——

Dr. BERKELHAMER. I just have to respond to the line of questioning by saying there is I think a futility in going down the path of

a catastrophic insurance program for children and that the thing

that I have seen in my career and every pediatrician has seen in

their career is delay in treatment resulting in catastrophic lifelong

disability to a child. A child who has simple diarrhea that can be

managed in the doctor’s office that waits too many days and comes

to the emergency room profoundly dehydrated has brain damage,

never recovers again. The child whose had an earache whose mother has waited to take him to have the ears examined to get antiVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00054 Fmt 6633 Sfmt 6633 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
51

biotics who shows up with meningitis on the fifth or the sixth day

of illness because she has been fretting about spending the $100 for

the doctor’s office visit.

I think that when you look at this program, you have got to look

at what is the benefit package that is going to promote good child

health. And a catastrophic only approach in SCHIP or for children

is just not right. It is not going to get us where we need to go in

terms of assuring that kids get the services they need.

Mr. BURGESS. If I may, Mr. Chairman?

I think we have an obligation on this subcommittee to ask these

questions. And certainly in countries that have done, had a movement more toward the medical savings account, catastrophic coverage like South Africa, the experience has been just the opposite

of what you would suggest that there has not been that delay in

coverage so we are charged with yes, trying to extend a very valuable healthcare system to children but we are also required to be

good stewards of the taxpayer dollar and it simply in that spirit

that the line of questioning occurred.

Mr. PALLONE. Thank you, thank you both.

Mr. Engel.

Mr. ENGEL. Thank you, Mr. Chairman.

Before I ask my questions, I want to just say to Dr. Lambrew

that in my opening statement I mentioned asthma and talked

about my area, my district in Bronx, NY has one of the highest

prevalent rates of pediatric asthma nationwide and I just want to

say that I was very pleased in you testimony that you focused on

the importance of comprehensive care to children with chronic illnesses. So I want to just say that if I had more time I would ask

you a specific question on it.

And I want to thank Ms. Molina for illustrating how frightening

the lack of healthcare coverage can be. Parents obviously want to

care for their children as best as possible and should not have to

worry that a small raise might make their kids ineligible for coverage or that if their kids are unlucky enough to get sick their family’s scarce finances may be turned upside down. Ironically, we find

that with children’s healthcare and we find that with senior citizens as well when they qualify for a program they get a very small

cost of living increase following January and that cost of living increase knocks them out a program and they wind up paying much

more than their little increase was so I want to thank you for

pointing that out.

But Dr. Lambrew, I want to ask you, could you please comment

on the earlier discussion on premium assistance. Would this be

helpful for children on Medicaid and SCHIP?

Ms. LAMBREW. Sure. I am actually glad to have an opportunity

to answer this because we actually do have this option in SCHIP

today. It was built into the program a decade ago because I think

there was a lot of reflection on we want to make sure that this is

an option for families as Nina mentioned earlier. And if it is cost

effective for a State to purchase the premium and wrap around the

coverage in an employer based plan States can do so. We have had

a few very small number of States that have called this a success,

Rhode Island for example because this is a fairly small State has

been able to develop relationships with firms to make this happen.

52

But it is the exception rather than the rule. The States that have

tried to do this have found it very challenging to coordinate with

employers whose workers are coming in and out of the workforce

by definition because this is a low, more a transient workforce at

this income bracket trying to coordinate the benefits when those

benefits change every year has been quite of a challenge. So some

States like say Maine have actually tried to say can we figure out

how to have those small business buy into a group product in the

same way that the Medicaid people buy into Medicaid managed

care. So rather than trying to coordinate with hundreds of different

plans, try to figure out some pulling mechanism to allow the small

business to buy in and the State to supplement.

Mr. ENGEL. Thank you.

Let me ask you another question. I believe that tax credits will

not be very useful in reaching the uninsured children because most

of these children are in families of very modest means. So let me

ask you this. Medicaid and SCHIP have done a great job in reaching uninsured children. The statistics I have is more than one in

every four children in the U.S. is covered through one of these programs. But some organizations have put forward tax credit proposal as a way to reach uninsured children rather than I believe

on building up programs that we already know work. So I want to

hear your opinion about that. Do you think such proposals are an

effective way to reach this population? I happen to think not but

I would like to hear what you have to say.

Ms. LAMBREW. I like to say my colleagues agree with me. I think

most experts would agree that for a poor population, for a very low

income families tax credits are not an effective way to get people

covered. These are people who have little to no tax liability. They

cannot put up the premium and wait for a tax refund the next

year. We have some experience now with advanceable tax credits

but it does not work very smoothly. So I think for the low income

people who are the majority of our uninsured, a tax credit approach

will likely not be as effective as a Medicaid or an SCHIP expansion.

Mr. ENGEL. Thank you.

Following that, the President in his State of the Union suggested

a radical proposal which is eliminating the current tax deduction

for employer sponsored health coverage and replacing it with a

standard deduction for all families. Now obviously this is a bold

proposal but my concern is that its net effect will be to cause families who today have decent coverage through their employers to

lose that coverage and potentially not be able to replace it with coverage in the individual insurance market which we have problem

with. It is obviously a terribly flawed market. I would like you to

comment on that, too, Dr. Lambrew.

Ms. LAMBREW. Sure. I will do this briefly. For the first reason

that I just said, low income people are uninsured, have little tax

liability. They are not going to benefit that much from this proposal. Even the administration has admitted that. Second, the idea

of moving people to a non-group market without the types of regulation that ensure that they have access to an affordable product

means that there may be some or older workers or sicker people

who do not have the option even though they may have that tax

voucher. And third, I think there is this whole question mark about

53

what happens to the employer based system. It is eroding now.

Will this accelerate the reduction in employer coverage? I think a

fair amount of experts will say yes, that there is no longer a tax

break associated with the employer contributing to coverage, why

would employers do it? In which case, we are taking apart the

main source of health insurance for most Americans today. And

then there are economists like John Gruber of MIT who thinks that

this actually could cause an increase in the number of uninsured

Americans rather than a decrease which is what the administration projects.

Mr. ENGEL. Well thank you very much, Mr. Chairman.

Mr. PALLONE. Thank you, Mr. Engel.

And Mr. Waxman is next.

Mr. WAXMAN. Thank you, Mr. Chairman.

Dr. Berkelhamer, I was interested in your views about the impact of Medicaid on low income children because of the EPSDT Program. If these children receive all medically necessary services as

prescribed by their doctor, the EPSDT is very important to be able

to identify what their needs may be whether it is birth defects,

chronic illness, well-child care. Could you talk about what EPSTD

guarantees for low income children?

Dr. BERKELHAMER. Early Periodic Screening Diagnosis and

Treatment. The T is extraordinarily important. It does not do any

good to recognize something unless you are going to do something

about it. Congressman, thank you for asking that question. One of

the big concerns in the Deficit Reduction Act was the language that

said that EPSTD would be wrapped around in the Medicaid Program and now we have created great confusion. That is a bedrock

component that every child needs. Every child needs to be looked

at periodically, the diagnosed diseases early, and to do what we can

about them before they become more problems. I would remind all

of you that the EPSTD Program was created in the late 1960’s, I

think it was 1967. Karen is that right, 1967. Did you invent it? No,

OK. That it was created in 1967 and it was after the bad experiences we were having during the Vietnam Era where so many

young men could not pass their physical and they had chronic lifelong disabilities that would have been identified and corrected if

there was a program like EPSDT. And that was the major breakthrough idea that came up with this whole concept for EPSDT. And

I would say that quite frankly ever child deserves EPSDT whether

it be in the private sector or in the public sector that this is when

I keep talking about the benefit package designed for children,

EPSDT is at the core of that benefit package.

Mr. WAXMAN. And what would we expect in that regard in the

private insurance plans?

Dr. BERKELHAMER. I think that there needs to be just like I

heard Congressman Green talk about mandating newborn coverage, I think that we should not allow children to be in a situation

where the parents have an economic disincentive to find out what

is wrong with their kid early and that they make the corrected

measures that are necessary to care for them. Children need comprehensive care.

Mr. WAXMAN. SCHIP does not have that requirement. Would you

think that we ought to be requiring it under the——

54

Dr. BERKELHAMER. Well certainly those SCHIP Programs that

are leaning on the Medicaid Program and there should not be any

problem moving from Medicaid to SCHIP as you move up the economic ladder and you should not lose EPSDT as you move up in

those programs. I would also say I think it would be very reasonable quite frankly from my perspective if you would require of all

insurance programs for children that they have EPSDT benefits.

Mr. WAXMAN. But we are dealing now with the SCHIP and

would you recommend Congress consider adding EPSDT to SCHIP

for children to ensure that all their benefits packages are appropriately——

Dr. BERKELHAMER. I think that would be a very good idea, thank

you for asking me that.

Mr. WAXMAN. One of the aspects of the welfare reform legislation

passed in the 1990’s was to delay Medicaid coverage for legal immigrant children. I think few people realized we have got policies in

place that keep them from coverage for 5 years. Frequently because

of burdensome requirements it is extended even longer. There is no

logic for delaying health benefits to legal immigrant kids for 5

years except to punish them for their immigrant status. I wonder

if some of the panelists might like to comment, Dr. Berkelhamer,

would you comment on the effect on a child’s health of banning coverage? Does this many any sense?

Dr. BERKELHAMER. It just seems Draconian to me to do that to

a child. And I cannot understand why if a child is not physically

within our borders that we do not recognize the value in giving

that child medical care. And we have to wait 5 years and they have

a disability that could have been treated earlier and could have

mitigated some of the lifelong problems, I am absolutely certain we

are saving money by doing the right thing from the get go. And I

just think that we are much too hung up on holding children responsible for whatever the problems are that their parents have.

We have to recognize that these children are all of our responsibility and we have to do the right thing for them.

Mr. WAXMAN. Dr. Lambrew, do you have any comment on that?

Ms. LAMBREW. I would just add two things from a cold heartless

researcher’s perspective which is you know there is a public health

argument to be made here which is to the extent that we have children lacking immunizations, lacking health, basic health care and

a society where we are more worried about Avian flu and other infectious diseases. It is a public health threat. We have evidence

that areas we have high undocumented people have problems with

public health and lack of healthcare. And it is an economic issue.

These children may get care in the emergency rooms but we are

paying more for them there and they are sicker as we talked about

earlier and creating a bigger burden on society.

Mr. WAXMAN. OK, thank you.

Thank you, Mr. Chairman.

Mr. PALLONE. Thank you. I just wanted to thank all of you for

being here today. I thought this was very worthwhile and answering our questions really in a very concise and effective way.

As I mentioned, we are going to have the second panel which was

supposed to be tomorrow but for the unfortunate death of Congressman Norwood and we will most likely have that second panel

55

on March 1. I would also remind the members that you may submit

additional questions for the record to be answered by the relevant

witnesses so you may get some written questions. And the questions should be submitted to the committee clerk within the next

10 days and then the clerk will notify Members’ offices about the

procedures. And without objection, the meeting of the subcommittee is adjourned.

Thank you all.

[Whereupon, at 5:00 p.m., the subcommittee was adjourned.]

[Material submitted for inclusion in the record follows:]

TESTIMONY OF SUSAN MOLINA

Good afternoon. My name is Susan Molina and I am a working mother whose two

children understand exactly how important reliable health coverage is.

I am also committed to improving my community and serve as the Board Chair

for Metro Organization for People in Denver, Colorado. MOP is a grassroots, faithdriven organization that works to empower people around real issues that affect our

families and communities. MOP is part of the PICO National Network, which spans

1,000 religious congregations in 150 cities in 17 states.

I am here as a mother to speak on behalf of my two children Bernadette (age 14)

and Joseph (age 10). I am also speaking for the tens of thousands of parents in the

PICO network who lack coverage for their children.

Almost all uninsured children (83 percent) live in families where at least one parent works. I am a single mom who works. I am uninsured. In September my children lost their SCHIP coverage because my new job paid slightly more than 200 percent of poverty and that made my children ineligible.

It is an honor to be here and not something I would have ever expected. I was

married at the age of 17 and I had two children. My husband was a very abusive

man who walked out on us when my oldest was five. I worked very hard so that

I would not become a burden to my parents. Sometimes I worked two jobs.

When I became involved with the MOP organization, my life began to change. I

began to see that it’s OK to realize where you are and what you’ve been through

as long as you want to change where you’re going. MOP and PICO helped me to

earn my GED and I even took an accounting class at the university. Now I help

mentor others who are in similar situations I was in.

I say all that to say this: as a single mother who has worked to be where I am

now it’s hard to know that my kids don’t have health care. Somehow we are punished for bettering our lives.

When my daughter was 4 she needed a lot of dental work. I was working two

part-time jobs that paid $8–9 an hour and none of us had health coverage. I remember going to the welfare department and asking to enroll in Medicaid. I told them

I did not need welfare or food stamps or anything else, just help with the dental

work that my daughter needed. After I did the paper work the caseworker told me

I didn’t qualify unless I quit one of my jobs or had another baby.

When SCHIP became available, I was able to enroll my children in the Colorado

Child Health Plus Plan and get my children health coverage. And like most kids,

they needed it. While they were on SCHIP both my children sprained their ankles,

my son broke his arm and my daughter had a bad burn. Both received good care

that kept them from any permanent harm and allowed them to go back to school

and allowed me to go back to work.

I was not worried about how much these accidents were going to put us in debt.

I just knew they were going to get the care they needed.

All that changed when we lost our coverage in September, because my new job

paid slightly above the 200 percent cut off to qualify for SCHIP in Colorado.

We talk about 9 million uninsured children. Behind these numbers are real children who go to school, have accidents and get sick. And real parents like me, who

work hard to meet their families’ needs.

When insurance prices are outrageously high, as a parent I have to decide whether to put food on the table or buy health insurance. I cannot afford to pay the hundreds of dollars each month that it would cost me to buy health insurance for my

children.

I worry that when my children, God forbid, have an accident or get sick I will

not have the means to pay for the medical attention they need.

56

I too am in danger of having a very serious eye disease. Four years ago when I

was being tested for Glaucoma I was told that I had to be tested every year to track

the condition. I have not been tested for the last 3 years, since I lost my health coverage. It scares me to think that I could eventually have serious problems as a result of not being treated.

Thank God that neither of my children has had a major injury since September.

But they have been sick, and not having insurance changes the care you can give

them.

Both of my kids were home sick last week for a number of days. The first night

I felt very sad that I couldn’t just take my son to the doctor because we don’t have

health insurance anymore. He was running a fever, and as I drove to the store to

buy him some medicine, I began to cry. I felt like a failure. My kids needed something I couldn’t provide. As a parent you work to make sure they have what they

need. I went into the store and picked up the generic brand of chest rub and some

Motrin for the fever. As I got back into the car I felt the need to tell someone that

of course I would take my children to the doctor if I felt it was an emergency. I

wouldn’t care if I had to pay hundreds of dollars later.

I called my friend and told her. She just heard me cry for a while, and she said

that it was important that I tell this in my story so that you would know that parents go through this helpless feeling everyday. She was right, and I hope you do.

Through MOP and PICO I’ve learned that my experience is not unusual. In MOP

and throughout the PICO network we have surveyed thousands of people in our

churches and schools around healthcare. We have heard many sad stories like mine.

We have also learned that this is hard for people to talk about because it’s so private.

My state, Colorado, has a long way to go in covering all children, but it cannot

get there without help from Congress. • In Colorado there are 176,000 uninsured children.

• Our state has one of the highest uninsured rates in the country: 29 percent of

low-income children are uninsured.

But things are changing.

• For the first time in 2005 Colorado spent its full allocation of SCHIP funds.

• Now MOP and PICO Colorado are working with health care organizations to

change state policy to enroll eligible children and expand coverage. • I’m happy to say that legislation is about to be introduced to expand coverage.

But Colorado cannot move forward to help working families like mine without

more Federal funding for children’s health.

That’s why Metro Organizations for People in Denver, PICO Colorado and the

PICO National Network, are working with child health organizations to see that

Congress fully funds the SCHIP program.

PICO is advocating a Road Map to Covering all Children by 2012. This Road Map

has five steps to cover all children:

(1) Fill the existing SCHIP shortfalls facing states, so that no one risks losing coverage

(2) Fund proven outreach programs and provide states with the financial incentives to cover all eligible but uninsured children

(3) Provide financial support and incentives for states to expand eligibility

(4) Allow states the option to cover legal immigrant children and pregnant women

(5) Provide the approximately $60 billion in SCHIP and Medicaid financing to

support the cost of covering newly enrolled children

[Attached to my testimony is a letter from more than 200 prominent clergy supporting the PICO Road Map.]

This road map is realistic, responsible, and for millions of children in working

American families like mine, it is the highest possible priority.

Working parents need to know that if our jobs don’t offer affordable family coverage we have another option for our children.

PICO is working closely with many other state and national organization to win

health coverage for all children. This week we joined 55 other national organizations

in adopting a consensus plan for SCHIP reauthorization.

I want to thank my own representative, Congresswoman Diana DeGette for her

leadership on children’s health in Colorado and nationally.

On March 7 I will be back on Capitol Hill with 400 other parents and clergy for

PICO’s Faith and Families Summit on Children’s Health.

We invite all members of the House Energy and Commerce Committee to join us

for a Summit kick-off event from 8–9:00am and a 1:00pm Rally. As part of PICO

thousands of parents like me are finding our voices.

Chairman Pallone, Congressman Deal, I know you are both parents—and many

other members of this subcommittee are too.

57

I don’t need to tell you about how hard we parents will fight for what our children

need. And my faith tells me I have a responsibility to join with other parents to

make sure that all children have the blessing of good health.

Thank you for the opportunity to tell you one parent’s story, on behalf of millions

of parents throughout our country.

PICO NATIONAL NETWORK

ALL CHILDREN DESERVE THE BLESSING OF GOOD HEALTH.

This year Congress is reauthorizing the successful State Children’s Health Insurance Program (SCHIP) which provides affordable coverage to six million children.

Despite progress in expanding health coverage there are still 9 million uninsured

children in the United States. This is the right moment for Congress to expand financing for children’s health, so that no child goes without treatment or relies on

an emergency room for their health care.

A ROAD MAP FOR COVERING ALL CHILDREN

PICO is advocating a five-step road map to help States cover all children by 2012

(1) Fill the existing SCHIP shortfalls facing States, so that no one risks losing coverage

(2) Fund proven outreach initiatives and provide States with the financial incentives and support to reach all eligible but uninsured children

(3) Provide financial support and incentives for State efforts to expand high-quality preventative care and increase eligibility

(4) Allow States the option to cover legal immigrant children and pregnant women

(5) Provide financing in SCHIP and Medicaid to support the cost of covering newly

enrolled children

Estimated cost is $60 billion over 5 years

WHY WE CAN’T AFFORD NOT TO COVER ALL CHILDREN

• Leaving children without coverage imperils their development and costs society

more than the $100-$120 per month needed to provide health coverage to a child

• Covering all children as part of SCHIP reauthorization is the best chance our

country has to move the ball forward on health care this year

• States across the country are moving ahead to cover all children, but they cannot succeed without Federal support to expand financing for children’s health.

• SCHIP is a highly successful program that has bipartisan support

ORGANIZING FAMILIES AND FAITH COMMUNITIES

PICO is a national network of 53 faith-based federations and 1,000 congregations.

PICO led a county-based cover-all-kids initiative that has been replicated in more

than half of California’s counties. In 17 States and 100 Congressional Districts,

PICO is partnering with health and children’s advocacy groups at the local, State

and national level to expand health coverage for children and families.

Join us for a Faith and Families Summit for Children’s Health on Capitol Hill

on March 7

For more information visit www.piconetwork.org/schip.html

PICO NATIONAL NETWORK

DECEMBER 20, 2006

The Honorable Harry Reid

United States Senate

Washington, DC 20510

The Honorable Kent Conrad

United States Senate

Washington, DC 20510

The Honorable Max Baucus

United States Senate

Washington, DC 20510

The Honorable Nancy Pelosi

U.S. House of Representatives

58

Washington, DC 20515

The Honorable John M. Spratt, Jr.

U.S. House of Representatives

Washington, DC 20515

Honorable John D.Dingell

U.S. House of Representatives

Washington, DC 20515

Dear Majority Leader Reid, Speaker-elect Pelosi, Senator Conrad, Representative

Spratt, Senator Baucus and Representative Dingell:

As you prepare to lead the 110th Congress, we urge you to include adequate funding in the Federal budget to sustain and expand the highly successful State Children’s Health Insurance Program, so that our Nation approaches the day when

every child in the United States has access to affordable health coverage.

As congregations from more than 50 religious traditions, representing over 1 million families, PICO sees children’s health as a core moral issue. We take as our example the prophet Jeremiah who lamented for his people of Judah. Grieving over

their condition, he cried out: ‘‘Is there no balm in Gilead? Is there no physician

there? Why then has the health of my poor people not been restored?’’ We ask these

same questions of our elected leaders. Is there no balm in Washington, DC? Is there

no solution there? Why has the health of our children not been restored?

In November, Americans voted for change. Many Democrats ran on a health care

agenda. Providing access to affordable health insurance for every child is the right

place to start. There are 9 million uninsured children in this country; more than

6 million are already eligible for public coverage. If we do what is right as a nation,

we can take care of all our children and raise the healthiest generation in American

history.

Reauthorization of the State Children’s Health Insurance Program (SCHIP) next

year provides a golden opportunity to take concrete steps toward covering all children. But progress is only possible if the budget includes adequate funding to sustain and expand the SCHIP program. We urge you to support funding for the following steps:

• Provide adequate Federal funding to cover the 2007 shortfalls in SCHIP funding

which put over 600,000 children at risk of losing their health coverage.

• Fill the estimated $12–14 billion shortfall in funding over 5 years so that no

one loses coverage in SCHIP.

• Include substantial additional funding to support States that are moving toward

covering all uninsured children, including those expanding coverage to 300 percent

of poverty.

• Create financial incentives and support for States to reach out to and retain coverage for the majority of uninsured children—those who are already eligible for

SCHIP and Medicaid.

• Give States more ability to simplify the enrollment and renewal process, including using express lane eligibility programs.

• Give States the option and funding to cover legal immigrant children and pregnant women.

In the effort to expand health coverage for children we urge that Congress do no

harm to the broader Medicaid program, which provides essential health care services to the poorest children in the Nation. The fate of our children and families is

interconnected; we must not pit children from low-income families against those

with even lower incomes.

Many local communities and State governments have already taken action toward

covering all uninsured children and expanding coverage for low-income families.

These initiatives reflect strong grassroots public support for efforts to improve children’s health. But without leadership and additional Federal financing, our counties

and States run the risk of losing rather than gaining ground on covering all children.

Over the coming months our faith communities will be organizing to make our

voices heard in our State capitals and in Washington, DC. We will continue to educate and agitate so that Congress adopts a budget that is faithful to the needs of

working families. We urge you to take a first step in restoring American domestic

priorities by budgeting sufficient funds to strengthen the State Children’s Health Insurance Program.

With more than 1,000 religious congregations representing 50 denominations and

1 million families in 150 cities and 18 States, PICO National Network is one of the

largest community-improvement efforts in the United States.

59

We look forward to an opportunity to meet with you at your earliest convenience

to discuss funding for children’s health in next year’s Federal budget.

Sincerely,

Fr. John Baumann

Executive Director,

PICO National Network, et al.

TESTIMONY OF KATHY PAZ MINGELDORFF

My name is Kathy Paz Mingeldorff and I am pleased to submit this statement

on behalf of the March of Dimes Foundation. As a mother, I understand in a very

personal way the importance of health insurance for women and children, and I

thank Members of the Committee for making access to coverage the focus of this

hearing.

Let me begin by telling you my family’s story, and specifically why Medicaid and

FAMIS—Virginia’s State Children’s Health Insurance Program (SCHIP) have been

so important to us. In 2001, I became pregnant while in college and was covered

by my parents’ private health insurance policy. But after my son Alex was born, I

lost my health insurance because I could no longer be considered a dependent. My

son Alex was born prematurely at 25 weeks and suffered many complications due

to his early delivery. Fortunately Medicaid was there to provide health insurance

for the first 3 years of Alex’s life. Without help from Medicaid with Alex’s enormous

medical bills—more than $800,000 in the first two years alone—I am not sure how

we would have survived.

By the time Alex was 2, complications associated with his premature birth required a feeding tube, special formulas and multiple medications. We took Alex to

the emergency room many times, and he was hospitalized on 3 separate occasions.

In January of 2004, Alex had surgery to stabilize his severe reflux condition. I cannot imagine what life would have been like for us without health insurance through

Medicaid.

In 2005, I married and found an employer who was eager to hire me. Unfortunately, the employer did not offer health insurance. I attempted to enroll Alex in

FAMIS but our income was too high for him to qualify. At that time, eligibility for

the program in Virginia was limited to children with family incomes below 133 percent of the Federal poverty level—less than $22,000 a year for a family of 3. So,

my only option was to turn down a position I really wanted in order to keep my

son insured through Medicaid. I want to emphasize how hard that was for me.

In July of last year, the State of Virginia changed its eligibility rules for FAMIS,

allowing families with incomes up to 200 percent of the Federal poverty level (a little over $34,000 for a family of 3) to qualify, and making it possible for me to enroll

my son.

Once Alex had health insurance through FAMIS, I was able to accept full time

employment at SAIC, a government contractor in northern Virginia. Today, Alex

and I have health insurance through my husband Adam’s employer, and I work part

time as an administrative assistant for a national furniture corporation and am taking graduate courses at Marymount University.

The help that my family received came at a time when we needed it most. Because I wanted and was able to work, it was great to have a program like FAMIS.

I know from my experience and that of other families with premature babies that

my story is not unique, in fact it’s not uncommon for a family just getting started

to face the problem of not having enough health coverage to meet the needs of a

fragile infant.

Given my family’s experience, I am sure you can understand why I am so committed to the March of Dimes’ goal of using this year’s SCHIP reauthorization as an

opportunity to strengthen the program to improve the health of pregnant women,

infants and children. To achieve this goal, the March of Dimes recommends that the

Committee authorize a substantial amount of new funding for SCHIP reauthorization. The Foundation’s immediate priority is funding sufficient to protect states’

2007 SCHIP enrollment levels. As Members of the Committee are aware, the National Institutes of Health (NIH) Reform Act, P.L. 109–482, enacted at the end of

the 109th Congress, included a redistribution of unspent FY2004 funds to states experiencing FY2007 shortfalls, and a January 30, 2007 Congressional Research Service (CRS) report projects that this measure will ensure that no state runs out of

SCHIP funding before May 1, 2007. However, officials in at least one state report

that its program may experience a funding shortfall prior to May 1. Unless ConVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00063 Fmt 6633 Sfmt 6633 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
60

gress acts soon, additional states may be forced to narrow or eliminate benefits,

lower eligibility thresholds, and/or reduce provider payment levels. Any of these actions would weaken a well regarded program and could undermine the availability

of affordable health coverage for pregnant women and children.

As members of this committee are aware, the concern about adequate funding extends well beyond 2007. In addition to the funding level assumed in the CBO baseline, new resources will be needed to maintain current levels of eligibility. And, if

the Committee wishes to see states reach out to eligible but unenrolled children or

expand eligibility, a significant investment of new funding will be necessary.

Using information provided by the U.S. Census Bureau, researchers have estimated that nearly half of the 9 million uninsured children in the U.S. are eligible

for Medicaid and almost 20 percent are eligible for S-CHIP. In other words, with

adequate funding and more attention to enrollment of those who are already eligible, more than 6 million uninsured children could have health insurance through

these two programs. The March of Dimes recommends that the committee provide

states with the tools and resources necessary to enroll these children.

The March of Dimes also encourages the members of the committee to use this

reauthorization as an opportunity to amend the law so that states can make modest

but important improvements to their SCHIP programs. The priorities the Foundation hopes the Committee will consider during its deliberations include giving states

the authority to: (1) cover income eligible pregnant women age 19 and older without

being required to obtain a Federal waiver; (2) provide wraparound coverage for children with special healthcare needs whose private health insurance benefits are limited; (3) cover legal immigrant children and pregnant women. Finally the Committee

should strengthen the law’s current requirements to monitor and report on the quality of care provided. Consumers, health professionals and policy makers need to

know how well SCHIP is doing on measures such as immunization rates, delivery

of services in neonatal intensive care units, well-child visits and other inpatient and

outpatient services.

COVERAGE FOR PREGNANT WOMEN OVER AGE 19

Under current law, maternity coverage for pregnant women over age 19 who meet

the SCHIP income eligibility requirements is permissible only through a Federal

waiver—a slow and cumbersome process which most states have chosen to avoid.

This policy creates an unfortunate separation between pregnant women and infants,

which runs contrary to long-standing Guidelines for Perinatal Care promulgated

jointly by the American College of Obstetricians and Gynecologists (ACOG) and

American Academy of Pediatrics (AAP). The March of Dimes view is that reimbursement policies should be aligned with—and not undermine—established clinical practice guidelines.

While SCHIP regulations permit states to amend their plans to cover ‘‘unborn

children,’’ thus making reimbursement available for prenatal, labor and delivery

services, postpartum care for the mother—a benefit prescribed in the ACOG/AAP

Guidelines for Perinatal Care—is not reimbursable with Federal funds. Women who

do not receive postpartum care are at greater risk for a variety of health complications that make it difficult for a mother to properly care for her infant. Further,

women who do not receive postpartum care are more likely to quickly become pregnant again, and a pregnancy spaced too closely to a previous pregnancy presents

a medical risk factor for premature birth.

The Centers for Medicare and Medicaid Services reports that five states (CO, NJ,

NV, RI, and VA) use waivers to cover income eligible pregnant women and nine

states have amended their plans to cover unborn children (AR, CA, IL, MA, MI, MN,

RI, TX, WA). However, a survey conducted by the National Governors Association

found an additional eight states where program officials indicate maternity care is

being provided to income eligible women age 19 and older through SCHIP. A simple

Federal mechanism is needed so that states can, at their option, provide the full

spectrum of clinically indicated services to pregnant women who meet the SCHIP

income guidelines. As Members know, early and continuous maternity care is crucial to the health of the mother as well as to that of her infant.

According to the 1999 Institute of Medicine Report entitled ‘‘Health Insurance is

a Family Matter,’’ uninsured pregnant women have fewer prenatal care services and

more difficulty obtaining the care they need. To maintain the health of a pregnant

woman and her unborn child, continuous access to prenatal care is essential. The

ACOG/AAP Guidelines for Perinatal Care state:

Women who have early and regular prenatal care have healthier babies.

Generally, a woman with an uncomplicated pregnancy should be examined approximately every 4 weeks for the first 28 weeks of pregnancy, every 2–3 weeks

61

until 36 weeks of gestation, and weekly thereafter. Women with medical or obstetric

problems may require closer surveillance.

Lack of adequate, regular prenatal care is associated with poor birth outcomes,

including prematurity (born before 37 completed weeks of gestation.) or low birthweight (less than 51⁄2 pounds). Prematurity is the leading cause of neonatal death.

Low birth weight is a factor in 65 percent of infant deaths. Premature and low birth

weight babies may face serious health problems as newborns, and are at increased

risk of long-term disabilities. Infants born to mothers who did not receive regular

prenatal care in 2002 were about twice as likely to be low birth weight as infants

born to mothers who received early and adequate prenatal care.

Conversely, women who do receive appropriate levels of prenatal care are more

likely to have access to screening and diagnostic tests that can help identify problems early; services to manage developing and existing problems; and education,

counseling and referral to reduce risky behaviors like substance abuse and poor nutrition. Such care may thus help improve the health of both mothers and infants,

reducing their future healthcare costs.

Neither the cumbersome and time consuming waiver process nor use of the ‘‘unborn child’’ regulatory option gives states the flexibility they need to provide pregnant women with the full spectrum of recommended maternity care through SCHIP.

Therefore, the March of Dimes recommends that the Committee approve a statutory

change granting states the authority to extend SCHIP coverage to income eligible

pregnant women age 19 and older. Both the NGA and the National Conference of

State Legislatures (NCSL) recommend that this option be made available to states.

PRIVATE-PUBLIC PARTNERSHIPS TO STRETCH SCHIP DOLLARS FURTHER

Under current law, children must be uninsured to qualify for SCHIP. Some children with significant health problems have limited private insurance that does not

meet their medical needs. Other children whose parents have access to employer

based coverage, may go without because the parent’s employer does not provide coverage for dependents or the family cannot afford the premiums. In each of these

cases, families face a difficult choice, purchase employer based coverage that does

not meet the child’s medical needs or forego private health insurance altogether in

order to be eligible for SCHIP. By allowing SCHIP and private plans to work together, SCHIP dollars could be stretched further because private plans would cover

a portion of healthcare costs. Such public-private partnerships could be structured

in several different ways. For example:

Wraparound coverage: For pregnant women, infants and children with limited private coverage, SCHIP could cover benefits—such as vision, dental, physical/occupational/speech therapy, et cetera—not offered by the private plan. Allowing states to

use SCHIP as a secondary payer for children when private insurance is limited

would parallel an approach already permitted in the Medicaid program.

Single benefit coverage: For pregnant women, infants and children with limited

private coverage, SCHIP could cover a specific benefit—such as vision, dental or

home care—not offered by the private plan.

Premium support: For families satisfied with their private coverage, but unable

to afford the full cost of the premium, SCHIP could provide a subsidy to lower the

premium cost so that dependents could be covered.

Pregnant women and children receiving this type of assistance should be allowed

to switch to traditional SCHIP if they lose their private coverage or the private plan

no longer meets their healthcare needs.

The March of Dimes urges the Committee to give states the opportunity to develop alternative types of public-private partnerships to better serve the complex

healthcare needs of pregnant women and children.

QUALITY AND ACCOUNTABILITY

The March of Dimes strongly recommends that the SCHIP reauthorization bill include provisions designed to strengthen the quality of healthcare that enrollees receive through measuring, monitoring and reporting on quality of care. Such initiatives help ensure that children receive the care they need. Since children are growing and developing, they have different kinds of healthcare needs than adults. To

date, however, most national initiatives aimed at improving the quality of care in

the U.S. have focused on adults. While title XXI has included a quality reporting

requirement since the program was created, the field of performance measurement

has advanced significantly in the past 10 years. Therefore, the March of Dimes

urges the Committee to revisit this section of the law and to provide states the tools

they need to update and expand the scope of reporting on the quality of care provided enrollees.

62

More specifically, the Foundation recommends that the Department of Health and

Human Services (HHS) collaborate with health professionals and consumer groups

to develop and disseminate a core set of pediatric quality measures. This effort

should be conducted in partnership with the Agency for Healthcare Research and

Quality (AHRQ) and other appropriate entities, including the National Quality

Forum and health professional certification boards. In addition, HHS should also

gather and publicly report state level data on pediatric quality performance measures.

The March of Dimes urges members of the committee to ensure that states have

the resources necessary to gather and report data as well as to develop interoperable clinical health-information systems.

COVERAGE FOR LEGAL IMMIGRANTS

In 2003, the Senate approved a provision to allow states to cover legal immigrant

children through their SCHIP programs, which was ultimately excluded from the

larger Medicare Modernization Act negotiated by the House and Senate Conference

Committee and signed into law. At that time, the Congressional Budget Office

(CBO) estimated that about 155,000 children and 60,000 pregnant women would

have been eligible for coverage if the provision had been enacted. The provision had

broad bipartisan support in the Senate as well as the support of the NGA and

NCSL. CBO estimated that this coverage would cost the Federal treasury $500 million over three years.

In 2004, there were an estimated 31 million non-elderly immigrants living in the

United States, approximately 74 percent of whom were here legally. It has also been

estimated that nearly half of non-citizen immigrants are uninsured, largely because

they are more likely to work in low wage jobs, service or agriculture industries or

small businesses where employers often do not offer health coverage.

The Foundation urges Members of this Committee to add to SCHIP an option for

states to extend SCHIP coverage to income eligible legal immigrant pregnant

women and children.

The March of Dimes appreciates the opportunity to submit its comments for the

record and looks forward to working with Chairmen Dingell and Pallone and Representatives Barton and Deal , as well as other members of the committee to reauthorize and strengthen SCHIP—a program central to the health of the nation’s pregnant women, infants and children.

STATEMENT OF AMERICA’S HEALTH INSURANCE PLANS

America’s Health Insurance Plans (AHIP) strongly support the State Children’s

Health Insurance Program (SCHIP), and we applaud the House Energy and Commerce Committee for focusing on the reauthorization of this vitally important program.

Over the past decade, SCHIP has proven to be highly successful in meeting the

health care needs of millions of low-income children. By providing the states with

the resources and flexibility to design innovative programs, SCHIP has demonstrated its value as an effective model for extending health coverage to a vulnerable population. As Congress prepares for the coming debate on reauthorization of

SCHIP, we see an opportunity to build upon the program’s past success with improvements that would enable the states to maintain their existing programs, while

also offering coverage to a larger number of uninsured children and making coverage more affordable for their parents.

AHIP ACCESS PROPOSAL CALLS FOR SCHIP EXPANSION

In November 2006, AHIP’s Board of Directors announced a proposal for expanding

access to health insurance coverage for all Americans. Our proposal includes a comprehensive set of policy initiatives that would expand eligibility for SCHIP and Medicaid, enable all consumers to purchase health insurance with pre-tax dollars, provide financial assistance to help working families afford coverage, and encourage

states to develop and implement access proposals.

A major element of AHIP’s access proposal calls for expanding SCHIP to ensure

that all states can, at a minimum, fully cover all uninsured children in families with

incomes under 200 percent of the Federal poverty level. To further address the

health care needs of children, we also propose that a health tax credit of up to $500

be established for low-income families who secure health insurance for their children. These steps are designed to expand access to health insurance coverage to all

63

children within three years. Other components of AHIP’s access proposal seek to

cover 95 percent of adults within 10 years.

AHIP also is an active member of the Health Coverage Coalition for the Uninsured (HCCU), which released a proposal in January 2007 for expanding health coverage to the uninsured. The membership of this diverse coalition also includes Families USA, the Chamber of Commerce, AARP, the American Medical Association, and

the American Hospital Association. Much like the AHIP proposal, the HCCU proposal builds on the strengths of the existing private-public system and includes key

improvements to SCHIP and Medicaid, as well as a broader tax credit. The HCCU

proposal shares AHIP’s phased approach, beginning with a Kids First initiative followed by a longer-term proposal for adults and families.

As Congress considers SCHIP reauthorization legislation, AHIP urges the committee to consider three priorities discussed in the following sections: (1) increasing

Federal funding to help states cover existing SCHIP caseloads and expand coverage

to more uninsured children;

(2) establishing performance standards, tied to funding bonuses, to promote quality throughout the program; and (3) authorizing demonstration programs to help

states coordinate SCHIP eligibility with private health insurance.

INCREASED FUNDING TO COVER SHORTFALLS AND EXPAND COVERAGE

A top priority in the SCHIP reauthorization process is ensuring that the states

receive adequate funding to provide coverage for eligible children. Currently, a number of states are facing funding shortfalls that are threatening their ability to provide quality coverage to children already enrolled in their programs. These shortfalls also may discourage the outreach efforts that are needed to identify eligible

children who are not yet signed up for SCHIP.

In addition to stabilizing existing SCHIP coverage, Congress should devote new

funding to help states expand coverage to children who currently do not qualify for

SCHIP assistance. An infusion of new funding would ensure that states could maintain existing enrollment, while also having greater flexibility to innovate and possibly expand enrollment in conjunction with broader innovations that leverage

SCHIP dollars. By providing additional funding for this priority and promoting

strategies that do not ‘‘crowd out’’ existing coverage, Congress could target assistance to a segment of the uninsured population—the ‘‘near poor’’—that have seen a

gradual decline in their access to coverage over the past decade.

PERFORMANCE INCENTIVES TO IMPROVE QUALITY

Congress should establish performance standards to measure the extent to which

states are achieving demonstrable improvements in child health. Such standards

could focus on immunization rates for children, the percentage of infants receiving

periodic screenings, the percentage of eligible children who remain continuously covered by SCHIP, and other measures for which data can be easily obtained and compared.

Moreover, these standards would help to promote accountability throughout the

program if Congress provided a financial bonus to states that demonstrate strong

success, based on the performance standards, in improving the health of their

SCHIP populations. These incentives should be supported with new funding—on top

of existing allotments—to allow states with highly successful SCHIP programs to

take additional steps in developing initiatives that can serve as models for the entire nation.

DEMONSTRATION PROGRAMS TO COORDINATE WITH PRIVATE COVERAGE

Recognizing the need for greater innovation throughout the health care system,

we believe Congress should authorize new demonstration programs that allow states

to use streamlined procedures in coordinating SCHIP eligibility with private health

insurance. These demonstrations could build upon SCHIP’s existing premium assistance program, allowing states to assist the parents of eligible children in purchasing

family coverage through their employers or other sources. Addressing the coverage

needs of the entire family is beneficial to children as well as parents, as indicated

by the findings of a 2002 Institute of Medicine (IOM) report which concluded that

children are more likely to be taken to the doctor for regular checkups if their parents also have coverage.

Significantly, Massachusetts is one of the few states that has used the current

premium assistance option to maximize the value of its SCHIP and Medicaid funding. By pursuing this public-private partnership, Massachusetts was able to position

itself for the broader reforms that its state legislature enacted last year. To open

64

the door for more states to pursue innovative strategies that meet the unique needs

and circumstances of their own populations, Congress should encourage greater coordination between SCHIP and private health insurance.

AHIP members are strongly committed to the long-term success of SCHIP and we

stand ready to work with the House Energy and Commerce Committee and other

members of Congress to strengthen the program.

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

100

101

102

(103)

COVERING THE UNINSURED THROUGH THE

EYES OF A CHILD

THURSDAY, MARCH 1, 2007

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HEALTH, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC.

The subcommittee met, pursuant to call, at 2:05 p.m., in room

2123 of the Rayburn House Office Building, Hon. Frank Pallone,

Jr. (chairman of the subcommittee) presiding.

Members present: Representatives Green, Capps, Baldwin,

Engel, Schakowsky, Matheson, Deal, Hall, Buyer, Ferguson, Rogers, Burgess, Barton [ex officio], and Wilson.

Staff present: Jonathan Brater, Robert Clark, Peter Goodloe,

Christie Houlihan, Purvee Kempf, Bridgett Taylor, Brin Frazier,

Ryan Long, Katherine Morton, Brenda Clark, and Chad Grant.

OPENING STATEMENT OF HON. FRANK PALLONE, JR, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY

Mr. PALLONE. I am going to ask that we get started because we

are expecting to have votes in about 15 or 20 minutes so I would

like to at least try to get thorough all of not most of the witnesses.

Today we have part 2 of our hearing on ‘‘Covering the Uninsured

Through the Eyes of a Child.’’ We had opening statements at the

previous hearing so we will not have them today. We are simply

going to turn to our witnesses, and I would ask them to come up

and take a seat there with your names.

Welcome and thank you for being here today and let me just introduce the panel before we begin. We have first Dr. Lolita

McDavid, who is the medical director for the Child Advocacy and

Protection Program in Cleveland, Ohio; and then we have my

friend and colleague, Senator Joseph Vitale from New Jersey, from

Woodbridge, New Jersey, who is the chairman of the New Jersey

Senate Health, Human Services and Senior Citizens Committee, so

glad to see him here today; and then we have Alan Weil, who is

the executive director for the National Academy for State Health

Policy; and Phyllis Sloyer, who is a nurse and Ph.D. and division

director of the Children’s Medical Services Department of Health,

I guess that is for the State of Florida in Tallahassee; and last is

Ms. Kathryn Allen, who is the director of health care for the U.S.

Government Accountability Office, so welcome all of you.

We are going to have each of you give us a 5-minute opening

statement. I should say these statements will be made part of the

104

hearing record. Each witness may in the discretion of the committee submit additional briefs and pertinent statements in writing for

inclusion in the record. I am simply going to through the list here

and I will start with Dr. Lolita McDavid for an opening statement.

STATEMENT OF LOLITA M. MCDAVID, M.D., M.P.H., MEDICAL

DIRECTOR, CHILD ADVOCACY AND PROTECTION, RAINBOW

BABIES AND CHILDREN’S HOSPITAL

Dr. MCDAVID. Mr. Chairman and members of the committee,

thank you for the opportunity to testify for the National Association of Children’s Hospitals. I am Dr. Lolita M. McDavid. As a pediatrician, I have devoted my medical career to children. Currently,

I am medical director of child advocacy and protection at Rainbow

Babies and Children’s Hospital in Cleveland. I submit my written

statement for the record.

I have been asked on behalf of the National Association of Children’s Hospitals to draw from my professional experience to describe the importance of health coverage for children. I would like

to try to do that by giving you two stories.

The first story is about the difference health coverage can make

in the life of a child and the child’s family. Eugene and Rhonesha

are brother and sister who are both patients in my practice. They

live with their mom and dad and their family income qualifies

them for SCHIP. Gene is 10 years old, the same age as SCHIP. He

is a great kid and a great student, and with the exception of needing glasses, he has only had routine health needs.

But Rhonesha, who is 6 years old, has a diagnosis commonly

seen in our patient population, asthma. I became Rhonesha’s doctor

when she was 2 months old. She had required well-child visits like

all children but by the time she was 17 months old she was showing signs of reactive airway disease which often is a precursor of

asthma. By the time Rhonesha was 22 months old, it was clear she

was asthmatic with mild persistent asthma. In many cases like

this, I could tell you about emergency room visits, hospitalizations

and missed days of work but that has not happened with

Rhonesha. Her asthma has been controlled by medications. When

she has an occasional flare-up because she has a cold or there is

a climate change, her mother manages her illness. Dr. John Carl,

a pediatric pulmonologist at our hospital, sees her every 6 months

for evaluation. We are now at the point where I only see her for

annual routine visits. She is an outstanding first grade student

whose favorite subject is math.

Because Rhonesha has coverage through SCHIP, her mother has

a relationship with Dr. Carl and me. She can access regular care

and not use costly emergency care. Her asthma is controlled. She

doesn’t need to be hospitalized and she doesn’t miss school and her

mom doesn’t miss work. That is the wonderful promise of health

coverage. It not only directly promotes health, it also indirectly promotes learning and employment.

My second story is about a child who is eligible for public coverage but who was not enrolled until after he was admitted to our

hospital. Nick’s parents brought him to our emergency room on

New Year’s Day. He was 5 weeks old with respiratory symptoms,

vomiting and diarrhea. Although Nick’s mother had insurance

105

through her job, Nick was uninsured. He was admitted to our hospital with pneumonia, and while in the hospital we found out his

family was qualified for SCHIP. Happily, Nick went home after 3

days. He was well and now had health insurance through SCHIP

that will cover his immunizations and doctor’s visits and hopefully

keep him out of the emergency room.

As these stories demonstrate, having health coverage makes a

real difference, not only in a child’s health but also in the cost of

the child’s health care and in their ability to be ready to learn and

grow up healthy and productive.

Building on the foundation of Medicaid, SCHIP has been a great

success. Together they have reduced the number of uninsured children by a third. At the same time the overall number of uninsured

Americans continues to grow. SCHIP enjoys broad support in State

capitals, in Washington and in the private sector. Because of the

success, Children’s Hospital recommend that Congress commit to

achieving the goal of health coverage for all children. The first step

should be to build on the foundation of SCHIP and Medicaid. We

offer four recommendations.

First, Congress should reauthorize and fully fund SCHIP, at

least to fill in all State shortfalls and to enable States to cover all

eligible but unenrolled children. Second, the reauthorization of

SCHIP should help States to improve outreach and enrollment of

children who are eligible for Medicaid or SCHIP. This might include financial incentives, simply their unified application forms,

extended continuous eligibility and other methods. Third, reauthorization of SCHIP should not come at the expense of Medicaid. Our

ability to sustain the success of SCHIP as the Nation reaches out

to cover all children depends greatly on both programs having the

funds to meet their goals. To be sure, neither Medicaid nor SCHIP

is perfect. SCHIP is capped. When funds run short, as 14 States

are projected to experience this year, children are left waiting in

line for coverage. Medicaid’s historically low payment rates, particularly for doctors, too often leave children without a medical

home. Nonetheless, together SCHIP and Medicaid have created an

essential safety net of coverage for low-income children and children with disabilities. They are also the foundation for health care

for all children. Finally, the reauthorization of SCHIP should include Federal leadership and investment in the measurement of

quality and performance of children’s health care. The Federal Government is investing in quality measurement for adults’ health

care through Medicare. It is not doing that for children. It is time

to make the same investment in quality and performance measures

for children that have been made for adults.

We ask that you provide DHHS with the authority and resources

needed to support the development and advancement of pediatric

quality and performance measures. This will greatly enhance our

ability for States, providers and consumers to have a portfolio of

measures they can use for children.

Ten years ago Congress faced and met an unprecedented bipartisan challenge: how to put the Federal Government on a solid path

toward the elimination of the Federal deficit. That successful effort

culminated in the Balanced Budget Act of 1997 and precisely because it was setting priorities vital to the future of our Nation,

106

Congress created SCHIP as part of the Balanced Budget Act to expand health coverage for children. In effect, Congress made children’s coverage a priority within a balanced budget. Ten years

later, Congress faces the same challenge: to achieve fiscal control

while at the same time taking the next step to cover all children.

They should reauthorize and expand SCHIP while keeping Medicaid coverage for children strong. Ten years of success, broad support through the private sector and bipartisan support in Congress

and State capitals all argue for taking that next step.

As a spokesman for Children’s Hospital, I can tell you that Medicaid and SCHIP are fundamental to the financial infrastructure of

health care for all children. Through the work of Children’s Hospital—thank you. I was finished. The decisions Congress makes on

SCHIP and Medicaid will affect the health care of every child in

this country. Thank you.

[The prepared statement of Dr. McDavid appears at the conclusion of the hearing.]

Mr. PALLONE. Thank you. I am trying to keep it to 5 minutes,

if I can, and not go over too much.

Our next witness is Senator Vitale, and I should mention that

not only is he from New Jersey but most of his State’s Senate district is within my congressional district, and not only is he the

chairman of the Senate Health Committee but he also has been an

outstanding spokesman on the SCHIP program, so thank you for

being with us here today.

STATEMENT OF HON. JOSEPH F. VITALE, NEW JERSEY STATE

SENATOR

Mr. VITALE. Thank you again. I am blessed to have actually

three Congressmen that represent my district: Congressman Ferguson and yourself and now Congressman Sires.

I wanted to come here today, and I appreciate the opportunity

to discuss the importance of the SCHIP program not just across the

Nation but in particular to the many children and parents in New

Jersey.

New Jersey implemented the SCHIP program in March 1998 by

covering children of families whose annual income up to 200 percent of the Federal Poverty Level and called it New Jersey

KidCare. An example of 200 percent of the poverty level is a family

of three whose annual income does not exceed $33,200. The program was met with great anticipation and excitement over the

prospect of providing health insurance to thousands of uninsured

children.

As enrollment grew steadily, we recognized how many more children needed help and health care coverage and in July 1999 expanded eligibility to children whose family’s income did not exceed

350 percent of the Federal Poverty Level. An example of that is a

family of three with income that does not exceed $58,100.

The KidCare program was successful and through it we learned

more about the uninsured population in New Jersey and how great

the need was to provide health care to children and their parents,

and we learned that there an increased participation among eligible children when parents are made eligible for health care coverage.

107

We also know that providing health care coverage to pregnant

women leads to healthier babies and moms and so in September

2000 New Jersey made a decision to cover parents up to 200 percent of the Federal Poverty Level and the program was renamed

New Jersey FamilyCare. Unfortunately, due to consecutive bridges

crises, New Jersey had to close the program to parents in June

2002, leaving only those already enrolled to continue participating.

In September 2005, I sponsored new FamilyCare legislation that

in addition to streamlining the application process again made

FamilyCare available to low-income parents and guardians up to

115 percent of poverty, $19,000 a year for a family of three, and

in 2006 up to 133 percent of the Federal Poverty Level, next year

for a family of three whose income would not exceed $22,000.

We now provide health insurance coverage to 125,000 New Jersey children and over 79,000 adults through our SCHIP program.

In addition, we cover 450,000 children and close to 350,000 adults

through our Medicaid program. As a result, in partnership with the

Federal Government, New Jersey provides health insurance coverage to over 1 million parents and children.

While New Jersey uses a higher percentage of the Federal Poverty Level for eligibility for its SCHIP program than all other

States, we also have one of the highest costs of living in the Nation.

Simply put, it costs far more to be poor in New Jersey than in almost all other States.

We have no choice but to use a more generous eligibility income

level in order to reach those truly needy families and children with

low income levels. Through SCHIP and Medicaid, it is also a much

more economically responsible way to spend health care dollars. In

New Jersey, where we have 1.4 million uninsured, access to all levels of care for that population is typically provided by our State’s

hospitals. In fiscal year 2007, the State has budgeted nearly $900

million to reimburse hospitals for percentage of the costs they absorb for treating the uninsured. In total, our State’s hospitals provide nearly $2 billion of uncompensated care, a financial strain

that has put many of our hospitals at risk.

New Jersey greatly appreciates the opportunities that the SCHIP

program provides States. Through our SCHIP program, we have

been able to provide health insurance and needed health care to

the most vulnerable population among us, and that is our children.

New Jersey has made a strong commitment to the SCHIP program. This commitment is evident in the generous benefits package

that we offer, our attention to simplifying the process for application and the intense outreach efforts we have undertaken. The

prospect of limiting or, at worse, eliminating our SCHIP program

to lower income level families would be devastating to our State’s

budget and to the families of our State.

New Jersey has historically spent its entire annual Federal

SCHIP allotment, and although we have been eligible for SCHIP

funds not used by other States, these reallocated resources have

been diminishing over the years. There is an urgent need for Congress to increase annual allocations to States to meet the evergrowing need for health care insurance for our children.

I will conclude my remarks by asking the members of this very

important committee to prevent shortfalls in funding for the

108

SCHIP program and to advocate for increased support. Both Medicaid and SCHIP have been successful and efficient in expanding coverage to children. By promoting the continued success of these programs, we can ensure that children and their families get the

health care that they need. This collaboration between the Federal

Government and the States, and with premium sharing by consumers where it is possible, allows the kind of partnership in health

care that is a model for success. Without this continuing alliance,

millions of children and their families will simply be unable to access the kind of care that the rest of us have and some take for

granted.

Thank you for this opportunity.

[The prepared statement of Mr. Vitale appears at the conclusion

of the hearing.]

Mr. PALLONE. Thank you, Senator. I appreciate your being here.

Our next witness is Alan Weil, who is executive director of the

National Academy for State Health Policy. Thank you.

STATEMENT OF ALAN WEIL, EXECUTIVE DIRECTOR OF THE

NATIONAL ACADEMY FOR STATE HEALTH POLICY

Mr. WEIL. Mr. Chairman, members of the subcommittee, thank

you for the opportunity to appear here today. My name is Alan

Weil and I am the executive director of the National Academy for

State Health Policy, a nonprofit, nonpartisan organization dedicated to improving State health policy and practice. My organization has worked closely with the Nation’s SCHIP directors and

monitored and reported on the shape of the program since its inception. While we serve ad the informal home of the SCHIP directors, I do not purport to speak for them.

The SCHIP has accomplished a great deal covering children, providing them with access to services and reducing unmet health care

needs. Your decisions in reauthorization will determine whether we

continue this impressive track record. The primary goal of my testimony is to provide a context to the reauthorization debate that is

sometimes missing.

States embraced the SCHIP program quickly yet as was expected, it took time for eligible families to learn of the program,

come to trust it and ultimately enroll. In the early years of the program, States were subject to substantial criticism for underspending. In response, States and the Federal Government took four

steps. First, States substantially increased their efforts to reach out

and find the eligible children within their States and keep them on

the program once they were made eligible. Second, States increased

their eligibility standards. Between 1998 and 2005, the number of

States with income limits for SCHIP below 200 percent of poverty

went from 22 down to just eight. Third, some States that already

had expansive coverage for children when SCHIP was enacted

sought Federal permission to use their SCHIP funds to cover families or other adults, and finally the Bush administration announced

its HIFA waiver initiative which explicitly encouraged States to

apply unspent SCHIP funds to the needs of low-income adults. Now

some are criticizing States that are experiencing shortfalls but the

complex SCHIP funding mechanism makes planning almost imposVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00112 Fmt 6601 Sfmt 6601 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
109

sible. Shortfalls and underspending are inevitable and do not reflect a lack of fiscal discipline on the part of States.

The SCHIP program is good example of cooperative federalism.

Working from a shared goal, the Federal Government developed a

framework and provided substantial resources while States contributed their own resources and tailored the program to their own circumstances. State choices vary along many dimensions, not just on

the eligibility levels and categories that have received so much attention but also on the benefit package, the delivery system, provider payment levels, health plan accountability mechanisms, family premiums and co-payments and integration with employer-sponsored insurance and Medicaid. States’ varied choices reflect the

economy, health care systems, values, politics and fiscal capacity

that each State has.

Federalism is not orderly but the tremendous success and bipartisan popularity of this program is directly tied to the flexible

structure. By delegating key decisions to the States, the Federal

Government has obtained a level of political, financial and administrative support at the State level that is unusual in the realm of

social programs. Efforts to remake this program with a different vision run the risk of undermining the Federal-State partnership

that has enabled it to thrive.

Now, underlying the debate over the appropriate level of funding

and reauthorization is the question of whether or not the target

population for the program should be modified. Each of the six million Americans reached by this program last year needs health insurance. Program modifications that prohibit covering anyone currently on the program will add another person to the growing

ranks of the uninsured. Funding levels inadequate to sustain coverage for those currently on the program or that fail to account for

the costs of reaching those who are eligible but not yet enrolled will

have the same negative effect.

At a time when the number of uninsured Americans continues to

rise, an ideological division impedes broader health reform efforts.

SCHIP has been a tremendous achievement. States need prompt

reauthorization so they can plan for the future. The expiration of

the current authorization is only 7 months away, and States need

an expanded Federal financial commitment of resources so they can

continue making progress meeting the needs of their citizens who

would otherwise go without health insurance. An effective FederalState partnership brought us to this point. A continued partnership

is the best framework for meeting the tremendous remaining needs

of children and families.

I appreciate the opportunity to offer this testimony.

[The prepared statement of Mr. Weil appears at the conclusion

of the hearing.]

Mr. PALLONE. Thank you, Mr. Weil.

Dr. Sloyer.

STATEMENT OF PHYLLIS SLOYER, R.N., PH.D.

Ms. SLOYER. Thank you, Chairman Pallone, Ranking Member

Deal, members of the health subcommittee. On behalf of Governor

Charlie Crist and the State of Florida, thank you for the opportunity to appear before you today to address reauthorization of a

110

very important program, the State Children’s Health Insurance

Program, better known as SCHIP.

I am here today representing the Florida SCHIP program known

as the Florida KidCare. We provide services to over 1.4 million lowincome children through four components: the Florida Medicaid

program for children, the Healthy Kids Corporation, the MediKids

program and the Children’s Medical Services Network.

At the State level, this month and in the upcoming months, Governor Crist and our legislature are looking at ways to simplify our

program and ensure seamless coverage and we believe that there

are several steps that we can take to improve efficiencies of our

program and we are looking to make those changes. Today, however, I would like to outline several Federal challenges that will

help us if they can be overcome in making our program even more

efficient.

Some of these challenges were highlighted in our 2007 Florida

KidCare Coordinating Council Annual Report, which was recently

submitted to our Florida State leadership. This council was developed in State law in 1998 to deliberate and make recommendations

to the Governor and legislature about the ways that we can improve our SCHIP program. It represents a diverse group of individuals including advocates, agencies and health care providers, and

I ask that that report along with this testimony be submitted for

the record this afternoon.

We know in Florida that we currently have a discrepancy in our

eligible versus enrolled ratio under our KidCare program. This discrepancy is a result in part of Federal statutory barriers and I

would like to describe several of them.

First, outreach efforts are extremely critical to reaching diverse

populations of children and retaining them. Florida is unique. It is

a microcosm of population trends happening nationwide and we

have communities who face many cultural, social and language

barriers. However, outreach currently is funding through the 10

percent administrative expenditure cap in the program and frankly, in order for us to cover administrative processing, premium

processing, application processing, call center functions, there simply is not enough money left in that cap to support targeted and

critical outreach functions for families. We ask that you consider

funding outreach outside of that 10 percent cap.

In addition, one of the hallmarks of our SCHIP program is the

ability to simplify procedures so that eligible children can obtain

health insurance without unnecessary roadblocks. The documentation requirements imposed on the Medicaid program under the Deficit Reduction Act of 2005, which require a State to prove a beneficiary is a United States citizen, impedes families from obtaining

Medicaid coverage. However, it also has a spillover effect on the

SCHIP program since families have to be screened and apply for

Medicaid before they can go through the SCHIP application process. I am not here today to discuss the overall purpose or merit of

the Deficit Reduction Act but rather to shed some light on some of

those unintended consequences. We ask that Congress and the Federal Government consider changes to some of the procedural requirements so that we can promote uniformity and increase the

111

number of eligible children enrolled in our SCHIP program and assist us in offering a more seamless benefit.

Continuous coverage is also important to maintaining our children’s health. In those States without expansion programs, and

Florida is one of those, this coverage can be interrupted due to different cost requirements between the SCHIP program and Medicaid program. When a child transitions from having no premium

under Medicaid to a premium-based SCHIP benefit, there can be

a temporary gap in health care coverage and actually a temporary

gap in continuity of care and in active treatment until that premium is paid. As a result, children temporarily lose coverage and

may not re-enroll in SCHIP. We encourage Congress to provide direction to States without expansion waivers and with separate

SCHIP benefits to implement policies that ensure children who lose

Medicaid coverage are able to move to our SCHIP program without

breaks in coverage.

In addition, today Florida public employees’ dependents can qualify for Medicaid benefits if they are deemed eligible. However,

under current Federal statute, those same families’ dependents

cannot qualify for SCHIP if their income level meets the SCHIP

threshold. These families, as an example who earn 200 percent of

the Federal Poverty Level, make about $40,000 a year for a family

of four. They have to pay at least 6 percent of their income in

monthly health care premiums which actually becomes quite prohibitive for them. We are asking you to consider removing that prohibition for dependents of public employees who may qualify for

SCHIP benefits.

Finally, we urge you to align coverage for pregnant women to ensure it is consistent with the coverage of infants provided under the

SCHIP program. For example, if an infant is eligible at 200 percent

of the Federal Poverty Level, the pregnant woman should be eligible at that same income level so that we can ensure adequate prenatal care and better birth outcomes.

Mr. PALLONE. Doctor, I am just going to ask you to summarize

if you will.

Ms. SLOYER. OK. We realize that States have expanded their

SCHIP programs outside of the original intent of the legislation. As

a result, we understand that several States are concerned about

forecast deficits. While we recognize that expansions were done

with the support of the Federal Government, we are concerned that

a State like Florida who has remained true to the intent of the program will be penalized in reauthorization. While we may have

some allocations sitting on the table, we are working to reach those

children that remain uninsured and are committing to using our

funding.

While these recommendations come from our experiences, we believe that many States would agree increased flexibility is critical,

these changes will help create a more fiscally responsible SCHIP

program and help cover more children. Thank you.

[The prepared statement of Ms. Sloyer appears at the conclusion

of the hearing.]

Mr. PALLONE. Thank you.

Ms. Allen.

112

STATEMENT OF KATHRYN G. ALLEN, DIRECTOR, HEALTH

CARE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

Ms. ALLEN. Mr. Chairman, Mr. Deal and members of the subcommittee, I am pleased to be here today as you address these very

important issues about the State Children’s Health Insurance Program and how it has helped to meet the needs of uninsured children since the program’s inception 10 years ago and issues concerning the program’s reauthorization. SCHIP indeed offers States considerable flexibility in how they provide health insurance coverage

to children and families whose incomes exceed eligibility requirements for Medicaid.

States have three options in designing their programs. They may

offer a Medicaid expansion, which offers the same benefits and

services that their State Medicaid program provides. They may

offer a separate child health program which is distinct from Medicaid that uses specified public or private health insurance plans or

they may offer a combination program which incorporates features

of both. At the time of enactment, Congress appropriated a fixed

amount of funds, about $40 billion over 10 years, to be distributed

amongst States with approved SCHIP plans. Unlike Medicaid, however, SCHIP is not an open-ended entitlement to services for beneficiaries but it is a capped grant—or allotment—to States. Each

State’s annual allotment is available as a Federal match based on

State expenditures and is available for three year after which time

any unspent funds may be redistributed to States that have already spent their allotments for that year.

Now, my remarks today will focus primarily on two issues that

will describe the experience across all States. What I will do is provide some numbers that describe the experience of all States, provides a little more detail beyond the context that has already been

provided. I will describe some recent trends in SCHIP enrollment

and the current design of all States’ SCHIP programs, State spending experiences under SCHIP and then I will comment briefly on

some issues for consideration under reauthorization.

First, SCHIP enrollment increased rapidly during the program’s

early years but it has stabilized in recent years. Total annual enrollment has leveled off at about 6 million individuals including

just over 600,000 adults with about 4 million individuals enrolled

at any point in time. Many States adopted innovative outreach

strategies and simplified and streamlined their enrollment process

in order to reach as many eligible children as possible. Nevertheless, 11.7 percent of children nationwide, about 9 million children,

remain uninsured, many of whom are eligible for SCHIP. States’

SCHIP programs reflect the flexibility for them in their overall program design. Currently, 18 States operate a separate child health

program, 11 use a Medicaid expansion program and 21 use a combination of the two. As of fiscal year 2005, about 27 States had

opted to cover children and families with incomes up to 200 percent

of the Federal Poverty level. Another 14 States had opted to exceed

that threshold with seven States covering children and families up

to 300 percent of poverty or higher. Thirty-nine States require families to contribute to the cost of their families’ care through some

form of cost-sharing such as premiums or co-payments. Few States,

however, only nine, operate premium assistance programs using

113

SCHIP funds to help pay premiums for available employer-sponsored coverage, in part because States find these programs difficult

to administer. As of last month, February, we identified 14 States

that have approved waivers to cover one or more of three categories

of adults in the programs: parents of eligible Medicaid or SCHIP

children, pregnant women or childless adults.

Second, SCHIP spending was low initially but now threatens to

exceed available funding. Some States have consistently spent

more than their allotments while other consistently less. In the

first years of the program, States that overspent their annual allotments over the 3-year period of availability could rely on other

States’ unspent funds which were redistributed to cover excess expenditures. Over time, however, spending has grown and the pool

of funds available for redistribution has shrunk. As a result, 18

States were projected to have funding shortfalls in at least one of

the final 3 years of the program, that is, they were expected to exhaust available funds including current and prior year allotments.

To respond to these projected shortfalls, Congress has appropriated

an additional $283 million for fiscal year 2006 and recently redistributed certain unspent allotments from fiscal years 2004 and

2005. Even so, as has already been mentioned, 14 States are projected to exhaust their allotments in fiscal year 2007.

Finally, Mr. Chairman, as Congress addresses SCHIP reauthorization, the single issue at the forefront may very well center on

the financing of the program yet this decision involves many moving and interdependent parts. They include how to maintain States’

flexibility within the program without compromising the overarching goal of covering uninsured children, how to help ensure

stable yet fiscally sustainable public commitments at both the

State and Federal levels, and finally, how to assess issues associated with equity including better targeting of SCHIP funds to

achieve certain public policy goals more consistently nationwide.

Mr. Chairman, this concludes my remarks.

[The prepared statement of Ms. Allen appears at the conclusion

of the hearing.]

Mr. PALLONE. Thank you, Ms. Allen. Let me just tell everybody,

we have 12 minutes remaining for the first vote. There are five

votes. These are the last votes for the day and there is also the debate for 10 minutes on a motion to recommit so we will be a while.

I was just figuring since there is 12 minutes, I will yield myself five

and then we will break, so if anybody wants to go, they can leave

now and then we will have the rest of the questions after.

Mr. HALL. Mr. Chairman, will you yield?

Mr. PALLONE. Yes.

Mr. HALL. Will you make available to us to submit questions and

ask them to respond in a reasonable time.

Mr. PALLONE. Absolutely. So ordered.

Mr. HALL. Thank you, sir.

Mr. PALLONE. But I will start and yield myself 5 minutes so we

can at least get that 5 minutes in.

I wanted to ask Mr. Weil, some groups who are opposed to shoring up the SCHIP program argue that when there is public coverage available, families will drop their employer coverage in order

to get it or employers will stop offering coverage, and I have heard

114

opponents of SCHIP argue that because we have seen a decline in

employer-sponsored coverage over the last 10 years and at the

same we have seen an increase in SCHIP coverage, that SCHIP

has in some way caused the drop in employer-sponsored coverage.

This is the crowd-out issue, if you will. On the first day of the hearing, the last hearing that we had, Ms. Owcharenko cited a paper

by Jonathan Gruver and Kazala Simon that supported this assertion. However, Jonathan Gruver has sent a letter to Chairman Dingell clarifying the information in his study and I would like to introduce those, both Mr. Dingell’s letter and the response into the

record, and he says in his response, ‘‘In our most general specification, we find no evidence of crowd-out associated with SCHIP per

se.’’ In addition, he states that public expansions like SCHIP remain the most cost-effective means of expanding health insurance

coverage. So I would like you to talk about this crowd-out issue,

whether in your opinion SCHIP is causing crowd-out or the decline

in employer-sponsored health insurance coverage and can you give

us your thoughts on Dr. Gruver and Simon’s report and letter

which I assume that you have seen.

Mr. BARTON. Mr. Chairman, before he answers, can the minority

have copies of these letters, please?

Mr. PALLONE. Yes, certainly. We will circulate them as I speak

hopefully.

Mr. BARTON. Thank you.

Mr. PALLONE. Mr. Weil?

Mr. WEIL. Mr. Chairman, the issue of crowd-out is very complex.

The methods that economists use to try to pull it apart are not

quite to the task and so if you look at a variety of estimates that

very smart people have made, you will see a range. This new study

adds yet another data point but does not really change the overall

conclusion, which is that there is not a lot but there is some. There

is no way the Government can invest in an area where some people

are spending their own money without a certain response but the

estimates in the paper are consistent actually with the ones that

have been given before, a quarter or so, and I think your prior

witness’s characterization of the conclusion of the paper is not really quite right. The paper does not reach the conclusion that there

is a 60 percent crowd-out rate, and it tries to look at families in

a way that, without getting bogged down in the methodological

issues, I think is stretching and not quite looking at the question

right, and I have spoken to some colleagues about that.

A fair reading of the Gruver-Simon paper is another piece of evidence that there is a small amount but this is not a new bombshell

telling you to stop running this program because you are wasting

your money. I would just say though that any area, whether it is

education, public safety, anywhere that the Government makes an

appropriation and expenditure, there is some chance there will be

some private citizens who reduce theirs. The issue is really the policy response to crowd-out, not whether or not it exists, and I think

there is really no reason to think given the size of the estimates

that the right policy response is either to reduce eligibility or to increase the hurdles to getting into the program. In fact, in this

Gruver-Simon paper, he estimates that the provisions that States

made to try to prevent people from dropping private coverage and

115

moving into SCHIP actually caused more crowd-out than they prevented. So I just think we have to accept that if we are going to

help people without health insurance, that that is the priority and

that that the reason employers are dropping coverage has primarily to do with growing costs that are affecting everyone. You

have an obligation to meet the needs of your citizens and I think

it is fair to say that the SCHIP program based on the overall review of the evidence is a very effective investment in addressing

that problem.

Mr. PALLONE. Thank you, and I am going to quickly get to Senator Vitale with only a few minutes left.

Could you discuss, Senator, how the cap on Federal funding on

SCHIP has affected New Jersey, and more specifically, since Federal SCHIP spending is capped at $5.4 billion a year into the future, what will this mean for New Jersey’s ability to continue those

they are already covering as well as any new children in the future?

Mr. VITALE. We are currently experiencing a $195 million shortfall from SCHIP so that is that the State treasury is making up

the difference for that shortfall. We are covering more children in

New Jersey than most of the States by way of Federal poverty but

it is that New Jersey has an ever-growing divide between the haves

and have-nots, and the reallocation or the diminishing reallocation

of funds on an annualized basis has a significant effect in terms of

the way it is New Jersey can afford to underwrite the costs of what

is left. We have 64,000 children in New Jersey who are still eligible

for SCHIP or Medicaid but not yet enrolled and we are aggressively

pursuing them through a number of means but the failure to reallocate—and I would advocate that we increase funding for SCHIP

because it has been so successful as a method to reach the rest of

those children, particularly in States that have not expanded to the

levels that New Jersey has.

Mr. PALLONE. Thank you. We are out of time and we are going

to have to break now, and I estimate probably about 45 minutes

or so before we come back, so thank you.

[Recess.]

Mr. PALLONE. I would ask our panelists to come back up and we

will begin and I yield to our ranking member, Mr. Deal.

Mr. DEAL. Thank you, Mr. Chairman, and thanks to the panel

for being here. As we consider the issue of reauthorization of

SCHIP, obviously there are many points of view and this panel has

expressed some of them here today.

Let me start, Dr. Sloyer, with the State of Florida since you have

been one of the more responsible States in terms of living within

your means and the allocations of the program. Does Florida have

plans to spend all of its 2007 allocation prior to its expiration in

2009?

Ms. SLOYER. We most certainly do. We in our last revenue estimating conference anticipate that we will spend every dime by the

end of our roll forward period in 2009.

Mr. DEAL. So I assume that you would be a little reluctant for

any proposal for either the shortfall or otherwise that would take

away that money to help States who have not lived within their

means?

116

Ms. SLOYER. I would say a little reluctant is an understatement.

Mr. DEAL. One of the problems that we have in looking at reauthorization as I view it is the great discrepancy and variance

among the States. Now, I know Mr. Weil says that that is federalism and it is, but there generally have to be general parameters,

and Senator Vitale, we don’t mean to pick on you but Frank invited

you so you have become the poster child for maybe some of us

viewing what is wrong, even though my State is in a shortfall and

we didn’t exceed it by insuring adults or singles or parents or anybody else. If we are criticized for anything, I guess it is we are 235

percent of poverty rather than 200 percent, which seems to be the

standard. But as I understand it, in the State of New Jersey, with

some of the provisions that allow you to have income disregards,

that a family of four in New Jersey can have an income of maybe

in excess of $72,000. Does that sound about right to you?

Mr. VITALE. Yes, close enough.

Mr. DEAL. For a program that by the legislative authorization

was designed to deal with children who are at a ‘‘near poverty

level’’, that becomes very difficult for some of us to understand how

it fits into the mix, and I know you will understand that that is

one of the criticisms that we all have to take into account.

With regard to where do we go from here, I think one of the

questions is, should we get to a more uniform-type standard as the

basis for it, and one of the great criticisms of some States and yet

the advocacy for it on the others who have advocated it is that parents should be included in the mix of children who are eligible.

Senator Vitale, have you all look at the possibility of including the

parents with the Medicaid FMAP as opposed to the SCHIP FMAP,

and would you be as interested in doing it that way with the lower

FMAP matching for those people?

Mr. VITALE. We currently cover parents, only parents of children,

not the childless adults but parents, up to only 115 percent of poverty. There are parents in Medicaid of course who would otherwise

not be eligible for FamilyCare or SCHIP but I think it is appropriate that we cover—100 percent of the poverty level, even 200

percent of poverty in New Jersey is an extremely low amount of annual income for a family and since we don’t cover childless adults,

only parents of children who are in the program but not all children, and since we go to 350 percent for our kids and for a time

we were at 200 percent for parents, it was really a match-up for

parents and kids and now we of course have abandoned 200 percent and we are back down to 115. It seems appropriate. These are

individuals who will never, ever in their wildest dreams have access to health insurance. Their primary care physician is the emergency room doctor or nurse.

Mr. DEAL. When a State like yours and others—I think when you

put Illinois along with you, those two States alone have consumed

all of the unused funds from all of the other States combined over

the last 2-year period. I believe you all have consistently been at

like 270 percent of your allocations. Now, my State, as I say is not

blameless because we haven’t kept and lived within our means either. The problem I think we have with it is that hopefully we will

keep this as a block grant program. It gets to look more and more

like an entitlement when we consistently overspend at the State

117

level and then expect the Federal Government to make up the

shortfall. It begins to make it look like an entitlement program but

only an entitlement program for those States who have overspent

and that creates the inequity I think we have to deal with and obviously is going to be one of those situations that we all have to

be concerned with in reauthorization.

I overstayed my time, I guess. Thank you, Mr. Chairman.

Mr. PALLONE. Thank you, Mr. Deal.

Mr. Green.

Mr. GREEN. Thank you, Mr. Chairman.

I guess coming from Texas I philosophically agree with my colleague from Georgia although in Texas we haven’t overspent our

allocation. In fact, we haven’t spent what I wanted them to on their

allocation, but that is an issue hopefully we will deal with. My

State of Texas provides 6 months for SCHIP coverage before kids

have to re-enroll in the program. The States that operate the separate SCHIP, only Texas and Oregon cover children for the 6

months at a time, and since Texas implemented the policy in 2003,

we lost approximately 180,000 children from SCHIP rolls and 50

percent of those children remain uninsured. It seems pretty simple

that 12 months of uninterrupted coverage will help keep kids on

the rolls and result in better health care outcomes for children.

However, according to the Texas Children’s Hospital, one of the

HMOs insuring Texas children under SCHIP in Houston, a 12-

month coverage policy has added benefit, actually saving the States

money. In fact, Texas Children’s Health Plan data shows that 12-

month coverage results in a 25 percent reduction in claims cost per

child, and can the witnesses speak to that issue and the cost savings that States accrue by covering children for 12 months as opposed to the 6 months? Because it is clear that at least in Texas

the 6 months coverage was enacted to suppress the enrollment and

keep State costs down.

Mr. VITALE. If I could, I think there are certainly a number of

issues. One, of course, is the issue of the continuum of care and

that children have access and they may not access their insurance

or access a provider within the first 6 months of their enrollment,

and if they have to re-enroll every time and if that re-enrollment

process is a little difficult where there are barriers to re-enrollment

in terms of when they have to begin to reapply, if there are mistakes in their application, that holds up their re-enrollment. So I

think for any numbers of reasons it makes sense that we do in New

Jersey, we have annual enrollment. We have one card that we give

to the parent for the child for their coverage. That saved the State

millions of dollars. We were giving out one card per month for

membership. But enrolling them for the entirety of the year gives

them the continuum of care for that 12-month period and in New

Jersey what we have provided is for an aggressive re-enrollment

process to make sure that they are, No. 1 eligible to re-enroll, and

we do that not only through the application process but through

Wage and Hour and Treasury. We have backtracked electronically

what the income is for the family to make sure that it is valid. For

any number of reasons an annual enrollment or an annual eligibility is the best way to go for two different reasons.

118

Mr. GREEN. When you say you backtracked it, that is through

your State treasury?

Mr. VITALE. Yes, through Wage and Hour through the treasury.

Mr. GREEN. Is that information available to some States—we

don’t have an income tax, for example. Is that available from the

Federal side?

Mr. VITALE. Gee, I don’t know. It is from our Wage and Hour locally so when companies submit their data monthly, we were able

to capture that information.

Mr. GREEN. Any other response to that question?

A follow-up question is, can you speak to the effect of the 6- versus 12-month coverage for the State Medicaid cost? For example,

2004 data from our Texas Health and Human Services Commission

indicates that the number of children moving from SCHIP to Medicaid is far higher than the number of children moving from Medicaid to SCHIP, so we are having children going from SCHIP to Medicaid and less than from Medicaid to SCHIP. While the 6-month

coverage period may keep enrollment down, and ironically also contributes to a net loss of State dollars, since the State receives a better match for children under SCHIP than they do under Medicaid,

can you comment on the effect of keeping children in SCHIP longer

would have on the State Medicaid budgets? Is there an effort to

keep children on SCHIP as compared to Medicaid because of the

additional cost to the State?

Mr. WEIL. I think it is very difficult to generalize about the budget effects across different States in these policies. I do think the

States have learned a lot in these 10 years and one of the things

they have learned is that 12-month continuous enrollment helps

achieve the objective of the program, which is to assure that children have health insurance. But you do have in the structure of

this program, States have the choice to decide a lot of things, and

for budgetary reasons, for their own decisions about the kind of

program they want to run, they don’t have to do that. There is a

combination of a financial component to the decisions States make

but there is also a choice about how they want to run the program

and I think those States that are most interested in achieving enrollment and retaining enrollment have gone the route of longer periods of eligibility. Clearly there is a cost to Medicaid to programs

that do not take full advantage of SCHIP so just because a State

saves money on one side does not mean they will save it on the

other side, and similarly, there is a cost to the Federal Government

if States are not fully—although they get a higher match in

SCHIP, if they are taking actions that yield more folks over on the

Medicaid side, then the cost may show up over there.

Mr. GREEN. Mr. Chairman, I know my time has run out, and I

have two other questions that I would like to submit to the panel

later if that is OK.

Mr. PALLONE. You can, but we also will have a second round, so

it is up to you.

Mr. GREEN. I will probably submit them.

Mr. PALLONE. I will leave it up to you. So moved. That is fine.

Mr. Engel.

Mr. ENGEL. Thank you, Mr. Chairman.

119

Dr. McDavid, I want to thank you for being here on behalf of the

National Association of Children’s Hospitals. I have great admiration for the service that Children’s Hospital in my area such as

Montefiore Children’s Hospital in my district in Bronx, New York,

and Blythedale at the New York Presbyterian in Manhattan provide to my constituents, and I am thrilled to welcome you to our

committee.

Sixty-one national advocacy groups devoted to improving chil- dren’s health requested $60 billion in additional monies to reauthorize SCHIP this year. The President countered with $4.8 billion.

Clearly there is a disconnect and we know based on the administration’s own estimates, only funding the program at $4.8 billion

could cause up to 400,000 children to lose SCHIP coverage. Can

you please tell me where does the National Association of Children’s Hospitals stand on the issues of SCHIP funding? I think I

know but I want you to say it. And do you believe that it would

be acceptable for Congress to allow so many children to lose their

SCHIP coverage over the next 5 years? Obviously I am outraged

over it and I think it is morally imperative and fiscally responsible

to devote more resources to providing and even improving and extending children’s coverage. So I hope you agree with this statement and I would like to hear your views on it.

Dr. MCDAVID. Well, the National Association of Children’s Hospitals would like to have all children covered, that funding for

SCHIP and Medicaid be sufficient not only to cover the children

who are now enrolled but to enroll the children who are eligible but

are not enrolled, Mr. Engel. The exact number, I would respond

that NACH can help with that but that will be a CBO designation.

That number will evolve as we know what the requirements are

going to be. The position of NACH is that all children be covered,

that Medicaid and SCHIP be appropriately funded, and eligible and

unenrolled children be enrolled.

Mr. ENGEL. Thank you. I want to ask you about asthma because

my area of the world in the Bronx, we have the largest, I think,

percentage of asthmatic children of virtually anywhere in the country. Two of my own children have asthma, my wife has asthma,

and a study several years ago noted that children living in New

York City primarily in the Bronx were almost twice as likely to be

hospitalized for asthma compared to the nationwide average. Obviously it contributes to school absenteeism for children and it is

very, very difficult and I want to tell you that I was pleased that

in your testimony you focused on the importance of comprehensive

care for children with chronic illnesses so I would like if you could

please comment on how chronic care management by programs like

SCHIP and Medicaid can reduce overall costs to families and safety

net providers.

Dr. MCDAVID. Well, medicine has evolved. We have learned more

in the last 100 years that we knew in the previous 1,000 years, and

the illnesses that children used to die from they no longer die from.

Immunizations have made an incredible inroad into child health.

With the introduction of the H. influenza B vaccine, we basically

eradicated the No. 1 cause of bacterial meningitis in children under

6 within 8 years of the introduction of that vaccine. My residents

don’t know what measles looks like. They don’t know what chicken

120

pox looks like. Those are the diseases that used to make children

sick and also families would have to lose time at work.

Mr. ENGEL. I had them both.

Dr. MCDAVID. Well, they wouldn’t know what it looks like now.

When I was training, which wasn’t that long ago, but it was some

time ago, 80 percent of all children who were diagnosed with leukemia would die and now 80 percent of children who are diagnosed

with leukemia live. That is a chronic illness. Asthma is a chronic

illness. Diabetes is a chronic illness in children and we are seeing

type 2 diabetes in children. So a lot of diseases that children didn’t

live long enough to have or didn’t live long with, they are now living. We are doing better. So we have to provide that kind of care.

My concern is that children go to school and families are allowed

to work and that is what good care on a routine basis does for families.

Mr. ENGEL. Thank you.

Thank you very much, Mr. Chairman. I see my time is just about

up. So thank you.

Mr. PALLONE. Thank you.

We are going to go into a second round, so I guess I am next.

I will just yield myself 5 minutes.

I wanted to follow up on this idea of, I call it flexibility. That

when the SCHIP program was founded and I think everybody who

is up here now was here at the time, it was not an entitlement the

way, Mr. Deal mentioned. It wasn’t intended to be. And the idea

was flexibility, that each State basically would be able to try to tailor the program to its own needs and so now we do have the proposal by the President to cut back the 200 percent and not include

for children and not include the adults other than those I guess

that have already been covered and so I just wanted to hear from

some of you about why you think some States have gone beyond

the guidelines now that the President is proposing and what it

would mean if we cut back, and I guess I will ask Senator Vitale,

I will ask Dr. Sloyer, anybody else who wants to get into it, but

just explain to us why this was done. One of the statements that

was made by the Governor of Tennessee at the National Governors

Association—I was there on Monday—was that we submitted these

proposals to go beyond the 200 percent or to include adults and

they are approved. They have been approved all along so why all

of a sudden are we being told to cut back. And if you just would

comment on it?

Mr. VITALE. Sure.

Mr. PALLONE. I will start with you.

Mr. VITALE. Thank you, Congressman. You are right that when

we were first at 200 percent of poverty in the beginning of KidCare

in 1998, it was widely publicized and accepted that it was a great

thing for kids. But we also recognize that New Jersey’s cost of living was much higher than most States, its median income, per capita income was much higher and the cost of living—to rent a onebedroom apartment in the average community is nearly $1,300 a

month, and those are issues that I can’t solve but what I can try

to solve is the health care issues for children. We did apply and it

was Governor Whitman at the time, a Republican Governor, who

applied for expansion to 350 percent. It was approved by CMS and

121

so essentially we believed that we a deal. We had an agreement

and this is going to be a partnership that would be ongoing. We

didn’t decide to go to 350 percent because we wanted to relieve

someone else the responsibility and obligation to provide the health

care. It wasn’t affordable for those individuals. It should also be

noted that at 350 percent or even at 300 percent and even below

that, there is a premium contribution by the parent so it is not a

freebie. There is, for lack of a better term, skin in the game for

those who are above 200 percent and get closer to 350 percent and

it is significant in terms of being responsible and we found also

that those parents how are covered closer to 350 percent want to

be able to contribute some dollars toward that. Some of them that

we have interviewed and we have talked to have said that they

don’t—maybe it is a personal thing but they don’t feel as though—

it is an entitlement that they don’t think that they want to be associated with. They don’t mind spending a few dollars to provide

their premium coverage.

But the comments that other States have lived within their

means, I don’t understand that. I think I understand the perspective that at one time the Federal Government gave us the opportunity to go to 200 percent, this was the limit, but when you say

you can go to 350 percent and we will match it at 65 percent, then

it is that we took advantage of that for the sole purpose of providing health insurance for children who would never, ever have that

opportunity for that kind of care.

Mr. PALLONE. Well, let me just ask Mr. Weil, over the past few

weeks we have heard a number of people suggest that SCHIP has

gone well beyond its intended reach. Do you think the program

really has run amok with all these waivers that were permitted

under the law? Are there beneficial aspects to the fact that we are

going above the 200 percent for kids and allowing adults, parents,

or do you think we have gone amok?

Mr. WEIL. We certainly haven’t gone amok, and the statute in its

own language says that HHS will reallocate unspent dollars to

those States that need them and therefore seeing other States not

using the funds did exactly what the statute anticipated. Why did

States go further? Some were already covering at higher levels and

the statute took that into consideration. Some found that the data

on which their allocations were based didn’t match the reality as

they went out to find families. Some used the funds as part of an

overall strategy to try to reach more uninsured people in their

States whether children or families and in some instances, but not

many, childless adults and of course Congress has already taken

that option away, and States are charging cost-sharing to families.

I would just note the real bottom-line answer to your question is,

States took advantage of this program because the Federal Government was taking no action on a problem that States saw as central,

which is the growing number of uninsured and the growing cost

problem that small businesses and families were facing, and this

was the only opportunity for States to interact with the Federal

Government and Federal programs to address that problem. If

there had been other avenues open, I am sure States would have

considered them as alternatives. There were no alternatives.

Mr. PALLONE. Thank you.

122

Mr. Deal?

Mr. DEAL. Thank you.

I want to get back to considerations for reauthorization and I

think the first place we ought to start is to remember that the C

in SCHIP is children, and they ought to be the primary focus. Now,

some people are saying we ought to have 100 percent of all children

who are 200 percent of poverty or below enrolled in SCHIP. I personally don’t think you will ever get 100 percent of any particular

category enrolled. What is an agreeable percent of 200 percent of

poverty of children that should be sort of a baseline, if you will?

Should it be 90 percent? Anybody think it ought to be lower than

90 percent of below 200 percent of poverty children in the SCHIP

program as a priority? Anybody think it ought to be less than 90

percent? Is 90 percent achievable? I think we have had States that

demonstrated that it is achievable. Does anybody disagree with

that? Does it get problematic when you fix that baseline above 90

percent? Does it become very difficult to achieve? I think I see most

people agreeing that it probably does. OK. So if we are looking at

where we should spend our money, is there anybody that disagrees

with the fact that we ought to set a baseline of, say, 90 percent of

children at 200 percent of poverty or below as a prerequisite for

spending SCHIP money on other categories such as adults or pregnant women or whoever? Does anybody disagree with that proposition?

Mr. VITALE. I do, Congressman.

Mr. DEAL. Why?

Mr. VITALE. Because it is that there are children who live at 210

percent of poverty or 250 percent of poverty and that is——

Mr. DEAL. They are not as bad off as the ones below 200 percent

though.

Mr. VITALE. Well, you are right, but it is also marginal, so let me

give you an example of a family of two in New Jersey at 200 percent of poverty is $27,000 a year. That is one parent and one kid.

Mr. DEAL. Well, let me stop you though. If we agree 90 percent

of those below 200 percent of poverty ought to be the sort of thing

everybody ought to be able to achieve, I am not saying you can’t

spend it on those above it. I am just saying that as a prerequisite

to that, you ought to achieve a certain penetration level of those

lower income children. OK. That is the point I was making.

Let me go quickly to another part, and Ms. Allen, I was looking

in the recommendations section because one of the things that my

State says is a problem is the formula. You allude to it, and as I

understand the formula, 50 percent of the formula is based on the

Medicaid formula of per capita income. Is that correct? Same as

you use in the Medicaid program?

Ms. ALLEN. That is correct.

Mr. DEAL. The other 50 percent is based on the uninsured children and those in the poverty level and the complaint my State

makes is that once they have been successful in enrolling the children in an SCHIP program, they don’t get to count those children

for future allocations of money. Does that make any sense to anybody?

Ms. ALLEN. Yes, sir. There are concerns about the formula does

disadvantage those States that are achieving a high rate of insurVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00126 Fmt 6601 Sfmt 6601 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
123

ing children and that is one of the recommendations that some are

making to relook at that formula.

Mr. DEAL. So theoretically, if you have 100 percent of your eligible poverty children, you would lose 50 percent or more of your

funding for the next allocation period. I think that is a huge problem and that does penalize the good actors in the process. Would

anybody agree we ought not to look at trying to fix that? Anybody

disagree with trying to fix that? OK. I think I got your approval

on that one.

One of the things that I think we also have to look at as we approach this is that we shouldn’t lose sight of the fact that it is a

block grant program and trying to keep it in that category I think

is very important. We earlier in the day talked about the possibility

that this might foreclose private insurance in the marketplace for

employer-based insurance that might be available to families who

might say well, I can get under the SCHIP program and therefore,

I don’t elect the employer-based. One of the suggestions—and some

States I think are already doing it. I know there is some in Medicaid—of using SCHIP money to assist families in that situation to

buy in to the private plans that are available through that employer-based system. It certainly saves a State money, I think, to

do that. Have you all done, Senator?

Mr. VITALE. Yes, sir, we have. In New Jersey we have the premium assistance program for parents whose children are already

covered in dependent coverage at work, so in a small group market

if your child is covered, the State if they would be—if they are

FamilyCare eligible but enrolled in their parent’s employer’s plan,

then two things can happen. One is that they would have to go

bare for 3 months before they would be eligible for our SCHIP program, which prevents the crowd-out piece. But we do though say

that since you are doing the right thing, you are insuring your kid

at work and you are paying the premium but you are FamilyCare

eligible, we will pay a piece of your premium to help you support

that premium because we know that you are eligible so let us do

the right thing; you have done the right thing, we will help you out

a little bit as well through premium support. And then our next

sort of iteration of that is to make a determination upon enrollment

going forward this legislation we are considering that would first

ask parents if they have health insurance opportunities at work,

and if they do and they are FamilyCare eligible and if the premium

is equal to or greater than, then we would help them with that as

well to sort of try to keep them in employer-based coverage and

support that system as well.

Mr. DEAL. Thank you very much.

Thank you, Mr. Chairman.

Mr. PALLONE. Mr. Burgess, questions?

Mr. BURGESS. Thank you, Mr. Chairman. If you don’t mind, I actually do have a couple of questions that have come up and I apologize about our voting schedule. At least we got to hear from all of

you before we had to leave.

I apologize because I wasn’t here for the early questions. If I am

re-asking something that has already been covered to just be patient with me, it won’t hurt for this committee to hear it more than

once anyway.

124

Ms. Allen, let me ask you about the eligibility for SCHIP in New

Jersey for those whose net income is 200 percent of the Federal

poverty level or below. That is by definition the definition of eligibility. Is that correct?

Ms. ALLEN. In New Jersey it is 350 percent percent of poverty.

Mr. BURGESS. Well, is that technically in compliance with the requirement that the program cover a population of 200 percent of

poverty and below as was intended when Congress passed SCHIP?

Anyone can answer.

Mr. VITALE. I can answer that. We first began in 1998 with

SCHIP when it first rolled out and we went to 200 percent of poverty for kids but we received a waiver from CMS to go to 350 percent the following year to enroll more children. So our waiver was

granted by the Federal Government and maintaining that 65 percent/35 percent Federal match.

Mr. BURGESS. So you covered all the kids in New Jersey if they

were 200 percent of poverty and below by that time?

Mr. VITALE. Most of the children in New Jersey are covered

below 200 percent, either FamilyCare or Medicaid, and we have

more children enrolled above 200 percent to 350 percent. The numbers get a little less as you go closer to 350 percent because those

are kids whose parents come in and out of insurance. They lose

their job, they lose their insurance and get back into it. So we have

a much higher enrollment at 250 or at 200 percent below and

above that.

Mr. BURGESS. So now we go up to 350 percent percent of poverty

basically. Now, let me just be sure that I am correct on my understanding of this. This is not the State of New Jersey spending New

Jersey money for everything above 200 percent percent of poverty

to 350 percent? It is the Federal money that you are drawing down

from the SCHIP program?

Mr. VITALE. That is correct. The Federal Government is paying

65 percent. We are paying 35 percent out of our State treasury.

Mr. BURGESS. So in a sense, you are then disregarding the income for those between 200 percent of poverty and 350 percent of

poverty?

Mr. VITALE. Well, sir, we are not disregarding anything. We are

not disregarding a Federal rule because we were given a waiver by

CMS to allow us to cover kids above 200 percent to 350 percent so

we are in compliance with the waiver.

Mr. BURGESS. Then we would be in agreement that the waiver

is the problem? OK.

Mr. VITALE. No, we would not.

Mr. BURGESS. Well, Senator, let me just stay with you for a

minute. It is my understanding that legislation has been introduced in Congress that would take 2005 allotments and 2006 allotments from States that have not yet expended these allotments before the 3-year time period that they had to expend the funds and

take those monies and redistribute to States who will spend their

entire 2007 allotment before the end of the fiscal year. Am I correct

about that?

Mr. VITALE. Yes.

Mr. BURGESS. I think I am one of those States that would lose

money in a deal like that, but you are supportive of that concept?

125

Mr. VITALE. Well, sir, I am not supportive of any State losing

their allocation but I do believe that all States that enter into this

partnership with the Federal Government have an obligation to do

all that they can to enroll all the children above—or not above but

to their limit.

Mr. BURGESS. No argument.

Mr. VITALE. There are States that have done a less than adequate job in enrolling those children so since there was a finite pot

of money, we want to be able to redistribute it to those States who

actually use it.

Mr. BURGESS. But we heard from other witnesses earlier in their

testimony that one of the problems is that we are inconsistent and

it would seem to me to be the height of inconsistency if we say

Texas, you have got 3 years to spend these funds but oh, by the

way, now we are doing a quicker look-back for you and we are

going to take those funds that should be yours until 2008, 2005

funds that should be yours until 2008 but we are going to zip those

off to someone else to cover their population. In Texas, we are not

as generous as you are in New Jersey. We don’t go up as high as

350 percent of poverty. Well, it is just a question of fundamental

fairness. Your position is that since the Federal Government allows

that to happen and you have the waiver that that is OK? We are

looking at reauthorizing this bill and we want to do it as best as

we can. We want to be fair to all the States and we hope the States

will play by the rules but then we should play by those rules that

we set out, I think. I had a discussion with Albert Hawkins, our

State HHS director, last week when I was home, and I said Albert,

is 3 years not enough time for you to allocate that money? Texas

of course has a legislature that meets every 2 years. Some people

say that is too often. But because of that, that was the reason we

were behind on spending our money going back to 1998. We didn’t

meet in 1998. We met in 1999 and began our expenditures of the

SCHIP program. But we have adjusted to that and now we are on

that steady state of a 3-year timeline and Mr. Hawkins said as

long as we stay on the 3-year timeline, we are fine. Because I

asked him, I said do you need more time to spend the money;

maybe you ought to spend more on doctors because they could get

paid more. And he said no, what we are doing is good but we just

need the stability of having that 3-year timeline not be interrupted

for us to be able to make our plans back in the State with the partnership that Texas entered into with the Federal Government.

I see my time has expired, Mr. Chairman. You have been very

indulgent. Thank you.

Mr. PALLONE. OK, sure. We are just going to go one more round

here and then we will close because I don’t want to keep all of you.

I just wanted to ask about more outreach because we know for

example in New Jersey, and I know it is true in other States, that

even now there are more kids eligible for the SCHIP program that

are not enrolled than are actually enrolled, at least in my State,

and I know that is true in many other States. I would ask Dr.

McDavid and then again Senator Vitale if he likes, there are currently 9 million uninsured children in the country. Of those, twothird currently qualify for public programs such as SCHIP and

Medicaid but are not enrolled. Some States have more barriers to

126

enrollment than others, but just talk to us about what things

States have done that have improved enrollment, what kind of barriers have been put up and certainly part of this may be—because

I know that Senator Vitale has told me in the past that enrolling

the adults is one way of enrolling the kids. What would you recommend to get more kids enrolled? What kind of outreach, what

kind of changes to the program as we go through the reauthorization?

Dr. MCDAVID. I can tell you what we have done in Ohio, and

Ohio has actually put everyone into Medicaid. We don’t have a separate SCHIP program. Twelve months continuous eligibility is very

helpful. I think that if any of us in this room had to pick our insurance every 6 months and gather up a bunch of materials and take

it down to the center, we probably wouldn’t get it done. So we have

to think about the barriers that low-income working families have

to face to get re-enrolled. So 12 months continuous eligibility, presumptive eligibility. If your income is low enough for you to meet

certain other programs in your State, then families need to know

about for us Medicaid and make sure that we get their kids enrolled. At my hospital, we have a person that we hire that we pay

for who literally helps families get the documentation together so

that they have the receipts and they help them get the birth certificates and the things that they need, because for many families it

is a very difficult thing to do. If you are born at our hospital, then

we know that you have got a birth certificate somewhere—not our

hospital, we have a women’s hospital with us.

The other thing we did in Cayuga County, which is the county

that I am from, we did a 2-year pilot with self-declared income.

People could say what their income was, and when we did it we

found that there was very little fraud, that people do honestly selfreport their income. So there are things that you can do to decrease

the barriers. Personally, I find that we ask people who have less

resources and skills than we do to do things that we probably

wouldn’t do, and I think we have to think about how the people

who stock the shelves at—can I say it—Wal-Mart and change your

oil at the lube stop and pass you your burger at the Burger King,

the kinds of things that you and I may not think of as barriers are

huge barriers to them.

Mr. PALLONE. Talk to me or tell us, Senator, about how, enrolling

the adults is a factor in enrolling the children or any other outreach that New Jersey has done to try to get more kids enrolled.

Mr. VITALE. We have seen that. We don’t know what the reasons

are. We kind of guess why that is. We know that when families

participate as a family, that there is higher enrollment for kids. I

don’t know why that is. You would think that even if a parent

weren’t eligible that they would get their kids in anyway. So I kind

of scratched my head on that notion. But 2 years ago when we reformed FamilyCare and we did FamilyCare II, our original application was 14 pages long, two sides. I used to joke that it looked like

an application for tuition assistance to Annapolis and it was that

difficult to fill out, and it was a challenge for me and for my staff

to fill it out without making a mistake, and if you mail it in and

you had a mistake, then it wasn’t processed, it sat in a pile for 6

months until they figured out where it came from. So we went

127

down to a 1-page form and asked for income. We went from three

pay stubs to one pay stub. We enroll online now. We have reached

out to hospitals to get them to participate in enrollment. We

weren’t asking for a Medicaid waiver so that we can have a certified individual in the hospital actually certify the application as

opposed to having that application filled out by a hospital employee, then have to go to the country to be certified and find its

way through the process and finally make it down to Trenton to

be finalized. We have also done a lot of average with FQHCs with

schools, with clinics. We have set up enrollment sites at legislative

offices inclusive of mine, then in reach within the departments, the

Department of Health and Senior Services. We have women’s, infants’ and children’s program and through the FQHC process

where we begin to now enroll. Each department head meets—every

time there is a staff meeting in Trenton, every department head,

every commissioner has to report to the Governor and to the commissioner of human services what they have done to help provide

outreach and awareness through their department, whether is the

Department of Education, Department of Health.

And last, in the Department of Education, we have identified

through a pilot program that will expand next year, we have been

outreaching to all children who are eligible for free and reduced

school lunch. So everyone who is eligible is certainly eligible for

SCHIP. But in New Jersey, since we have a higher eligibility, we

are looking for all children so now we are educating school districts, school nurses and others so that they can participate in the

enrollment process as well.

Mr. PALLONE. OK. Thanks a lot.

Mr. Deal.

Mr. DEAL. One of the things that I encounter when I talk with

my State legislature and Governor with regard to their shortfall

was that the Georgia statute that put in place our Peach Care program prohibits our State from adding State dollars when the Federal match runs out. Do you have a similar prohibition under New

Jersey law, Senator, that you are aware of?

Mr. VITALE. No, Congressman, we do not.

Mr. DEAL. And as I understand it, there is no prohibition in the

Federal statute that would prohibit a State when they are approaching a shortfall from self-funding whatever the shortfall

might be. Am I correct on that? There is no Federal prohibition

against it?

Ms. ALLEN. I am not aware of any, no.

Mr. DEAL. Obviously one of the reasons that SCHIP is so popular

is that the FMAP differential is much more favorable to a State

than is the Medicaid FMAP. In my State, it is little slightly less

than a 161⁄2 percent differential and I know that must vary from

State to State. Ms. Allen, did you all look at that issue of the differential between the Medicaid and the SCHIP differential on the

FMAP, and how big of variance do we see in States. Mr. Weil, you

may know.

Mr. WEIL. The formula is in statute and it is a little complicated.

The State has to put in 30 percent less than it would for the Medicaid program. So for the States at the 50 end of the range, it is 50/

128

65 so it is a 15-point gap as you move up into matches that move

slightly but it is a pretty good rule of thumb.

Mr. DEAL. So it sort of starts at 15 percent? Is that what I understand you to say?

Mr. WEIL. Yes.

Mr. DEAL. So there is great incentive to maximize the use of your

SCHIP if at all possible.

Ms. ALLEN. Yes.

Mr. DEAL. Well, we have a task of reauthorization and trying to

deal with some of these issues that we are confronted with. I have

come to the conclusion though that there are some things that are

immutable. One is, if it is a choice of me paying for something or

somebody else, namely the taxpayer paying for it, I am going to

choose the taxpayer every time. If it is a choice of the State paying

for it or the Federal Government paying for it, the State is going

to always choose the Federal Government to pay for it. Those are

the laws of human nature and we are not going to pass anything

up here that is going to repeal the laws of human nature, and I

think what we have to do is work within those to try to make a

program as far as possible. Because quite frankly, people from

States like Texas, as Dr. Burgess has indicated, they have a right

to be indignant when they were given their allowance by Uncle

Sam just like my State was given its allowance by Uncle Sam and

we have overspent ours and we come running back and saying

well, take part of his or give me some more to make up the difference. Those inequities are going to haunt us until we try to get

a handle on them to address them as appropriately as possible, and

it is going to take good faith and it is going to take a willingness

to try to deal with the tough issues because otherwise politics will

take over and human nature is going to take over and sometimes

it does not draft the best kind of legislation for the long term.

So Mr. Chairman, I appreciate the time and I especially appreciate these witnesses being here today, and we probably are going

to have questions that some of our members who are not here are

going to submit to you and hopefully you will be able to respond

to those, and any suggestions—I would simply say that any suggestions that you have about things we haven’t even talked about or

haven’t even thought about perhaps, and I would and I am sure

the chairman would too, we would welcome your input on all those.

Thank you.

Thank you, Mr. Chairman.

Mr. PALLONE. Thank you. Dr. Burgess.

Mr. BURGESS. Thank you, Mr. Chairman.

Let me just echo what Ranking Member Deal just outlined because I think that is extremely important. Maybe since I am so

new to this process and I really don’t understand all the time what

something like a waiver might be or might look like, perhaps we

can ask CMS for some examples of waivers, perhaps the waiver

that is provided to your State, Mr. Chairman, and waivers that

have been provided to some of the other States as well just so we

have an opportunity to look at—I am always concerned about Medicaid as a Federal program because it requires 2,800 waivers to

work well. Maybe we ought to try to get it right the first time and

not require the CMS to come back and give us waivers to make it

129

work when it is not working well for the people it is intended to

serve, and it is a good goal to serve children, provide children with

coverage. It is after all preventive medicine at its best. I think we

heard from our previous panel when we had our first hearing that

for every dollar that it costs to cover an adult, you can get comparable coverage for a child for about 60 cents because we are obviously treating disease much, much earlier in someone’s life span

and so we can expect our therapeutic outcomes to be enhanced,

which leads me to the question of—well, let me back up for a

minute and ask Ms. McDavid, I think I heard you say during your

opening statement that you are looking at possibly providing financial incentives for people to enroll in SCHIP. Is that correct?

Dr. MCDAVID. That wasn’t me.

Mr. BURGESS. Maybe I misheard that. Well, the whole concept of

covering adults on a children’s health insurance statute is one that

I just intellectually have some trouble with. If we are going to be

covering adults, we should cover adults. If we are going to be covering children, let us cover children. Let us decide what we are going

to do and do it well and do it better than anyone else. Does anyone

have any thoughts on the concept of expanding the populations to

include adults? In the interest of full disclosure, I was an OB/GYN

doctor in my former life so I do think we ought to cover pregnant

adults because that really is preventive medicine at its very best

because we are going to prevent problems before birth. But aside

from the individual who is pregnant, non-pregnant adults and

childless adults, does anyone have any thoughts about it? Are these

populations we should be seeking to cover with the SCHIP program?

Dr. MCDAVID. I would like to state on behalf of the National Association of Children’s Hospitals that our fundamental focus should

be making sure that children are insured, that there is an adequate amount of money to cover the children who are already enrolled and that we do outreach and enroll those children that are

not enrolled. I agree with you, in Ohio we cover pregnant women

to 150 percent of poverty and, as you know, it is very effective. You

come in, you give your urine, you get measured, you get your blood

pressure taken, you have ruled out gestational diabetes, intrauterine growth retardation, preeclampsia. We understand that, but

for children, our emphasis is that children should be adequately

covered and after that has been taken care of, then we can look at

other populations.

Mr. BURGESS. So we would be in agreement that the children

should be the primary focus of this as we reauthorize this legislation?

Dr. MCDAVID. Yes.

Mr. BURGESS. And, Mr. Chairman, I may be wrong on this but

I think when we do our supplemental appropriation request from

the administration in a couple of weeks, we are going to be asked

to add funding to SCHIP for the shortfalls that are occurring

throughout the country and all well and good if we are not paying

our bills, by all means, let us step up and do that, but if we are

incurring those bills because of not using the program for the original intention, the original purpose for which it was intended, then

I think we have to look at how we have structured it, and again,

130

it just leads me back to the coverage of adults. So if anyone else

has any thoughts on that, I will be happy to hear them in the 54

seconds I have left.

Mr. VITALE. If I could be so bold, Doctor——

Mr. BURGESS. Actually, if you are talking, I will bet the chairman

will give you as much time as you may consume.

Mr. VITALE. Congressman, thank you. I think fundamentally that

there is—let me back up. I believe that we can cover all the children in our States. In New Jersey we have done a great job. We

only have 64,000 kids left who are not covered at our poverty level

of 350 percent. The States who are at 200 percent or 250 percent

or 225 percent, I believe that with the right kind of effort they can

get to their goal of almost 100 percent coverage if they really try

because generally they don’t mandate coverage but through the appropriate kind of average we can get really close to insuring most

of those kids. But it is fundamentally important as a matter of not

just fairness and equity. As a physician, you understand that. Anyone who goes uncovered for so long, the health consequences are

enormous and it is also health consequences that provides for an

enormous amount of strain and burden on State and Federal budgets.

Mr. BURGESS. I am not going to argue about that but let me

just——

Mr. VITALE. We can change the name, change SCHIP to something else.

Mr. BURGESS. And if that is something that this Congress needs

to take up, then perhaps we should do that. But there are four

States that I am aware of where there are more adults covered

then children. Clearly the intent of the program is not being followed if you have four States where you might have double the

number of adults that you have children covered. I would suspect

that just looking at the numbers that I was given the other day,

that in those States there are probably children under 200 percent

of poverty who are not being covered in those States, and for that

reason we are not doing the job that—and I see we but I wasn’t

here in 1997 but that the Congress intended when this legislation

was passed 10 years ago.

Mr. VITALE. I think you are right. I think it is a shame that

there are more parents than children covered in those four States

but I would just caution all of us not to throw the baby out with

the bath water because there are 46 other States doing the right

thing.

Mr. BURGESS. Well, yes, but we do need to be good stewards of

the taxpayer money at the Federal level. We are not always seen

in that role but it is important that we keep that role in mind.

Thank you, Mr. Chairman. You have been very indulgent. I will

yield back.

Mr. PALLONE. Thank you, and I want to thank all of our witnesses for being here today. I thought this was very thought-provoking and helpful for us as we move to reauthorization of SCHIP.

I just wanted to mention—well, first of all I will enter into the

record a letter that went from the National Governors Association.

This is from Governor Corzine, Governor Douglas on a bipartisan

basis to the House leadership about the SCHIP program, and I also

131

wanted to remind the members that you may submit additional

questions for the record to be answered by the relevant witnesses.

The questions should be submitted to the committee clerk within

the next 10 days and the clerk of course will notify your offices of

the procedures.

Thank you all again. This was very helpful. And without objection, this meeting of the subcommittee is adjourned.

[Whereupon, at 4:58 p.m., the subcommittee was adjourned.]

[Material submitted for inclusion in the record follows:]

132

133

134

135

136

137

138

139

140

141

142

143

144

145

146

147

148

149

150

151

152

153

154

155

156

157

158

159

160

161

162

163

164

165

166

167

168

169

170

171

172

173

174

175

176

177

178

179

180

STATEMENT OF LOLITA M. MCDAVID

Mr. Chairman and members of the committee, thank you for the opportunity to

testify on behalf of the National Association of Children’s Hospitals (N.A.C.H.) in

support of Federal efforts to ensure all children have health coverage, beginning

with reauthorizing and strengthening the State Children’s Health Insurance Program (SCHIP).

I am Lolita M. McDavid, M.D., M.P.H. As a pediatrician, I have devoted my medical career to children. Currently, I serve as medical director of child advocacy and

protection for Rainbow Babies and Children’s Hospital, the pediatric hospital of University Hospitals of Case Western Reserve University School of Medicine in

Cleveland. Earlier in my career, I was head of general pediatrics at MetroHealth

Medical Center in Cleveland, the largest public hospital in Ohio. I am also an associate professor of pediatrics at Case Western Reserve University.

N.A.C.H. is the only national, not-for-profit trade association of children’s hospitals, including more than 135 independent acute care and specialty children’s hospitals and children’s hospitals that operate within larger hospitals or health systems. A longstanding member of N.A.C.H., Rainbow Babies and Children’s Hospital

was founded in 1886. It is a 244-bed pediatric academic medical center that serves

children from every county in Ohio, as well as children from many other states

throughout the country. We devote more than 52 percent of our patient care to children assisted by Medicaid or the Ohio version of the State Children’s Health Insurance Program.

Children’s hospitals are the backbone of health care for children in America. Less

than five percent of all hospitals in the nation, children’s hospitals deliver more

than 40 percent of all hospital care for children as well as the large majority of hospital care for children with complex and serious medical conditions such as cancer

or heart defects.

In addition, children’s hospitals are the health care safety net for their communities, devoting, on average, more than 50 percent of their patient care to uninsured

children or children covered by public programs, despite the fact that public programs often pay well below the cost of care. Finally, children’s hospitals train most

of the Nation’s pediatric workforce and house the nation’s premier pediatric research centers. Directly or indirectly, through clinical care, training and research,

children’s hospitals touch the lives of every child in this country.

Children’s Stories I have been asked to draw from my professional experience to

describe the importance of health coverage for children. I have two stories.

The first is a story about the powerful difference that health coverage can make

in the life of a child and the child’s family. Eugene and Rhonesha are a brother and

sister who are both patients in my practice. They live with their mom and dad, and

their family income qualifies them for SCHIP.

Gene is 10 years old—the same age as SCHIP. He is a great student and a great

kid. And with the exception of needing glasses, he has had only routine health care

needs. But Rhonesha, who is 6 years old, has a diagnosis commonly seen in our patient population—asthma.

I became Rhonesha’s doctor when she was 2 months old. She had required well

child care visits like all children but by the time she was 17 months of age, she

was showing signs of reactive airway disease, often a precursor of asthma. We supplied her with an aerosol machine and instructed her mother in how to use it. By

the time Rhonesha was 22 months of age, it was clear that she was asthmatic. She

is categorized as having mild persistent asthma.

In many cases like this, I could tell you about emergency room visits, hospitalizations and missed days of work, but that has not happened with Rhonesha. Her asthma has been controlled by medications. When she has an occasional flare-up, because she has a cold or there is a climate change, her mother manages her illness.

Dr. John Carl, a pediatric pulmonologist at Rainbow Babies and Children’s Hospital,

sees her every six months for evaluation and any needed medication adjustments.

We are now at the point that I only see Rhonesha for her annual routine visits.

When I last saw her, she was as healthy as her brother Gene. She is an outstanding

first grade student whose favorite subject is math. And, like Gene, she was wearing

glasses. Because Gene and Rhonesha have coverage through SCHIP, her mother has

a relationship with Dr. Carl and me. Rhonesha can access regular care and not use

costly emergency care services. And because she has the medications she needs, her

asthma is controlled and she doesn’t need to be hospitalized. She doesn’t miss school

and her mother doesn’t miss work. That’s the wonderful promise of health coverage—it not only directly promotes health, it also indirectly promotes learning and

employment.

181

My second story is about a child who was eligible for public health coverage but

who was not enrolled until after he was admitted to our hospital. Baby Nick (name

changed) was brought to our emergency department by his parents on New Year’s

Day. He was 5 weeks old with respiratory symptoms, vomiting and diarrhea.

Although Nick’s mother had insurance coverage for herself from her employment

at a supply company, Nick was uninsured. He was admitted to Rainbow Babies and

Children’s Hospital with a diagnosis of respiratory syncytial virus (RSV) pneumonia.

While hospitalized, it was determined that his family income qualified him to be enrolled in SCHIP. Happily, Nick went home after three days. He was well and now

had health insurance through SCHIP that will cover his immunizations and doctor’s

visits, which hopefully will keep him out of the emergency room.

Ohio’s Story In the last decade, expanded public coverage has made a world of

difference not only to individual children such as Rhonesha, Gene, and Nick but also

to children across the country, including in my home state of Ohio.

According to Georgetown University’s Center for Children and Families, over the

last decade, the number of uninsured Americans has steadily risen, now totaling

more than 46 million. At the same time, however, the number of uninsured children

declined by about one-third, even as private and employer-based coverage for children continued to erode.

Together, Medicaid and SCHIP cover more than one-third of all children in the

country, and they have made the difference, according to U.S. Census Bureau analysis. In fact, the number of uninsured children began to increase in 2005 but only

after states, faced with record breaking deficits, were forced to curtail Medicaid or

SCHIP or both. Today, 69 percent of all uninsured children nationwide are eligible

but not enrolled in Medicaid or SCHIP, according to the American Academy of Pediatrics.

These programs have been especially important to industrial states such as Ohio,

which have been losing not only employer-based insurance but also industrial jobs

that in the past provided insurance for the families of those who fill them. The

Brookings Institution reports that the between 1995 and 2005, Ohio lost more than

52,000 manufacturing jobs—a decline of more than 26 percent of such jobs. The loss

of those jobs brought with it the loss of health coverage for thousands of families.

Ohio is one of 33 states that have opted to administer SCHIP either through its

Medicaid program or through the combination of its SCHIP and Medicaid programs.

Together, Medicaid and SCHIP cover about one-third of all Ohio children, according

to the Ohio Bureau of Budget Management and Analysis in 2006. Between 1998 and

2004, the percentage of uninsured children declined from 9.8 percent to 5.4 percent,

based on data from the Ohio Family Health Survey. In state fiscal year 2007, Ohio’s

SCHIP program will cover an estimated 145,000 children, at a cost of about $290

million.

The proportion of Ohio children who remain uninsured could be reduced substantially simply by fulfilling the promise of existing Federal and state law, since 68 percent of all uninsured children in Ohio are eligible for, but not enrolled in, Medicaid

or SCHIP, according to the Health Policy Institute of Ohio.

Recommendations As the stories of Rhonesha, Gene and Nick demonstrate, having health coverage makes a real difference—not only in a child’s health but also

in the cost of the child’s health care and in his or her ability to be ready to learn

and grow up to be healthy and productive.

Building on the foundation of Medicaid’s coverage of 28 million children—who are

among the nation’s poorest and sickest children—SCHIP has made it possible for

states to cover an additional 6 million children of families whose incomes exceed

Medicaid eligibility criteria but who cannot afford or are unable to obtain private

coverage for their children. At a time when the rising number of uninsured Americans is testimony to the limitations of our system of health coverage, the last decade

of declining numbers of uninsured children is a measure of the combined success

of SCHIP and Medicaid.

The program’s success can be seen in the broad spectrum of support that exists

for the reauthorization of SCHIP. No matter where you turn, national organizations

of business groups, insurers, providers and consumers are saying the best way to

turn

around the loss of health coverage for Americans is to start by building on a solid

foundation of Medicaid and to expand SCHIP to cover more children.

The same breadth of support can be seen across Congress and state capitals,

where there is strong support among members of both parties for reauthorizing

SCHIP and expanding children’s coverage. Many governors have made expanded

coverage for children one of their priorities. Many more, including Ohio’s new governor, a former member of your committee, are exploring how expanding children’s

health coverage might be possible.

182

Because of this success, N.A.C.H. recommends that Congress commit to achieving

the goal of health coverage for all children. The first step should be to build on the

foundation of Medicaid and SCHIP. In particular, N.A.C.H. offers four recommendations: • Reauthorize and Fully Fund SCHIP: Congress should reauthorize and fully fund

SCHIP—at least to fill in all projected state shortfalls and to enable states to cover

all eligible but unenrolled children. • Improve Outreach and Enrollment: Reauthorization of SCHIP should include

specific measures that help states to improve outreach and enrollment of children

who are eligible for Medicaid or SCHIP. Measures might include financial incentives, simplified and unified application forms, extended continuous eligibility, and

others.

For example, a few years ago, Cuyahoga County in Ohio undertook a 12-month

demonstration of self-declaration of income by low-income families applying for Medicaid and SCHIP, as part of a larger strategy of improving enrollment of eligible

children. A study found that self-declaration of income by parents resulted in at

least 24,000 eligible children being enrolled, with a 98 percent accuracy rate. Approval rates of applications reached 85 percent, up from 65 percent prior to self-declaration, and the time taken to process applications was reduced from between 30

and 60 days to between 14 and 30 days.

In Ohio, we are recommending to our governor new public investment in outreach,

enrollment and retention, which were successful before the state cut back its funding. We also are recommending a change in the frequency of re-determination of eligibility so that it is the same for children and adults, as well as establishment of

presumptive eligibility for children, among other initiatives. • Protect Medicaid’s Safety Net for Children: As I have said, the success of SCHIP

stands on the shoulders of Medicaid. Our ability to sustain this success, as the Nation reaches out to cover all children, depends on both programs having the funds

to meet their goals.

To be sure, neither Medicaid nor SCHIP is perfect. SCHIP is capped; when funds

run short, as 14 states are projected to experience this year, children are left waiting in line for coverage. Medicaid’s historically low reimbursement rates—particularly for physicians—too often leave children without a community physician or

medical home. Nonetheless, together SCHIP and Medicaid have created an essential

safety net of coverage for low-income children and children with disabilities or other

special needs.

Children’s health care, especially for children with serious illnesses or chronic conditions, is much more concentrated and regionalized than comparable care for

adults. Health coverage for all children, including all of the patients of children’s

hospitals, relies heavily on the strength of our public insurance programs for children of low-income families.

• Invest in the Development of Quality and Performance Measures for Children:

Finally, more and more payers are asking for quality and performance measures for

health care providers. Providers like Rainbow Babies and Children’s Hospital are

pursuing quality and performance measurement as well. We are responding not

simply to payers but also to the need for ever better, safer care for our patients.

The American Academy of Pediatrics, American Board of Pediatrics, Child Health

Corporation of America and N.A.C.H. are working together to identify measures for

hospital and physician care for children and for ways to validate those measures.

But we cannot do this alone. Achieving quality and performance measures for children needs Federal leadership.

Measures need to be tested, and they need to gain consensus support and wideacceptance. Private and public investment has made this progress possible for measures for adult health care. The Federal Government’s leading role in public investment has focused largely on adult measures and Medicare. A commensurate investment for children’s measures has not been made, even though public coverage

through Medicaid and SCHIP is the nation’s single largest payer of children’s health

care.

It’s time to make the same investment in quality and performance measures for

children’s health care that has been made for adults. We ask that you provide the

Federal Government, though the Centers for Medicare and Medicaid Services, with

the authority and resources needed to support the development and advancement

of pediatric quality and performance measures. This will greatly enhance our ability

for states, providers and consumers to have a portfolio of measures they can use

for children.

Ten years ago, Congress faced and met an unprecedented bipartisan challenge—

how to put the Federal Government on a solid path toward elimination of the Federal deficit. That successful effort culminated in the ‘‘Balanced Budget Act of 1997’’

183

(BBA). And, precisely because it was setting priorities vital to the future of our nation, Congress created SCHIP as part of the BBA to expand health coverage for children. In effect, Congress made children’s coverage a priority within a balanced

budget.

Ten years later, Congress faces the same challenge—to achieve fiscal control while

at the same time taking the next step to cover all children. It should reauthorize

and expand SCHIP, while keeping Medicaid coverage for children strong. Ten years

of success, broad support throughout the private sector, and bipartisan support in

Congress and state capitals all argue for taking that next step.

As a spokesperson for children’s hospitals, I can tell you that Medicaid and

SCHIP are fundamental to the financial infrastructure of health care for all children, through the work of children’s hospitals. The decisions Congress makes on

SCHIP and Medicaid will affect the health care of every child in this country.

STATEMENT OF SENATOR JOSEPH VITALE

Good morning. It is a welcome opportunity to be here to discuss the importance

of the SCHIP program across the Nation and in particular to the many children and

parents of New Jersey.

New Jersey implemented the SCHIP program in March 1998 by covering children

of families with annual income up to 200 percent of the Federal Poverty Level (FPL)

and called it NJ KidCare. An example of 200 percent FPL is a family of three whose

annual income does not exceed $33,200. The program was met with great anticipation and excitement over the prospect of providing health insurance to thousands

of uninsured children.

As enrollment slowly grew, we recognized how many more children needed health

care coverage and in July 1999 expanded eligibility to children with family income

up to 350 percent FPL (ex. family of 3 with income not exceeding $58,100).

The KidCare program was successful and through it we learned more about the

uninsured population in New Jersey and how great the need was to provide health

care to children and their parents. We learned that there is increased participation

among eligible children when parents are made eligible for health care coverage. We

also know that providing health care coverage to pregnant women leads to healthier

babies and moms.

And so in September 2000, New Jersey made a decision to cover parents up to

200 percent FPL and the program was re-named NJ FamilyCare.

Unfortunately, due to consecutive budget crises, New Jersey had to close the program to parents in June 2002, leaving only those already enrolled to continue participating.

In September 2005, I sponsored legislation that in addition to streamlining the

application process, again made FamilyCare available to low-income parents and

guardians up to 115 percent FPL ($19,090 family of 3) in 2006 and up to 133 percent FPL ($22,078 family of 3) beginning September 2007.

We now provide health insurance coverage to over 125,000 New Jersey children

and over 79,000 adults through our SCHIP program. In addition, we cover over

450,000 children and close to 350,000 adults through our Medicaid program. As a

result, in partnership with the Federal Government, New Jersey provides health insurance coverage to over one million parents and children.

While New Jersey uses a higher percentage of the Federal poverty level for eligibility for its SCHIP program than all other states, we also have one of the highest

costs of living in the nation. Simply put, it costs far more to be poor in New Jersey

than in almost all other states.We have no choice but to use a more generous eligibility income level in order to reach those truly needy children and families with

low income levels.

Through SCHIP and Medicaid, it is also a much more economically responsible

way to provide health care. In New Jersey, where we have 1.4 million uninsured,

access to all levels of care for that population is typically provided by our State’s

hospitals. In fiscal year 2007, the State has budgeted nearly 900 million dollars to

reimburse hospitals for a percentage of the costs they absorb treating the uninsured.

In total, our State’s hospitals provide nearly 2 billion dollars of uncompensated care;

a financial strain that has put many hospitals at risk.

New Jersey greatly appreciates the opportunities that the SCHIP program provides states. Through our SCHIP program, we have been able to provide health insurance and needed health care to the most vulnerable population: our children.

New Jersey has made a strong commitment to the SCHIP program. This commitment is evident in the generous benefits package that we offer, our attention to simplifying the application process and the intense outreach efforts we have underVerDate 11-SEP-98 11:37 Jun 04, 2007 Jkt 000000 PO 00000 Frm 00187 Fmt 6601 Sfmt 6601 Q:\DOCS\110-6 SCOM1 PsN: SCOM1
184

taken. The prospect of limiting or, at worse, eliminating our SCHIP program to

lower income level families would be devastating to our State’s budget and to the

families of our State.

New Jersey has historically spent its entire annual Federal SCHIP allotment. And

though we have been eligible for SCHIP funds not used by other states, these reallocated resources have been diminishing over the years. There is an urgent need for

Congress to increase annual allocations to states to meet the ever-growing national

need for health care insurance.

I will conclude my remarks by asking the members of this important committee

to prevent shortfalls in funding for the SCHIP program and to advocate for increased support. Both Medicaid and SCHIP have been successful and efficient in expanding coverage to children. By promoting the continued success of these programs, we can ensure that children and families get the health care that they need.

This collaboration between the Federal Government and the states, and with premium sharing by consumers where it is possible, allows the kind of partnership in

health care that is a model for success. Without this continuing alliance, millions

of children and families will simply be unable to access the kind of care that the

rest of us have and some take for granted.

Thank you, again, for your interest in this urgent issue. I hope that my remarks

will help to support the need for leadership and long-term solutions to this ever increasing need.

TESTIMONY OF ALAN R. WEIL

Chairman Pallone, Ranking Member Deal, and members of the committee, my

name is Alan Weil and I am the Executive Director of the National Academy for

State Health Policy (NASHP), a non-profit, non-partisan organization with offices in

Washington, DC, and Portland, Maine. Thank you for the opportunity to appear before you today to discuss health insurance for children and the reauthorization of

the State Children’s Health Insurance Program (SCHIP).

This hearing comes at a very important time for the SCHIP program and for children’s health insurance. There is much to celebrate. The Centers for Medicare and

Medicaid Services (CMS) reports that approximately 6.1 million children were enrolled in the SCHIP program during the past fiscal year. Millions more children

have obtained Medicaid coverage due to the outreach and enrollment efforts associated with SCHIP. A solid base of evidence now exists linking the SCHIP program

to improved access to health care services for children. The nation observed declines

in the percentage of uninsured children for six consecutive years, coinciding with

the development and maturation of the SCHIP program. But now, as the SCHIP

program is up for reauthorization, these gains have come to a halt. Your decisions

with respect to the program will determine whether we continue to make progress

on children’s coverage or we return to the gloomy days when we took as a given

that the number of uninsured children would grow inexorably year after year.

NASHP AND SCHIP

My organization is dedicated to promoting excellence in state health policy and

practice. We have provided technical assistance to state SCHIP programs and

worked in partnership with the Federal Government since the program was created.

We serve as the informal ‘‘home’’ of the SCHIP directors’convening them each year

to discuss their progress and concerns implementing the program, and maintaining

inter-state communication throughout the year. We track state choices in the

SCHIP program and have published three surveys of state SCHIP programs, entitled ‘‘Charting SCHIP: An Analysis of the Comprehensive Survey of State Children’s

Health Insurance Programs.’’ The ‘‘Charting SCHIP’’ series, published in 1998,

2001, and 2006, has documented the progress states have made building their

SCHIP programs and described the various choices made, including program design,

populations covered, and benefit offerings.

While my organization works closely with the nation’s SCHIP directors, I do not

purport to speak for them. My testimony is solely on behalf of my organization, but

its content is shaped by the lessons I have learned from the SCHIP directors and

my great respect for their commitment and dedication to the people of their states

as they have developed and refined this important program.

The primary goal of my testimony is to provide context to the SCHIP reauthorization debate—context that sometimes seems absent as I listen to characterizations

of the program’s design and evolution. My testimony will focus on why the program

looks the way it does today and what is at stake in your deliberations.

185

‘‘COOPERATIVE’’ FEDERALISM

The SCHIP program is a good example of ‘‘cooperative federalism.’’ The states and

the Federal Government shared a goal. The Federal Government developed a framework for addressing that goal and provided substantial resources to the states. The

states, in turn, contributed their own resources and tailored the program to their

own circumstances. In an unusual step, many of the major features of the program,

including the key regulations and reporting requirements, were developed through

negotiations directly with the states rather than through edicts handed down from

Washington.

Within the constraints of the Federal statute and regulations, states took the program in different directions. Recently, there has been a great deal of attention paid

to how state choices vary on the income guidelines for eligibility and on the choice

to cover some parents and other adults. But state choices vary on a tremendous

range of dimensions such as the benefit package, the delivery system, provider payment levels, health plan accountability mechanisms, family premiums and copayments, and integration with employer-sponsored insurance and Medicaid. And, of

course, states have made varying decisions on what was a key compromise in the

original statute—whether to operate SCHIP as a Medicaid expansion, as a separate

program, or a combination of the two.

federalism is frustrating—it allows for, indeed it celebrates, the diversity of our

nation—and it is not orderly. Each of you may have a preferred vision for the program with respect to these many parameters. Your preferences may be aligned with

the choices made in your own state, or you may look around the country and see

other states operating programs more in line with your own views.

My overarching message to you is that the tremendous success and bipartisan

popularity of this program is directly tied to its flexible, Federal structure. Efforts

to remake the program with a different vision run the risk of undermining the Federal-state partnership that has allowed it to thrive. This is not to say that the program cannot or should not be modified. It is to say that the balance that SCHIP

represents was carefully crafted to meet objectives that spanned the political spectrum and met the needs of the Federal Government and states. Altering that balance risks undermining the roots of the program’s success.

As someone who has been studying the SCHIP program since its inception, I find

the current focus on the dozen states that cover families, the half-dozen states that

cover childless adults, and the eight states that extend SCHIP coverage above 250

percent of the Federal poverty level to be strangely removed from context.

Washington Called—and States Answered

States embraced the SCHIP program far more quickly than they did the Medicaid

program when the latter was enacted four decades ago. Forty-five states and the

District of Columbia created programs within one year of SCHIP enactment and all

but one jurisdiction had a program in place by 2000. Yet, as was expected, it took

time for eligible families to learn of the program, come to trust it, and ultimately

enroll. And there was great uncertainty at the time of enactment regarding the precise number of eligible children in each state so states tended to be conservative in

their estimates, not wanting to overspend the available resources.

In the early years of the program, states were subject to substantial criticism for

underspending. As the unspent balance amassed, Congress seriously considered reducing the size of the SCHIP appropriation. Ultimately, political pressure within

states combined with urgings from the Federal Government led to four responses.

First, states substantially increased their efforts to reach out and find the eligible

children within their states. The working families that are served by SCHIP are not

the traditional Medicaid or welfare population. No one had much experience marketing a program to this population. States took a variety of approaches and learned

from each other as they developed outreach plans. Such state-to-state learning has

continued as states have sought to retain children on the program rather than have

them cycle on and off.

Second, states increased their eligibility standards. The trend line is clear. In

1998, twenty-two states had income limits for SCHIP below 200 percent of the poverty level. By 2005, only eight states had income limits that low. In 2005, twentynine states were at twice the poverty level, and 13 states were above that level.

Third, every state had an SCHIP allocation—even those like Minnesota that already covered children up to 275 percent of the Federal poverty level at the time

the program was enacted. Facing the same pressures to spend their allocation that

every other state faced, these leadership states had the choice of going even farther

up the income scale or seeking permission to use their SCHIP funds to cover families or other adults. States that chose to cover parents and families did so on the

basis of a diagnosis of unmet need, an understanding that families are the typical

186

unit for health insurance coverage, and evidence showing that family coverage improves program enrollment and increases the odds of appropriate utilization by the

children.

Fourth, the Bush Administration’s announced in 2001 its Health Insurance Flexibility and Accountability (HIFA) waiver initiative which explicitly encouraged states

to apply for waivers to expand coverage to low income populations. Since the overwhelming majority of low-income children were already eligible for existing programs, the target population for HIFA was adults. CMS also explicitly identified

SCHIP funds as a desired source of funding for these waiver programs. In the absence of any other major Federal initiative, this waiver process, which included no

new resources, represented and continues to represent the primary vehicle available

to states that wanted to provide health insurance to childless adults.

These four steps took place at a time when the available resources to any given

state seemed limitless. With states given three years to spend each year’s allotment,

as the program’s fourth year approached it was clear that there would be substantial funds available for at least a few years for all states that exceeded their allotments. The combination of large unspent balances, pressure to draw down all available funds, and the incentive of an enhanced matching rate, made it possible for

all but the largest states to expand their programs as far as they wanted to, confident that reallocated funds would be available to pay for the Federal share. And

it is worth noting that the larger states are underrepresented in lists of states that

have gone beyond the original core parameters of the SCHIP program. Larger states

could not be confident that reallocated resources would be sufficient to meet their

greater needs.

The purpose of telling this story is to explain that, as the program was maturing,

ample Federal resources were available. States were under great pressure to spend

those resources, and the Federal Government was actively encouraging states to

draw down SCHIP dollars to meet the needs of children in families with income

above twice the poverty level as well as low-income adults. Washington called, and

states answered the call.

THE SCHIP STRUCTURE MAKES PLANNING DIFFICULT

Today the picture looks quite different. We speak of shortfalls and states are criticized for the choices they were encouraged to make just a few years ago.

Rather than point fingers we should acknowledge that the structure of the SCHIP

program makes planning difficult, and at times impossible. The actual resources

available to a state in a given year cannot be known until shortly before the year

begins, at which point it becomes possible to estimate how many funds are available

for reallocation and how many other states are eligible to receive reallocated funds.

The reallocation formula and timelines have been modified over the years—generally with the positive intention of preserving resources for children’s coverage—

but the knowledge that the formula can change at any time makes planning quite

difficult. And, of course, with any health insurance program, the needs of the population are constantly changing.

Why is there a hint of approbation directed at those states that have shortfalls,

when there is mostly silence regarding those states that have not spent their full

allotment? The fact is that the allocation formula and process all but guarantee that

there will be overspending and underspending. The law creates an impossible task

for states: project your spending perfectly using imperfect information. The states

should not be scapegoats for problems inherent in the program’s design.

LEARNING FROM THE SCHIP EXPERIENCE

The SCHIP program has been a successful Federal-state partnership. By delegating key decisions to the states, the Federal Government has obtained a level of political, financial, and administrative support at the state level that is unusual in the

realm of social programs. States’ choices reflect the economy, health care systems,

values, politics, and fiscal capacity that each state has. What happens if Congress

substitutes its judgment for those of the states? Of course that is your prerogative,

but with that authority comes the responsibility to recognize the likely consequences. Taking a program that states consider a success and a reflection of their

values and priorities and forcing them to modify that program in a manner that

may diverge from those priorities risks losing the investment and support that

states currently have. Changes at the margin likely have limited risks, but major

changes carry substantial risks.

In addition, please keep in mind that the states have their own list of concerns

regarding the program. In particular, SCHIP directors have told us of their frustration at their inability to provide supplemental benefits in key areas such as dental

187

care for children whose private insurance does not include this benefit. The prohibition on covering children of state employees not only is inequitable but it poses administrative barriers to enrolling all children since it lengthens the application process. Rules regarding premium assistance programs are cumbersome. My point in

listing these items is to remind you that the program is not perfect in anyone’s eyes.

Compromise is a central feature of SCHIP.

But the most important lesson from SCHIP is that it is possible to develop a successful program that overcomes the ideological chasm that has generally prevented

progress toward addressing the needs of the 47 million Americans without health

insurance. Congress could not resolve the key ideological choice when SCHIP was

enacted: Should it be a Medicaid expansion or should it be a separate program patterned on commercial health insurance? Congress passed that decision to the states.

These were hard-fought battles in some states, but every state rose to the occasion,

made choices, and moved forward with implementation.

In an era in which people question whether or not government can do anything

right, here is a program that has accomplished exactly what it set out to accomplish.

It has not done it perfectly, and it has not done it consistent with any one person’s

unified vision for how a program ought to look, but it has done it in a truly American way reflecting our nation’s diversity and diverse values.

WHAT IS AT STAKE IN REAUTHORIZATION?

It might be tempting to go back and use the same playbook in reauthorizing

SCHIP that was used ten years ago. Yet, that would overlook a whole wealth of information, gained through experience, states have provided policymakers. States

know first-hand what has worked and what has failed in their state. In many cases

states have redesigned their programs over time to achieve better results. States

have taken seriously the flexibility and responsibility granted in the original statute.

Much of the reauthorization debate focuses on the level of funding. This is a critical issue, but it is a debate to which I have little to add. Other aspects of the debate

have turned to whether or not the target population for the program should be redefined. On that issue I simply note that each of the 6 million Americans reached by

this program last year came to his respective state because he needed help meeting

a basic need—the need for health insurance. Any modifications that prohibit covering anyone currently on the program will add another person to the growing ranks

of the uninsured. Any calculation of future levels of funding that fails to account

for the resources needed to retain coverage for those currently on the program will

have the same negative effect. Funding allocations that fail to consider the eroding

effects of health care inflation and premium increases will result in fewer people

covered each year. And any funding level that fails to account for the costs of reaching those who are eligible for this program but not enrolled will serve as a barrier

to finishing the job that SCHIP so successfully began.

While the Deficit Reduction Act prohibited CMS from approving additional waivers that enable states to use SCHIP funds to cover childless adults, one comment

on this topic is warranted. Nearly one out of three 19 to 24 year olds in this country

is uninsured—a rate far higher than for children. Targeting limited resources to

children is an appropriate value judgment, but we should not ignore the fact that

as children become young adults (and enter their child-bearing years) our existing

public programs and private insurance policies shove them off a cliff of eligibility.

The importance of health insurance for a 20 year old is no less than for a 17 year

old, but our nation’s commitment to meeting the health needs of 20 year olds is far

more limited than it is to people just a few years younger.

At a time when the number of uninsured Americans continues to rise and ideological division often impedes broader health reform efforts, SCHIP has been a tremendous achievement. States rose to the occasion, showing an ability to break

through the ideological divide and implement a successful health program. States

expanded coverage and helped cut the ranks of the uninsured. States need prompt

reauthorization so they can plan for the future—the expiration of the current authorization is only seven months away and states are already well into the process

of setting their budgets for next year. And, ultimately, states need an expanded Federal financial commitment of resources so they can continue making progress meeting the needs of their citizens who would otherwise go without health insurance.

An effective Federal/state partnership brought us to this point. A continued partnership is the best framework for meeting the tremendous remaining needs of children and families.

188

STATEMENT OF JANET STOKES TRAUTWEIN

The National Association of Health Underwriters (NAHU) is the leading professional trade association for health insurance agents and brokers, representing more

than 20,000 health insurance producers and employee benefit specialists nationally.

Our members service the health insurance policies of millions of Americans and

work on a daily basis to help individuals and employers purchase health insurance

coverage.

In the course of conducting their business, NAHU members regularly encounter

parents of SCHIP-eligible children that have access to employer-sponsored health

insurance coverage but cannot afford their portion of the dependent premiums.

Some of these parents enroll their children in SCHIP, but many children remain

uninsured. NAHU would like to see the process for states to voluntarily use SCHIP

dollars to subsidize such employer-sponsored coverage made much simpler so that

more families can be covered together under the same private-market plans.

With the upcoming reauthorization of SCHIP, NAHU feels that there is a great

opportunity at hand to improve SCHIP’s existing public/private partnership structure and more cost-effectively cover more low-income uninsured children by removing some current restrictions that have hindered premium-subsidy efforts of privatemarket employer-sponsored coverage. Doing so would have the following benefits: • More families would accept employer-sponsored coverage for their children, lowering the number of uninsured children. • The administrative burden on low-income families would be lessened, as families

could be covered together on the same health insurance plan. • It would reduce the ‘‘crowd-out’’ of the private market that occurs when parents

decline employer-sponsored coverage in favor of SCHIP coverage for their dependents. • It would lower costs by taking advantage of any premium dollars employers are

willing to contribute toward their eligible employee dependent premiums—money

that is now often ‘‘left on the table.’’ • It would also reduce SCHIP costs because the risk associated with covering the

children with employer-sponsored coverage would be borne by the private market

plan rather than the public program. • Licensed health insurance producers, who are already helping millions of business owners purchase health insurance coverage for their employees nationally,

could provide outreach and enrollment assistance at virtually no cost to the SCHIP

program.

The original SCHIP legislation included an option for states to subsidize employer-based family coverage for eligible children if the coverage met certain requirements. But these rules are considered onerous by states; consequently, only

nine have attempted to implement premium-assistance programs. In order to receive federal approval to operate an employer-buy-in program under SCHIP, states

must demonstrate that the premium assistance will be directed to employer plans

that meet SCHIP requirements, including benefit standards, enrollee cost-sharing

limits, and minimum employer premium contribution levels. In addition, states

must show that buying the private insurance plan is cost-effective in comparison to

the cost of covering the enrollee directly through the state SCHIP program.

NAHU feels that it is crucial for Congress to make the SCHIP premium subsidy

process as simple as possible for both states and employers during the upcoming

program reauthorization process. While subsidization of employer-sponsored health

insurance certainly won’t be the solution for all SCHIP-eligible children, it would

be an attractive option for many working families, and NAHU members work every

day with employers that would love to be able to offer this type of subsidized coverage to their eligible employees as a benefit. However, for this option to work, it

needs to be easy for states to implement and administer, and more importantly, the

regulations governing this option need to be flexible enough to apply to all different

types of employers and their varying benefit plan options. Congress could improve

the ability of states and employers to offer and qualify for premium subsidies by

making the following changes to SCHIP:

Restructure the Cost-Sharing Requirements. The current SCHIP legislation virtually prohibits cost-sharing for children in families under 150 percent of the poverty level, and it is limited to five percent of family income for families with incomes

that exceed 150 percent. Unfortunately, cost sharing is defined to not only include

premiums, but also co-payments, deductibles and co-insurance. As such, most ‘‘average’’ private plans would exceed the five-percent maximum for many eligible participants, and the rule hinders qualifying employers from making changes to plan designs. If the cost-sharing language was amended to only cover health plan premiums, this problem would be alleviated.

189

Make Changes to the ‘‘Crowd-Out’’ Requirements. A further challenge is that

SCHIP regulations specify that children have to be without employer-sponsored coverage for at least six months to be eligible. This provision was originally put in place

to prevent the crowd-out, but it actually has had the reverse effect. It hinders employer subsidization efforts as it penalizes those employers that have already been

subsidizing the coverage of SCHIP-eligible dependents. The SCHIP crowd-out requirements are also inconsistent with Medicaid rules, which allow for children to

receive subsidized coverage if they have employer-sponsored coverage. Since the majority of states combine their SCHIP programs with Medicaid in whole or in part,

the inconsistency serves as a further obstacle to premium assistance. To fix this

problem we would like to see the reauthorization legislation specify that income-eligible children who already have access to employer-sponsored coverage be immediately eligible for SCHIP premium assistance.

Make it simpler for employer-sponsored health benefit plans to qualify. Current

SCHIP rules require that states set minimum employer contribution amounts or

percentages for employers to qualify for premium subsidy programs. Employers

structure employee cost-sharing requirements differently based on a variety of factors, and don’t always use percentages or flat-dollar amounts to determine their contribution. Also, overly specific requirements can be difficult for states to administer,

as it necessitates that they review every potential participating employer’s benefit

plan structure every year. This regulation was put into place to make sure that participating employers contribute to premiums, but it is really not necessary to ensure

employer participation. The cost-effectiveness test, if properly applied, will enough

to determine adequate employer contributions. As such, NAHU recommends that

the reauthorization legislation specify that premium contributions are required for

an employer plan to qualify for participation in any SCHIP premium-subsidy program, but it should also specify that the means of contribution must be left up to

the individual employer’s discretion.

Improve the design for the cost-effectiveness test. Like with Medicaid, any SCHIP

premium subsidy must be cost-effective for the state. However, unlike with Medicaid

premium subsidy programs, states with SCHIP programs that are separate from

their Medicaid programs must apply for a special waiver when non-eligible family

members are included in the employer-premium that is being subsidized. Under this

‘‘family waiver’’ scenario, the cost of insuring the entire family privately must be

less than the cost of insuring just the SCHIP-eligible child in the public program.

Since almost all employer health insurance policies for dependents are based on a

family rate and/or a rate for a parent plus his/her dependent children rather than

a separate rate for just the children, the vast majority of private plans fall into this

family waiver category, making this test formula virtually impossible for most employer plans to meet. NAHU recommends that the SCHIP reauthorization legislation eliminate the family waiver: requirement and instead apply the Medicaid costeffectiveness standard, which merely compares the cost of covering the eligible individual(s) privately versus publicly.

Make Medicaid and SCHIP rules consistent. In addition to the cost-effectiveness

test requirements, many SCHIP premium-subsidy regulations are inconsistent with

Medicaid rules on the same topics. This poses a significant administrative challenge

to states, because in the majority of states these programs are at least partially

combined. The reauthorization legislation should specify that all of these regulations

be reviewed and the inconsistencies resolved, with the goal of simplifying the employer plan integration process for both Federal programs.

Make premium subsidy programs easier to administer. One of the biggest obstacles to successful premium subsidy programs, from both the employer and administrative perspective are the plan benchmark standards. Since these requirements

must be implemented on a case-by-case basis, with an annual review of every employer-sponsored health benefit plan that wishes to participate, they are very hard

for states to administer. Also, since SCHIP benchmarks do not conform to most private-market employer-sponsored plan designs (in some states, there aren’t even

fully insured products available for private employers to buy that would meet these

standards), the benchmarks have really hindered program enrollment in the states

that have attempted premium subsidies.

Clearly, the reasons plan benchmarks were included in the original SCHIP legislation was to ensure that program beneficiaries were receiving adequate coverage.

However, NAHU feels that this goal can be achieved in a way that would be simpler

for the states to administer and allow many more employer plans to qualify. We recommend that instead of including benchmarks for employer-sponsored plans, the reauthorization legislation should specify that eligible children who participate in an

employer-subsidy program also be eligible for SCHIP wrap-around coverage for services not covered by their employer-sponsored plan. SCHIP coverage would be used

190

by eligible children merely to fill in any gaps in coverage, a method that has been

used successfully and cost-effectively in the Medicaid programs in many states.

Make sure that employees know about the programs. In order for employer premium-subsidy programs to work, employees have to know about them. However,

ERISA prevents states from requiring employers to notify their employees about the

existence of such programs. As such, NAHU recommends that Congress amend

ERISA as part of the reauthorization legislation to require employer notification

about Medicaid and SCHIP premium subsidy programs, similar to way that employers are required to notify eligible employees about Medicare Part D benefits.

Make it easier for states to get information about employer sponsored plans. A

final challenge to SCHIP subsidization of employer coverage is state-level reporting

requirements. To calculate the cost-effectiveness test needed for employer premium

subsidy programs, states need to obtain information about employer-sponsored plan

designs. Due to ERISA obstacles, there is no way of imposing reporting requirements on private employer-sponsored plans. This barrier has hindered many states

from taking up the idea of premium subsidies. Under current law, states can either

ask employers to provide this information voluntarily (which many do, but not all)

or ask the parents of SCHIP beneficiaries to obtain/provide it (which is both inefficient and also overly burdensome for parents). Congress could make this process

much more efficient for states and also easy for employers by amending ERISA to

require employers participating in an SCHIP premium subsidy program to directly

provide their summary plan descriptions to the state upon request. Right now

ERISA plans are already required to provide employees, upon their request, with

summary plan descriptions. The information contained in these summaries would

be sufficient for the states to determine the cost-effectiveness of an employer plan.

Thank you for this opportunity to provide information about how SCHIP could be

modified to cover more uninsured children through the employer-based health insurance delivery system. NAHU feels that SCHIP effectiveness could increase dramatically by eliminating legislative and regulatory barriers that have made it difficult

for states to develop private-market based plans. We look forward to working with

Congress and the Energy and Commerce Committee during the upcoming reauthorization process to address this issue. If you have any questions, or if NAHU could

be of further assistance, please do not hesitate to either contact me directly at either

(703) 276-3806 or jtrautwein@nahu.org, or speak with our Vice President of Congressional Affairs, John Greene, at (703) 276-3807 or jgreene@nahu.org.

Æ