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48–375 PDF 2008

COVERING UNINSURED KIDS: MISSED 

OPPORTUNITIES FOR MOVING FORWARD 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JANUARY 29, 2008 

Serial No. 110–85 

( 

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 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

JOHN B. SHADEGG, Arizona 

CHARLES W. ‘‘CHIP’’ PICKERING, 

Mississippi 

VITO FOSSELLA, New York 

ROY BLUNT, Missouri 

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 WILKINS 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 

DAVID CAVICKE, Minority Staff Director 

(II)

(III) 

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 

Vice Chairman 

TOM ALLEN, Maine 

TAMMY BALDWIN, Wisconsin 

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 

JOHN D. DINGELL, Michigan (ex officio) 

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 WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

JOE BARTON, Texas (ex officio) 

(V) 

C O N T E N T S 

Page 

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

New Jersey, opening statement .......................................................................... 1 

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

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

Hon. Anna G. Eshoo, a Representative in Congress from the State of California, opening statement .................................................................................... 4 

Hon. Joseph R. Pitts, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 5 

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

opening statement ................................................................................................ 5 

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

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

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

opening statement ................................................................................................ 8 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 9 

Hon. Diana DeGette, a Representative in Congress from the State of Colorado, opening statement ...................................................................................... 10 

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

of Pennsylvania, opening statement ................................................................... 11 

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

opening statement ................................................................................................ 12 

Hon. John B. Shadegg, a Representative in Congress from the State of Arizona, opening statement ...................................................................................... 613 

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

Texas, opening statement .................................................................................... 15 

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, prepared statement ...................................................................................... 16 

Hon. Jan Schakowsky, a Representative in Congress from the State of Illinois, prepared statement ..................................................................................... 126 

Hon. Edolphus Towns, a Representative in Congress from the State of New 

York, prepared statement .................................................................................... 130 

WITNESSES

Cynthia Mann, Research Professor and Executive Director, Center for Children and Families, Georgetown University Health Policy Institute ............... 18 

Prepared statement .......................................................................................... 20 

Chris Peterson, Specialist in Health Care Financing, Domestic Social Policy 

Division, Congressional Research Service .......................................................... 40 

Prepared statement .......................................................................................... 42 

Carolyn Taylor Chester, Nursing Assistant, Service Employees International 

Union ..................................................................................................................... 62 

Prepared statement .......................................................................................... 63 

Louis F. Rossiter, Research Professor and Director, Schroeder Center for 

Health Care Policy, College of William and Mary ............................................ 64 

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

Bruce Lesley, President, First Focus, Alexandria, VA ......................................... 66 

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

Answers to submitted questions ......................................................................

Ann C. Kohler, Deputy Commissioner, New Jersey Department of Human 

Services ................................................................................................................. 98 

Prepared statement .......................................................................................... 100 

Dennis G. Smith, Director, Center for Medicaid and State Operations, Centers 

for Medicare and Medicaid Services ................................................................... 101 

Page

VI 

Dennis G. Smith, Director, Center for Medicaid and State Operations, Centers 

for Medicare and Medicaid Services—Continued 

Prepared statement .......................................................................................... 102 

Tricia Brooks, President and CEO, New Hampshire Healthy Kids Corporation ........................................................................................................................ 106 

Prepared statement .......................................................................................... 108 

SUBMITTED MATERIAL

Chart, Monthly Costs of Living .............................................................................. 128 

Chart, ‘‘Coverage of Recent SCHIP Enrollees During the Six Months Before 

They Enrolled,’’ submitted by Ms. DeGette ....................................................... 129 

(1) 

COVERING UNINSURED KIDS: MISSED 

OPPORTUNITIES FOR MOVING FORWARD 

TUESDAY, JANUARY 29, 2008 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HEALTH, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 10:13 a.m., in room 

2128, Rayburn House Office Building, Hon. Frank Pallone, Jr., 

[chairman of the subcommittee] presiding. 

Present: Representatives Pallone, Eshoo, Green, DeGette, Capps, 

Solis, Hooley, Deal, Cubin, Shadegg, Pitts, Murphy, Burgess, 

Blackburn, and Barton (Ex Officio). 

Staff Present: Purvee Kempf, Bridgett Taylor, Robert Clark, Amy 

Hall, Yvette Fontenot, Hasan Sarsour, Brin Frazier, Lauren 

Bloomberg, Brandon Clark, and Chad Grant. 

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

Mr. PALLONE. The hearing of the subcommittee is called to order. 

Today’s hearing is entitled Covering Uninsured Kids, Missed Opportunities For Moving Forward. Last week the House tried for a 

second time to override the President’s veto of bipartisan bicameral 

legislation that would have reauthorized the Children’s Health Insurance Program and moved our Nation towards making sure no 

American child has to go without health insurance. To be honest, 

it is hard for me to understand the President’s logic or the rationale of those within Congress who voted to uphold his veto. I think 

we all have forgotten or simply do not understand the challenges 

that American families face in securing affordable health coverage 

for their children. 

Perhaps today’s hearing will remind us about the day-to-day 

struggle millions of American families face in order to afford the 

costs of health insurance. As health care costs continue to rise, employer-sponsored insurance is eroding. Employers are shifting more 

cost to workers or they are dropping coverage all together. For 

those who don’t have employer insurance purchasing insurance 

health insurance in the individual market is not really a viable option. The result has been a steady increase in the number of uninsured Americans since 2001, 9 million of which are children. 

Now as the economy continues to slump, things are only going 

to get worse for these families that have no health insurance. Unemployment rates are increasing, which means more and more 

2 

Americans are going to lose the health coverage that was tied to 

their jobs, will have fewer dollars in their pocket to pay for private 

insurance. 

Soon enough, many of these families are going to come to rely on 

CHIP or Medicaid for their children’s health coverage, and I think 

it is questionable whether or not the States will have the ability 

to respond to this increasing level of need. As we learned from last 

year’s debate, States are already having great difficulty in meeting 

the needs of those presently enrolled, not to mention the millions 

of kids who are currently eligible but unenrolled. Every year, the 

number of States that experience a shortfall increases. I distinctly 

remember members of the Georgia legislature descending upon 

Washington last year, pleading with congressional leaders to provide them with additional funds in order to prevent an enrollment 

freeze. We answered their call and filled in their shortfall so no 

child on the program had to lose their health care. But we didn’t 

stop there. We worked in a bipartisan fashion with our colleagues 

in the Senate to craft a bill that would strengthen CHIP so that 

there wouldn’t be any more shortfalls. Our bill would have provided $35 billion over 5 years to the States to maintain and expand 

coverage to 10 million children. 

We provided the States with the tools and resources necessary to 

go out and sign up the lowest-income children first. We strengthened the benefits offered under CHIP including the mental and 

dental benefits. We took note of the administration’s concerns and 

removed adults from the program faster than the President could 

by simply disapproving waiver renewals. And we also strengthened 

the program so only U.S. citizens could enroll in CHIP or Medicaid. 

But none of this seemed to satisfy the President. Instead of living 

up to the promise he made to enroll millions of poor children in 

CHIP during the 2004 presidential campaign, he issued veto after 

veto, and he didn’t stop there. 

It was simply not enough to deny the States the resources they 

need to insure the children of their State. The Bush administration 

has also tried to tie their hands with a torrent of erroneous policies 

on CHIP and Medicaid. Today, this administration has issued 

seven regulations that would collectively gut the Medicaid program 

and roll back coverage for millions of Americans. Some of the most 

egregious regulations are targeted towards health care services for 

low income and disabled children. In addition to the Medicaid regulations, the administration’s misguided CHIP directive contained in 

the August 17 letter to State Medicaid directors is truly atrocious. 

It would, amongst other things, force a child to go one full year 

without health insurance before they could enroll in CHIP. I guess 

a kid can just go to the emergency room for his or her health care 

like the President suggested. But I would like to see the President 

send one of his children to the emergency room instead of their 

family doctor. If it is good enough for hardworking families, it 

should certainly be good enough for his children as well. 

The bottom line is that instead of working with us to move our 

Nation forward and provide health care to kids, the President has 

chosen to wage an all-out attack on our Nation’s safety net system 

and those who rely upon it. I am glad we have someone here from 

the administration today, Mr. Smith, who can try to justify these 

3 

policies. But I also want to put Mr. Smith and the President on notice that I don’t intend to sit idly by as more and more Americans 

lose their health coverage. 

We are determined to work together to strengthen CHIP and 

Medicaid so every American child can access the care that they 

need to grow up healthy. And while the President may not be in 

the habit of living up to his promises when it comes to children’s 

health care, that is a promise from me to you that anyone can take 

to the bank. I would obviously like if over the next year we can 

come up and negotiate an expansion of SCHIP that provides additional coverage for children on a bipartisan basis. Nothing ever 

happens around here unless it is done in a bipartisan basis. But 

I also think it is important and today’s hearing is part of that process, it is important to show that we can’t just sit by. That we are 

going to continue to have kids that are uninsured and the numbers 

are going to increase and something has to be done. And that is 

the purpose of this hearing, to find out what actually is going on 

out there. And with that, I would yield to the gentleman from 

Georgia, Mr. Deal. 

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

Mr. DEAL. Thank you, Mr. Chairman. You and I get along very 

well on a personal basis. I find it regrettable that your opening 

statement is so partisan, a continued effort to beat up on our President. We ought to be concerned about what we either do or don’t 

do right here on our own Health Subcommittee. We ought to ask 

ourselves the very hard question, why was it in both iterations of 

the SCHIP bill that came before the House to vote on we never had 

a legislative hearing on either of those versions? 

This is what this committee is supposed to be about. We are supposed to have input. I heard your reference to you worked on a bipartisan basis with the Senate. Well, we are not the Senate. We 

are all elected to come here to this committee in this body and try 

to work together. And I pledge to you that we will do that if given 

the opportunity. But we agree on some things, we disagree on others. One of the things we agree on is that SCHIP ought to be reauthorized. It should have been reauthorized and we should have 

learned the lessons of the first 10 years of its existence. 

No piece of legislation is perfect, and over 10 years of being in 

existence we should have learned where the mistakes and the errors were. One of those mistakes was it should have been a children’s insurance plan and yet we find that in the versions that we 

were asked to vote on, we offer a bill or a version to get adults out 

of the children’s health program and that was rejected. 

Now GAO recently issued a report looking at those States that 

have covered adults in SCHIP and they conclude that overall 

adults account for 54 percent of the total SCHIP expenditures in 

those nine States. That is not a children’s program. And it ought 

not to be working that way. The other thing we should have 

learned is, it was intended at the outset to focus on children that 

were above the Medicaid eligibility levels and at a 200 percent or 

below of the poverty levels. 

4 

And yet we have found States that—my State, as you alluded to, 

Georgia, we went to 235 percent. I think yours went to 350 percent. 

We had States that were using income disregards that could bring 

your earnings in a family of four far above the $42,400 for a family 

of four, which should have been the target area for those families 

and below. Now we offered a meaningful test that would have 

eliminated income disregards and that was rejected. 

Now, where are we and what can we do? First of all, I think we 

ought to acknowledge that the program has value and merit, and 

it should be reauthorized. But it should not be used as a spring 

board for a larger plan of universal government-run health care for 

everybody. And if we want to keep it in a bipartisan fashion, then 

let’s focus on the things that we agree on and those are many. And 

I would hope that in today’s hearing as we listen to witnesses, we 

can focus on those things that we can agree on and make the program work as it was originally intended, to help poor children first. 

And I personally think that any State that says that they are not 

willing to enroll 90 to 95 percent of their children that are poor 

children below 200 percent of poverty, but instead want to go up 

the economic scale to extend benefits to families with 70 and 80 

and above earning income, I think that is wrong. It is a perversion 

of the intent of the program. And we ought to do something to stop 

it. I look forward—we have two good panels of witnesses and thank 

you for putting them here today. Thank you. 

Mr. PALLONE. Thank you, Mr. Deal. The gentlewoman from California, Ms. Eshoo. 

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

Ms. ESHOO. Mr. Chairman, thank you for holding this hearing. 

I can’t help but think that this is really very sad that we are here 

to review the impacts of what is not being done. I get up every day 

and that is an act of optimism and I think the information that we 

will get will be important. I can’t really figure out why those that 

are so into States rights, that when the States want to exercise 

something and come up with the dollars for it, that they be able 

to do so. I think my friends on the other side of the aisle are 

squarely against every American having health insurance. That is 

why this is so menacing to them. The best place we know to start 

is children. They are the cheapest to insure. We know how to do 

it. We have had success with the program. It is one of the best offerings that has been set up. And so today, we will learn more from 

the witnesses through their expertise about how this is going to affect children across the country. I think it is regrettable that we 

are where we are. But I look forward to a new day when not only 

when all children are insured but that their mothers and fathers, 

their families are as well. So thank you for having the hearing and 

I look forward to what the witness will instruct us. 

Mr. PALLONE. Thank you. The gentleman from Pennsylvania, Mr. 

Pitts. 

5 

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF PENNSYLVANIA 

Mr. PITTS. Well, Mr. Chairman, I wasn’t going to say anything, 

but since the dialog is so good. In SCHIP, we were talking about 

poor children without insurance, children, not adults, poor children, 

not children of middle income families. Children without any insurance, not bringing people off the private insurance markets for government-run health care. You know, the purpose of government is 

not to provide all the needs of people. The purpose of government 

is to provide atmosphere in which people can meet their own needs. 

We are for every American having health insurance, just not government-owned health insurance. Government may be organized in 

insurance, private insurance but not one-size-fits-all. I find it sad 

that we are deteriorating into this partisanship so soon. I would 

hope that we could be a little bit more bipartisan in looking at 

some of the solutions and I look forward to hearing the witnesses. 

Thank you, Mr. Chairman. 

Mr. PALLONE. Thank you. The gentleman from Texas, our Vice 

Chair, Mr. Green. 

OPENING STATEMENT OF HON. GENE GREEN, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. GREEN. Thank you, Mr. Chairman. And I have to respond to 

some of the opposition. And for someone that has dealt with insurance both as a State legislator and now in Congress, health plans— 

it is interesting, last night we had the State of the Union and the 

President decided one of his proposals was to remove employerbased insurance tax deductions. And yet in our country after World 

War II, the countries that were coming out of World War II were 

receiving national health care, Japan, western Europe, our country, 

because of World War II stuck with employer-based insurance. And 

by and large, it was very good up until we found out that employers often didn’t cover their employees for retirement so Medicare 

was created and Medicaid in 1965. And in 1997, we found out that 

children oftentimes, even though the employer maybe provided coverage for that employee, low-wage workers, they couldn’t afford the 

dependent care. 

So the SCHIP program has created a partnership similar to Medicaid in many States to cover these low-income children. Those children may have access to employer-based insurance, but they can’t 

afford it if you make $15 an hour and have two or three children. 

So that is why it has to be created. The private insurance market 

will work as long as they can make money. 20, 25, 30 percent. But 

when the market doesn’t work, we have to make sure we depopulate our emergency rooms in dealing with persons 65, with the poor 

and the elderly, and now, in 1997, the children. And so that is why 

I think it is interesting. I support the private insurance market, 

but there are a lot of areas that they don’t want to cover folks and 

this is one of them. I think it is interesting, the CHIP program was 

created in 1997 for children. But because of various administrations, two administrations have given waivers to certain States to 

be able to cover adults. 

6 

In the bill that the President vetoed allowed those adults who 

were on there for 1 year so they can find another coverage if they 

can. But that wasn’t a congressional decision. That was an administrative decision. And to call for the removing of adults, the easiest 

way they could have done it is never allow them to begin with. And 

it wasn’t a congressional decision to do that. My frustration in the 

10 years since Congress created the SCHIP program is that I come 

from a State like Texas where nationwide, we still have 9.4 million 

children are uninsured. 

Unfortunately 100,000 of those children are in my home State of 

Texas. And I hope our witnesses today will help answer some of 

the questions. Our State, because of local controls, they erected significant barriers that make it difficult enrolling new children in 

SCHIP. And it will kick children off of CHIP in 2003, and it resulted in enrollment of about 500,000 children in Texas in 2003 

going down to 200,000, 350,000 in 2007. 

And while these numbers were dropping, we still have the 

growth in children who qualify. U.S. citizens data puts the number 

of uninsured Texas children below 200 percent of Federal poverty 

at 1.5 million. Of these 1.5 million children, almost 750,000 or 

850,000 are eligible for Medicaid or SCHIP. Approximately 3/4 of 

those 750,000, 850,000, I am sure are eligible but not enrolled. The 

majority of these children would qualify for Medicaid and the remainder for SCHIP. Let me put it another way, Texas HHS estimates somewhere between 200,000, 300,000 children are eligible 

for SCHIP but simply not enrolled in my home State. 

And Mr. Chairman, I know we have a limit on time and I have 

lots of information. But I think it is atrocious that the President 

vetoed the reauthorization of the SCHIP program. And I would 

hope that when we do reauthorize it, if not this year then next 

year, we will make sure that we make—that we cover as many 

children as possible and not allow States who pay less than in case 

of the third of the SCHIP to be able to send back money and have 

uninsured children in a State like I have in Texas. And I would 

like my home State to be placed into the record. And I yield back 

my time. 

Mr. PALLONE. Thank you. The gentlewoman from—oh, Mr. Barton is here. I am sorry. Our ranking member of the full committee, 

Mr. Barton. I apologize that there is no time posted anywhere. I 

have a little clock on my left here. But there is nothing else for the 

rest of you to know what the time is unfortunately. 

Mr. BARTON. That is what you get when you get outside our committee room, see. 

Mr. GREEN. Mr. Chairman, not to interrupt, but they take our 

jurisdiction and they don’t even give us a clock. 

Mr. PALLONE. Or another way of saying it, they don’t even give 

us the time of day. 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BARTON. But the blue color is soothing though. It is good to 

be here, to see Mr. Leach and some of the other former chairmen 

of this committee. Mr. Gonzalez, a fine Texan. Mr. Oxley. It is good 

to be here. Well, thank you, Mr. Chairman, for this hearing. I can 

7 

go either way on that. I hope we are substantive today. It is obvious that there are lots of children in America that need help, their 

families need help to provide health insurance and health care for 

them. Their parents don’t make the money or don’t work in the situation where their companies provide health insurance. People on 

my side of the aisle have been asking for over a year to have a 

hearing that was focused just on SCHIP and just on the children. 

And today we have that opportunity. I hope it doesn’t become political. But so far this year, or last year, almost everything that was 

involved with SCHIP was political, which is acceptable. 

It is understandable in an atmosphere where people get elected 

by parties and sometimes we have partisanship. Having said that, 

I know that you and my friends on the Democratic side are totally 

supportive of the Children’s Health Insurance Program. And I can 

assure you that myself and people on the Republican side of the 

aisle are just as supportive. Our differences of opinion, when we 

really get down to the policy, are about which children should be 

covered. Those of us on the Republican side believe that the program, as it was initiated 10 years ago or 11 years ago now, should 

be focused on the near low income, those children between 100 and 

200 percent of parents whose parent or parent in some cases do not 

have health insurance in the workplace. There is still work to be 

done in that targeted area. 

Now we know that there are many children below 100 percent 

of poverty in America. Those children are covered by a program 

called Medicaid. We also know that there are many children above 

200 percent of poverty or 250 percent of poverty whose family may 

or may not have health insurance. And those children also are deserving of help. But study after study has shown that in the initial 

original target group of 100 to 200 percent of poverty, there is still 

many children that could be covered that are not covered. 

And what we on the Republican side of the aisle, Mr. Chairman, 

are saying, let’s do the very best job we can to cover those kids 

first. That is what the President was saying when he put out his 

proposal that we have to cover 95 percent of those children before 

you go above 200—I believe 250 percent of poverty. And that is 

what Mr. Deal and I were saying when we put out our proposal, 

that again, allowed to go above the 200 percent level which you got 

and I believe we said 90 percent. 

So I hope at some point in the hearing, Mr. Chairman, we focus 

on that. I also hope that we focus on ways to do better outreach. 

Mr. Pallone and myself have had off-the-record informal discussions, but I think the Republicans would be very willing to look at 

ways to encourage States to go out and again find innovative ways 

to get children enrolled that could be enrolled if their parents just 

knew how to enroll in the program. I think we could also look at 

the enrollment period. I know in my State of Texas until recently 

you had to re-enroll every 6 months. Well, that is silly. 

Surely there is a way to get a child enrolled and maintain that 

child’s enrollment over a longer period of time than a 6-month period. So Mr. Chairman, we are very excited that we are finally having a hearing just on SCHIP. I hope that it leads to another hearing and a legislative markup in a bipartisan drafting exercise. It 

is not impossible even in this political environment to permanently 

8 

reauthorize or reauthorize for an extended period of time the 

SCHIP program. If it devolves into a partisan mud-slinging contest, 

obviously nothing is going to happen. But if we really work constructively together, I am very confident that this committee and 

the full committee could come up with a program that both sides 

of the aisle could support. With that, Mr. Chairman, I yield back. 

Mr. PALLONE. Thank you. The gentlewoman from California, 

Mrs. Capps. 

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

Mrs. CAPPS. Thank you, Chairman Pallone, for this hearing and 

the demonstration of your continued dedication to the hearing and 

health and well-being of children in this country. I might add yet 

another of several hearings on children’s health and lack thereof. 

We have also, as I recall, had a very painful markup experience on 

the State Children’s Health Insurance Program, which, of course, 

is administered through the various States through private vehicles. 

I am proud to serve on this subcommittee and to be part of the 

ongoing effort to ensure access to health care for every child in this 

country. I always welcome the chance to talk about it and listen 

to the expert witnesses talk about the importance of providing 

quality health care to children and families. It is unfortunate, however, I believe that we need to hold a hearing to discuss missed opportunities. Last week we had another chance to provide health insurance coverage for the most vulnerable members of society 

through the Children’s Health Insurance Program. And once again, 

this opportunity was denied by this President and his allies in Congress. 

We worked long and hard to construct a package that would 

have protected not only 6.6 million children currently enrolled in 

SCHIP but 4 million additional children who are eligible, clearly eligible and have no access to care. I am extremely disappointed that 

the misguided opposition of the President and a few of our Republican colleagues derailed this important bipartisan effort despite 

the overwhelming support of the American people. As a result of 

this indefensible act of obstruction, millions of low-income children 

will continue to remain uninsured. You know, their lives don’t 

stand still while we do this. And we can’t afford to wait any longer. 

In the face of an economic downturn that continues to threaten 

important American families, we have failed to offer the comfort of 

knowing that their children’s care or health care will be covered. 

How many more mothers are going to be forced to make this impossible decision between putting food on the table or taking her 

child to the doctor and paying cash? 

As a former school nurse, I have seen firsthand the consequences 

of that result from this kind of inaction, these kinds of painful 

choices. Millions of children are not receiving proper primary care 

or dental care, and they are suffering from preventable illnesses. 

They will be sent to school sick, interfering with their ability to 

learn. Our children count on us to protect them. They can’t do it 

by themselves. 

9 

So it is our responsibility to give voice to their needs when they 

can’t advocate. It is imperative that we work together to overcome 

the roadblocks posed by those who do not value the health and 

safety of our children above all else. So I thank you, and I know 

that we can do better for our children and I know we are going to 

learn a great deal from our witnesses. And I thank you all for coming. I yield back. 

Mr. PALLONE. Thank you. The gentlewoman from Tennessee, 

Mrs. Blackburn. 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Mrs. BLACKBURN. Thank you, Mr. Chairman. And I thank you 

for the hearing. I want to welcome all of our witnesses. And I am 

one of those individuals that is a strong supporter of the SCHIP 

program as it was originally put in place. And we have heard about 

how successful this program is. That is because of the way that the 

structure was placed in order for it to be a block grant program, 

not an entitlement program. We have heard about the need for getting health care to poor children and yes indeed, the children of the 

working poor are to be the ones that realize the benefits of this program and previously they have. 

Now, I do have concerns that we have had a litany of missed opportunities in this committee due to a lack of regular order, if you 

will. This is only the second hearing that we have done on SCHIP. 

We never had a hearing on the legislation when it came to committee for unfinished markup. So those are regrettable because we 

have seen SCHIP on the floor 13 different times, 13 different times 

on the floor of the House. So I find myself sitting here listening to 

the opening statements thinking, how many times is the House 

going to have to vote down the majority’s attempts to socialize 

health care before they realize that working in a bipartisan manner 

with regular order is what is going to be necessary to produce better legislation that will deal with the original intent of SCHIP and 

will allow for its continued success? So I think that we have heard 

time and again, Mr. Chairman, people are not interested in seeing 

adults on SCHIP. They have concerns about that. There are concerns about loopholes that may have been in the legislation that 

was presented to us earlier this year that would allow illegal immigrants to access services. They are concerned about spending billions of dollars to substitute private health insurance coverage 

when, with a government-run health care coverage, they are concerned about focussing on enrolling higher-income kids instead of 

the low-income uninsured kids. 

They are concerned about a flawed tobacco tax scheme to the 

tune of $70 billion. I am pleased with the efforts that we have had 

to reject some of this. I do look forward to working with the committee, and working to achieve consensus on SCHIP legislation 

that will focus on securing health care for the under served children and children of the working poor. And I yield back. 

Mr. PALLONE. Thank you. Ms. DeGette. 

10 

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

Ms. DEGETTE. Thank you, Mr. Chairman. Well, listening to the 

comments of my colleague who spoke last, I guess we could both— 

all of us keep beating a dead horse for this term of Congress and 

yet we would still have 12 million kids in this country who don’t 

have health insurance. I don’t think that is good for those kids and 

I don’t think that is good for our country and I don’t think anybody 

would. The topic of this hearing is Covering Uninsured Kids, 

Missed Opportunities For Moving Forward. 

I will talk about SCHIP in a minute more globally. But there is 

a couple of missed opportunities that no one has yet mentioned 

that I am looking forward to hearing our witnesses talk about. The 

first one is the CMS regulation recently promulgated that serves 

to limit States’ flexibility and undermine our safety net. On August 

17, CMS ordered a directive that hinders long-standing State flexibility surrounding SCHIP eligibility levels. Now, all of us agree 

SCHIP should be used for the children of the working poor, people 

whose parents can’t afford health insurance. What this directive 

does, though, is it says that States cannot expand coverage levels 

above 250 percent of the Federal poverty level unless they meet a 

90 percent participation rate for below 200 percent of the Federal 

poverty level. But CMS has not provided any guidance to the 

States as to how to meet those standards or even what data will 

be used to calculate a 95 percent compliance rate. 

So how can States be expected to meet minimum standards when 

CMS won’t even tell States how the standards are calculated? Now 

to all of us, we all say well, we want to cover children of the working poor. But in fact, the reason we gave States flexibility in this 

State Children’s Health Insurance Program is because income levels and ability to buy insurance vary widely from State to State. 

The most recent expansion of the number of uninsured children 

in this country is from families who make from 200 percent to 400 

percent of poverty. And the reason is because two things have happened: Number one, insurance premiums have skyrocketed; and 

number two, employers have been covering less and less of those 

premiums. And so since 2000 the average cost for a family of four 

for insurance around the country is almost $12,000, and in some 

parts of the country, like New York and New Jersey, it can be 

$20,000. 

So while it seems ridiculous to give SCHIP to a family making $53,000, if you have a family of four living in New York, making 

$53,000 and their insurance premium is $20,000, I am going to 

guarantee you, they are not going to insure their kids. And Mr. 

Chairman, members of this committee all have the Federal employees health insurance so we don’t realize what a burden these bills 

are on American families. 

One last issue. There is another CMS regulation that went into 

effect this year which limits reimbursement for school-based rehabilitation services and another one limits hospitals’ ability to access 

the Medicaid dish funding by inappropriately changing the definition of public hospitals. In my State alone, Colorado, this is going 

to cost us $140 million. The impact of this would be devastating 

11 

both to individuals and safety net providers. The rule is slated to 

go into effect the end of May. But if we don’t fix it much in advance, Mr. Chairman, what will happen is the hospitals are going 

to simply start cutting their budgets now. I hope we can do something about this and all of these other problems. And I look forward to the rest of the hearing today. 

Mr. PALLONE. Thank you. The gentleman from Pennsylvania, Mr. 

Murphy. 

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

Mr. MURPHY. Thank you, Mr. Chairman, and thank you for continuing to work on issues for our children. Many times the discussion that takes place on Capitol Hill when it comes to issues dealing with health care are really discussions about health insurance. 

And regardless of what side of the aisle one is on, the discussions 

are often the same. For example, we talk about health care as 

being expensive and so we say let’s have the Federal Government 

pay for it. We talk about health care as being expensive, so we say 

let’s have the Federal Government manage it through such things 

as tax breaks for people to purchase it. We expand Medicare and 

Medicaid and SCHIP and see those price goes up to the point that 

45 percent of our Federal mandatory spending is health care. And 

yet the expanses continue to rise. Now we understand for families, 

they need health insurance coverage at one time or another. But 

we also have to do it as a Congress. 

I still have hope that this session of Congress will do something 

about it, is deal with the spiraling cost of health care. Let me give 

you a couple of examples. When it comes to infection rates that are 

picked up at hospitals and clinics, the CDC tells us that there are 

about 2 million cases a year, 2 million cases that cost $50 billion 

and 90,000 lives a year. Illnesses people pick up in hospitals when 

someone doesn’t wash their hands or use sterile equipment or use 

antibiotics before or after surgery. There are tens of billions a year 

wasted when people have a chronic illness that is difficult to manage. And so amidst the multiple doctors’ appointments and medications and treatments and therapies, it is inevitable that patients 

will feel overwhelmed by that and oftentimes not follow through 

correctly. 

Oddly enough, many times the Federal insurance programs that 

we have will not pay $5 for a nurse to call a patient and say what 

is your blood glucose level? Did you pick up your insulin? How is 

your diet? How is your weight? Won’t pay $5 for a nurse to do that 

but will pay thousands of dollars to have a diabetic’s foot amputated when they have complications. Something is wrong there. We 

also have a system where we realize that people who have chronic 

illness have a high incidence of depression, twice that of the general population, twice that. And yet if a person has untreated depression and chronic illness, their medical costs double while we 

struggle to getting a mental health parity bill done in this Congress. 

We have electronic medical records issues that we have tried to 

move forward. The RAND Corporation estimates $162 billion a 

12 

year savings would come if we are able to get electronic medical 

records use nationally and then save employers an additional $150 

billion a year in other lost wages and lost work time. I still hold 

out hope that perhaps in this SCHIP bill or some other vehicle this 

committee can move through that we have both the passion and 

compassion to work to save lives and save money. We should be 

working hard on these issues to make sure that we incorporate all 

these things, ways of paying for all of these health care reforms 

and not just insurance. 

I am glad we are dealing with SCHIP. It is an important issue. 

But I still hope that this committee, this subcommittee will add to 

it or other bills issues that could really save money so we can expand health care to those who need it and not just continue to expand ways to pay for it. I yield back. Thank you, Mr. Chairman. 

Mr. PALLONE. Thank you. I recognize the gentlewoman from Oregon, Ms. Hooley. 

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

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

today on missed opportunities because of the President’s veto of 

overwhelmingly bipartisan legislation to reauthorize the State Children’s Health Insurance Program, SCHIP. It was over 11 years ago 

when I first came to Congress that I was working with a group of 

women to provide health insurance for children. A year ago, when 

I first became a member of this Subcommittee on Health, I had 

hoped that we would be holding hearings this year, discussing the 

early successes of a bipartisan SCHIP reauthorization. Although 

Congress extended SCHIP reauthorization through March 2009, I 

thank you, Mr. Chair, for continuing to push this important issue 

to the front of our agenda. 

The debate about SCHIP has always been about priorities. I tell 

my constituents who implore me to continue fighting to expand 

children’s health care that I will not stop working until we realize 

that goal. And every corner of my district, constituents tell me they 

do not understand why the President would oppose providing 

health care to more low-income children. More than 9 million 

American children, including nearly 116,000 children in Oregon, 

are currently uninsured. That is simply not acceptable. 

Nearly 4 million more children, including over 36,000 Oregon 

children, would have received health insurance under TERPA. As 

the economy softens, more parents are likely to lose their jobs and 

thus, their health insurance. Employers may also drop their coverage for employees as premium costs rise and profits fall. Since 

2000, health insurance premiums have skyrocketed by 87 percent 

and that growth trend seems likely to continue. Family incomes 

have simply not kept pace with health care inflation. 

In these uncertain economic times, we must act for our children’s 

sake now more than ever. Providing health insurance through 

SCHIP is the most cost effective way to provide health care to our 

Nation’s children. We cannot afford not to act. The lack of access 

to adequate medical care creates a terrible burden for our children. 

Uninsurance leads to delayed diagnosis for treatable conditions 

that may become acute, chronic or life threatening. 

13 

As a former schoolteacher, I can also say from experience that 

poor health leads to poor performance in schools. No society can expect to achieve and maintain its prosperity while compromising on 

the well-being of their children. I would also like to briefly mention 

my concern with some of the regulatory action taken last year by 

the administration. For example, the Centers for Medicare & Medicaid Services, CMS, August 17 directive placing unreasonable restrictions on States in their efforts to expand coverage to more lowincome children will likely force States to drop thousands of currently covered children. Regulations creating cost limits for public 

providers and reduction in payments for graduate medical education are two more of CMS regulations that will have a harmful 

effect on our children. 

The latter two regulations are particularly important for Oregon’s Health and Science University, the location for much of the 

best pediatric care in Oregon. Legislation and regulatory roadblocks set up by this administration last year will make it more difficult for children to receive health care. I hope we can begin to 

overcome those hurdles this year and reach sensible compromises 

that meets our children’s health care needs. Again, thank you, Mr. 

Chairman for holding this hearing. 

Mr. PALLONE. Thank you. I will recognize the gentleman from 

Arizona, Mr. Shadegg. 

OPENING STATEMENT OF HON. JOHN B. SHADEGG, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ARIZONA 

Mr. SHADEGG. Thank you, Mr. Chairman, and thank you for 

holding this hearing. I think this is a critically important issue and 

I am glad we are discussing it. I want to make something very 

clear, I have introduced a refundable tax credit to provide cash to 

every single child that would be eligible for SCHIP funding every 

year since I have been here in Congress. I believe that it is a 

shame that there are so many children in America without insurance and I believe that it is a shame that there are so many Americans without insurance and without health care coverage. What I 

think this debate needs to be about, however, is how we go about 

achieving the end. 

I personally believe that America made the decision as a Nation 

a number of years ago that nobody should go without health care, 

not the least of us in our society should have to go without health 

care, and certainly our children shouldn’t. But I think the fundamental question that we need to ask here is how do we go about 

improving health care? Let me ask you some questions. Are there 

problems with health care in America and with the access of children to health care in America because we as individuals have too 

much control over our health care and our health care decisions 

and who our doctor is? Or are there problems because we as individuals have too little control? Is it better off to have third parties, 

like our employers or our insurance company or the government 

making health care decisions for us? Or would we be better off if 

we made health care decisions? Let me ask kind of a fundamental 

question, would the cost of health care go down if we gave more 

control of health care and health care decisions to the government, 

to our employers, to our insurance companies? Or would the cost 

14 

of health care go down if we had, as individuals, more control over 

our health care? 

Would, for example, the quality of health care in America go up 

if we gave more control to our employers or to our insurance companies or to the government? Or would, in fact, the quality of 

health care in America go up if we could hire and fire our insurance company, if we as individuals could hire and fire our health 

insurance plan, if we could hold our health insurance plan accountable by firing it when it did a lousy job rather than having to go 

and complain to our employer, I suggest we get both lower cost and 

higher quality. If in fact we could decide who we wanted to provide 

our insurance because the government helped us get money to go 

buy our own health plan and we can hold accountable, wouldn’t 

that both drive down cost and up quality? And I would suggest it 

would. 

And that is why I believe what we need to be doing in this country to insure the children of America is to provide a refundable tax 

credit to every single family in America. If you don’t make enough 

money to pay income taxes, we will give you cash, provided you go 

out and buy yourself a health insurance plan. It is your health insurance plan. You can pick the plan that has the doctors you want. 

If you don’t like the plan, you can fire the plan. It is not your employer’s health insurance plan. It is not the government’s plan. And 

the reason that I don’t favor SCHIP is because I think giving those 

basic health care decisions, who my health insurer is, whether it 

is responsive to me or not, which doctors it hires, giving those decisions away to the government, as SCHIP does, simply divorces the 

consumer of the good from the provider of the good and when you 

divorce the consumer of the good health care from the provider of 

the good, you get no accountability. 

So costs go up as they have in America when we have had more 

and more third-party pay, and quality goes down as we have had 

in America, as we have had more and more third-party control over 

our health decisions. So what is the answer? Why isn’t the answer 

to say to every American, you get a tax credit. If you are too poor 

to pay income taxes, you get money from the government. If you 

are already paying income taxes, you reduce the amount you send 

to the government, and you go take that tax credit and you buy a 

health insurance plan. Whether you are poor or whether you are 

rich, it is your money. You get to hire the plan, not your employer. 

You get to fire the plan, not your employer. The government 

doesn’t hire the plan. The government doesn’t fire the plan. The 

government doesn’t let the plan pick the doctors. You do. Wouldn’t 

giving people control over their own health care improve quality 

and lower cost? And isn’t that a much better system than expanding even further the third party control we already have in this 

country where we have divorced the consumer from the provider 

and therefore you can’t fire your doctor, you can’t fire your health 

care plan and you can’t demand higher quality or lower cost? I 

thank the gentleman and yield back my time. 

Mr. PALLONE. Thank you. The gentleman from Texas, Mr. Burgess. 

15 

OPENING STATEMENT OF MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BURGESS. Thank you, Mr. Chairman. I too am glad we are 

having this hearing today early in the year. Probably some of the 

most interesting time i have spent during my short tenure in congress was in the unintended SCHIP negotiations that worked their 

way through this Congress last fall and worked really on conference committee because we never appointed conferees from the 

House and the Senate. It was just people who showed up when we 

talked health care oftentimes well into the night. The consequence 

of that was the 18-month extension that we passed last December, 

and I am grateful that we were able to do that. No child in this 

country lost health insurance because Congress was not able to do 

its work in a timely fashion. Now we are tasked with getting this 

job done. We have given ourselves an extension. It is incumbent on 

us to utilize that time wisely. But a lot of the issues that have 

come up this morning, and we do need to talk about how we are 

going to maintain a network of providers, the workforce the doctors, the nurses, the nurse practitioners, the pediatric specialists to 

ensure that children who are covered whether it be by partial insurance or by SCHIP will have timely access to medical professionals. 

How do we keep from removing children from private insurance 

when parents have the means to pay for their children’s coverage? 

And is that even important? Well I think that it is. Doing an informal survey back home in my district from pediatricians and talking 

to them about—even as bad as our insurance companies are, we all 

know they are terrible. But the average of the four largest third 

party payers in my district in north Texas, CPT code 99213, office 

visit low level of complexity, the four largest insurers compensate 

at an average price of $71 for that visit of 99213. Under the State 

Children’s Health Insurance Program, State of Texas 99213 reimburses at a rate of $37.64. So a little more than half of what the 

four largest insurers, as bad as they are, a little less than half of 

what the four largest insurers compensate. 99214, office visit established medium complex. The bad insurance companies, as bad as 

they are, reimbursed at a rate of $109. 99214, the State Children’s 

Health Insurance Program, State of Texas Dallas/Fort Worth area 

$52.86. 

Again, we are talking a little less than half. What is the effect 

of our pediatric workforce if we move children from commercial insurance, as bad as it is, and I am not going to argue that commercial insurance is good or companies behave properly. But as bad as 

it is, what is the effect if we remove children from commercial insurance? Now when we had multiple hearings during the negotiations, we had figures from the Congressional Budget Office, and 

the figure of 10 million children was always brought up. Well, 6 

million children are already on SCHIP. There are 800,000 kids that 

could be on SCHIP today but they are hard to find. It is hard work. 

It is hard for the States to go find them. 

And guess what, if the States do the work and go find them, they 

pick up 1,200 children who could be on Medicaid. So there are children that could be covered under today’s rules under today’s expansion without any expansion of the program. And in fact, according 

16 

to the CBO’s own figures, to get that 10 million figure, 2 million 

children will have to be pulled off of private health insurance. Is 

that a problem? 

Again, I submit the notations that I got from a survey of pediatricians back in my district back in north Texas. We are putting 

their reimbursement rates by about half by taking children from 

SCHIP, from commercial insurance and putting them on SCHIP. 

That may not be a problem if you are an academic pediatrician, it 

may not be a problem if you practice in a Federally qualified health 

center. But if you are out there in the neighborhood doing the work 

in my district, it will have an extremely deleterious effect on the 

pediatric workforce. 

Mr. PALLONE. I would just want to notify the gentleman he is 

over a minute. If you could wrap it up. 

Mr. BURGESS. Where is our clock, Mr. Chairman? 

Mr. PALLONE. Unfortunately we don’t have one and people have 

been going over. 

Mr. BURGESS. Reserving the right to object, I think I have made 

my point. And I will yield back my time. But I thank you for holding the hearing. I think it is important and I look forward to the 

testimony of our witnesses. And I think it is incumbent on all of 

us to work hard. We have to put the partisanship aside and get the 

work done for the American people. And that is what I look forward to doing today. And I will yield back. 

Mr. PALLONE. Thank you. I have one but no one else does. So we 

will try to bear with it. 

Let me ask unanimous consent that a statement of our full committee Chairman, Mr. Dingell, be entered into the record. Without 

objection, so ordered. 

[The prepared statement of Mr. Dingell follows:] 

STATEMENT OF HON. JOHN D. DINGELL

Thank you for holding this hearing. I am pleased that there are two distinguished 

panels of witnesses before us today to discuss missed opportunities for providing 

health care to America’s children. Certainly the most obvious ones are the Administration’s two vetoes of our efforts to reauthorize and expand the Children’s Health 

Insurance Program. 

Not once, but twice this Administration rejected legislation that would reauthorize 

the Children’s Health Insurance Program for the next five years and add sufficient 

funding to protect existing coverage and improve access for millions of additional 

low income children. 

There are many States without enough money to cover their children under the 

existing program. The bills passed by Congress would have averted these likely 

funding’ shortfalls, expected to affect some 42 States by 2012. 

Last year’s CHIP reauthorization also made great strides in the area of children’s 

dental and mental health, as well as in quality measurement and improvement. 

With the President’s veto we lost this as well. 

Most importantly, the bill went right to the heart of finding and enrolling uninsured but eligible children through financial incentives for States and new tools, 

such as express lane eligibility, to streamline enrollment paperwork. 

It is a sad legacy indeed that this Administration leaves behind on children’s 

health. 

If preventing health coverage for 10 million additional children isn’t bad enough, 

the Administration has proposed to cut more than $12 billion from the Medicaid 

program over the next 5 years. 

We can also thank the Bush Administration for the now-infamous ‘‘August 17 

guidance,’’ which is being used to derail State plans to cover uninsured children. 

With little regard for the well-being of poor children in America, the Administration 

17 

would prohibit a child’s enrollment in CHIP for a full year after the date the child’s 

parent loses employer-sponsored coverage. 

That is a full year of immunizations, well-child visits, ear aches, strep throat, dental care, and other needs that will go untreated. This is simply bad and, frankly, 

mean-spirited public policy. 

Our Nation has record numbers of Americans who are uninsured and, in addition, 

millions more who are under-insured. Nearly 1 in 4 families under the age of 65 

will spend more than 10 percent of their pre-tax income on healthcare costs in 2008. 

With the pending recession, programs such as CHIP and Medicaid take on heightened importance. As we all know, health coverage is often an early casualty of a 

parent who is laid off, and children should not be the ones who suffer as a result. 

States need the ability to keep these vital programs strong—especially in times 

of economic downturn—and we should be seeking ways in addition to CHIP that 

provide State assistance in the form of increased Federal funding of Medicaid. 

States also need the ability to ramp up these programs to help those working Americans whose incomes are not keeping pace with health costs. We should not have 

any more missed opportunities for this country or its children. 

I thank today’s witnesses for joining us, and in particular Ms. Taylor-Chester for 

sharing her very compelling story of her son’s experience with CHIP. 

Mr. PALLONE. And now that concludes our opening statements by 

the Members of Congress. I will now turn to our witnesses. If the 

members of the first panel could come up to the table there, I 

would appreciate it. 

I understand there are other Members on both sides that would 

like to submit opening statements for the record. So without objection, I will ask unanimous consent that those all be entered into 

the record. And let the record be open for those opening statements. Without objection, so ordered. 

First of all, welcome. Let me introduce the first panel and I will 

go from my left. We have Cynthia Mann, who is research professor 

and executive director at the Center For Children and Families at 

Georgetown University Health Policy Institute. And next to her is 

Mr. Chris Peterson who is a specialist in health care financing, domestic social policy division of the Congressional Research Service. 

And then next to him is Ms. Carolyn Chester who is a nursing assistant. And she is speaking on behalf of Service Employees International Union. And then we have Dr. Louis Rossiter who is a research professor and director of the Schroeder Center For Health 

Care Policy at the College of William and Mary. And then the last 

on my right is Mr. Bruce Lesley who is President of First Focus 

based here in Alexandria, Virginia. 

Mr. PALLONE. We are going to have 5-minute opening statements 

from each of you. They will be made part of the record. And again, 

you don’t have a clock. So I may just have to tell you when the 5 

minutes are up. Each witness may, in the discretion of the committee, submit additional brief and pertinent statements for inclusion in the record. I am going to try to stick to the 5 minutes and 

give you some notice when the 5 minutes is over. We will start 

with Ms. Mann. I recognize her at this point. Thank you for being 

here. 

18 

STATEMENT OF CYNTHIA MANN, RESEARCH PROFESSOR AND 

EXECUTIVE DIRECTOR, CENTER FOR CHILDREN AND FAMILIES, GEORGETOWN UNIVERSITY HEALTH POLICY INSTITUTE 

Ms. MANN. Thank you. Good morning, Chairman Pallone, and 

Representatives Barton, Deal and other members of the subcommittee. I am Cindy Mann, research professor at Georgetown 

University and director of the Center For Children and Families. 

I am pleased to be with you today to talk about the topic of children’s coverage and missed opportunities to move that coverage forward. During my remarks, I will refer to some of the figures that 

were included in my testimony beginning on page 16. When 2007 

began, all signs were that CHIP reauthorization would go forward 

and that it would be accomplished in a manner that would actually 

legally strengthen children’s coverage both in the CHIP program 

and in the Medicaid program. But instead, we had a year of missed 

opportunities in terms of children’s coverage, and in fact, as a result of the directive issued by the Centers for Medicare & Medicaid 

service, the August 17 directive that some of you have referenced. 

Federal policy governing children’s coverage has actually moved 

backward over this past year. It is particularly troubling that this 

has happened because despite a decade of progress in terms of lowering the rate of uninsured children. We have begun to see that 

number rise in the last 2 years under census data. And it is growing again at a rate of about 2,000 children a day. The weakening 

economy will inevitably push these numbers upward unless further 

action is taken by Congress to put the Nation back on the right 

track. 

There were many hopeful signs as we began the year 2007. The 

first we had a program with a 10-year track record. It was a much 

studied program. And we know from the studies from the State experiences that it worked. In fact, it exceeded expectations. It was 

regarded widely as resoundingly successful. 6.7 million children 

were enrolled in CHIP as we began the year. And millions more 

had been brought in the Medicaid program because of the focus on 

covering children had prompted States around the country to ease 

up their Medicaid enrollment processes and make it easier for families with eligible children to enroll their children into coverage. 

Not only were children gaining coverage, but the studies also 

showed that the children with coverage had greater access to care, 

access that was comparable to counterparts with private coverage. 

As a result of CHIP and Medicaid over these last 10 years, the 

uninsured rate among low-income children, children below 200 percent of the poverty line dropped by a third. That is an astounding 

development, particularly when you think about that during this 

period of time we had rising health care costs, declining employerbased coverage for both children and adults, and the number of 

adults without insurance rising sharply. 

So as the debate over CHIP began, we had a program with a 

proven track record and where the results had actually exceeded 

expectations. We also had very willing partners at the State level. 

You know, we will hear from two of them today, two CHIP directors. During the years 2006 and 2007, we began to see a resurgent, 

a new wave of activity going on around the country as States began 

19 

to reinvest their energies, reinvest their resources into coverage for 

children. So whatever changes Congress was about to make in 2007 

through CHIP reauthorization, you had a ready and willing audience at the State level. States were eager to move coverage forward 

and you will see in my testimony the States that did so were quite 

diverse. They were Oklahoma they were Indiana they were Washington, Texas, Alaska, Pennsylvania, States in all regions of the 

country and with leadership on both sides of the political aisle, 

moved coverage forward. 

In this environment, Congress also moved forward. You passed 

a very strong bill now known as CHIPRA, the Children’s Health 

Insurance Program Reauthorization Act of 2007. It didn’t have all 

of the provisions that was in the House reauthorization, the 

CHAMP bill that would have moved coverage forward for children. 

But it was a very strong bill. And according to the Congressional 

Budget Office, it would have brought coverage to an additional 4 

million children who otherwise didn’t have access to affordable 

health insurance coverage. 

It is important when you think about the missed opportunities 

and where we are today to think about what CHIPRA would have 

done. It would have strengthened coverage in three ways. Put 

CHIP on secure financial footing over the next period of time, give 

States new resources, new tools, new options to make sure that the 

lowest-income children were covered, and it also would have 

strengthened the benefit package and adopt new quality initiatives 

for children. CHIP would gain the support of the large majorities 

of the members of Congress, but of course not enough to override 

the veto. And as a result, the opportunities presented by that legislation were lost. 

Let me now focus on two of the consequences of those missed opportunities. One is the weakening economy. As I mentioned before, 

we began to see the uninsured rate among children pick up. 

Mr. PALLONE. Ms. Mann, you are over 5 minutes. So if you could 

try to wrap it up. I apologize because I know there is no clock 

there. 

Ms. MANN. That is fine. I will try to be very brief. The lack of 

CHIP moving forward is obviously more of a problem now because 

of the weakening economy where we will see more children be uninsured. Let me just finally touch on the August 17 directive which 

remains in place. I think there is a sense that by extending CHIP 

through the March 2009, you left the status quo in place, but in 

fact, we have a new policy that has actually thwarted States’ efforts to move forward. We have already had six States affected. We 

will have 23 States affected by August 2008. They are stopped from 

making the decisions that they have decided were best for the children in their State which is to cover children with no affordable 

health care options. Thank you, Mr. Chairman. 

[The prepared statement of Ms. Mann follows:] 

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Mr. PALLONE. Thank you. Mr. Peterson. 

STATEMENT OF CHRIS PETERSON, SPECIALIST IN HEALTH 

CARE FINANCING, DOMESTIC SOCIAL POLICY DIVISION, 

CONGRESSIONAL RESEARCH SERVICE 

Mr. PETERSON. Thank you, Chairman Pallone, Mr. Deal and 

members of the subcommittee. I am going to pose four questions 

to frame health insurance issues generally in SCHIP reauthorization specifically and then I will discuss how those questions were 

addressed in the three House passed reauthorization bills: 

CHAMP, which the Senate did not take up, and the two CHIPRA 

bills vetoed by the President. Obviously, my role is not to assess 

whether any particular approach was right, but rather to instill the 

complex issues into a framework of describing bills that I hope is 

useful. Much greater detail is in my written testimony. The first 

question is, if you build it, will they come? In 2006, 9 million children were uninsured, nearly two-thirds of them eligible for Medicaid or SCHIP. The Federal Government and States built it. But 

6 million uninsured eligible kids haven’t come. 

To address this, the House-passed bills would have provided 

bonus payments to States that increased child enrollment by certain amounts and that outperform certain activities. CBO estimated CHAMP would increase Medicaid and CHIP enrollment by 

2012 by 7.5 million. The two vetoed CHIPRA bills would have increased enrollment by 5.8 million. In all three the increase was 

mostly about current eligibility groups, which leads to the second 

question, if you build it, how many nontargeted individuals will 

come? And how many is acceptable? Note the question is not 

whether nontargeted individuals will come but how many. Children 

not targeted by SCHIP include those already enrolled in job-based 

coverage. According to CBO the House-passed reauthorization bills 

had crowd-out rates of a third. This means that for every three people enrolled in Medicaid or SCHIP because of the legislation, two 

would have been uninsured and one would have had other coverage 

in its absence. 

However, CBO’s director said quote, we don’t see very many 

other policy options that would reduce the number of uninsured 

children by the same amount without creating more crowding. As 

one economist put it, it is like fishing for tuna, when you let down 

the tuna nets, you catch some dolphins too. Again, the policy question is, how much is acceptable? The third question is, if you build 

it, who should design it? And with how much flexibility? For example, the tension between State flexibility and federal specificity is 

illustrated by recent debates over how high up the income scale 

SCHIP eligibility should go and whether adults should be eligible. 

This is also discussed in greater detail in my written statement. 

The fourth and final question is, if you build it, what should the 

structure be? Nearly 100 years ago Americans debated whether 

coverage proposals linked too heavily toward government involvement versus the free market concerns also raised regarding SCHIP. 

But discussions about what health insurance structure we should 

have are impeded by challenges to defining what structure we currently are. Private insurance is projected to generate public tax exVerDate Nov 24 2008 13:30 Oct 07, 2010 Jkt 037690 PO 00000 Frm 00046 Fmt 6633 Sfmt 6633 Q:\PRINT EDITOR-110\HEARINGS 110\110-85 SCOM1 PsN: JIMC
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penditures of $130 billion this year. On the flip side, public insurance, like Medicaid and SCHIP, provides much of its coverage 

through private insurers. Thus, health policy options are rarely binary choices between something wholly private or public but tend 

to be gradations of one over the other in the hopes the trade-offs 

are beneficial. 

If one’s goal for SCHIP is to lean more toward private coverage, 

one option is premium assistance where SCHIP pays a portion of 

job-based premiums. Of course when considering a different structure like this, it raises the first three questions again. If you build 

it, will they come? How many nontargeted individuals will come? 

And who does the designing? With how much flexibility? Because 

current restrictions on SCHIP premiums make it so difficult, most 

States with these programs use waivers to give them more flexibility. CHAMP had no premium assistance provisions, but CHIPRA 

would have made SCHIP premium assistance easier to implement 

without waivers. 

In conclusion, getting health insurance to children in any population is not rocket science. It is harder. In rocket science, you have 

constants. You know what speed is necessary to escape the earth’s 

atmosphere and how often do you hear debates about the measure 

of gravity’s pull or whether a certain orbit is too high or too low 

or what the best path is to get there? When it comes to health insurance, however, there are important fundamental questions 

about what the goals are and how best to accomplish them. I hope 

my testimony has helped frame these questions in a useful way. 

Thank you. 

[The prepared statement of Mr. Peterson follows:] 

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Mr. PALLONE. Thank you. Ms. Chester. 

STATEMENT OF CAROLYN TAYLOR CHESTER, NURSING 

ASSISTANT, SERVICE EMPLOYEES INTERNATIONAL UNION 

Ms. CHESTER. Good morning, my name is Caroline Taylor Chester and I live in Baltimore with my husband Jerry and son, Keith. 

He is 11 years old. I work at Wesley Assisted Living in Baltimore, 

which just changed from a nursing home to assisted living. I have 

worked there for almost 8 years, and I do it because I like helping 

elderly and taking care of patients. The work is hard and it does 

not pay much, but I get to meet special people and their families. 

I like making their days a little better. Last year my family earned about $20,000. Wesley offers health 

insurance, but it is very, very expensive to cover my family. There 

is no way in the world I would be able to afford it. It would cost 

over $298 per pay period for my check to cover my husband and 

Keith. That would eat up almost 30 percent of my family’s income 

just for health insurance. On top of that, there are still deductible 

and a $30 co-pay for a primary care physician, $40 co-pay for visits 

to the specialist. This does not even cover dental insurance either, 

that is more. 

Every year the cost of family coverage just keeps going up and 

up. God knows I appreciate SCHIP. We pray on my husband staying healthy without insurance, but at least our son is covered. 

Keith has been helped by the Maryland CHIP program all his life. 

With the Maryland CHIP program, Keith sees a pediatrician on a 

regular basis, gets tested early for allergies and asthma and sees 

an allergist when needed. 

My son had a lot of ailments when he was younger. He has had 

asthma pretty bad. With MCHIP we are able to treat Keith’s 

breathing problem early and we do not use the hospital emergency 

room, which is sometimes the only option for families like mine. 

The relationship you have with your doctor is one that needs to 

be built on trust and understanding. Not only has Keith been able 

to see the same pediatrician his entire life, he is the same pediatrician I went to when I was a child. He denies it to the end, he says 

he was not the one, but he did treat me. 

Keith also gets a regular dental checkup with the MCHIP program. Since we were first enrolled with CHIP in the program for 

about 12 years Maryland has made it easier for a family like ours 

to renew our coverage from the mail. We have moved a lot so we 

can live in better places. It is not easy for us to make sure that 

Keith stays insured under MCHIP. 

I brought a picture of Keith with me today because I am very 

proud of him. He is a healthy, strong sixth grader who doesn’t have 

to miss school all the time because he is sick. He can focus on his 

schoolwork and just being a kid. This is my family’s story. I wanted 

you to hear because it is not just about Keith, it is about people 

like my coworker Antoinette whose daughter lost her health insurance when the SCHIP expansion funding was cut. There are millions of people like us whose families and health depend on the 

program. 

I used to work on the health suite at Baltimore City Public 

Schools when I was employed by the schools and I knew the chalVerDate Nov 24 2008 13:30 Oct 07, 2010 Jkt 037690 PO 00000 Frm 00068 Fmt 6633 Sfmt 6633 Q:\PRINT EDITOR-110\HEARINGS 110\110-85 SCOM1 PsN: JIMC
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lenge of just finding parents just to remember to renew your insurance every year. It was hard and we had to look for parents. Teachers would send children to the health suite, they were sick, and it 

was like we do not have any insurance. Children are in need of insurance, families are in need of help because we cannot afford to 

have the health insurance that is needed for the parents that need 

to have health insurance. They quit their jobs or do whatever they 

need to do to be able to provide insurance for their children. It is 

not fair that I should choose whether to work or whether my child 

should have health insurance. We live in the richest country in the 

United States, and it is a shame for anyone to say we can’t afford 

health insurance for each and everyone that lives in the United 

States. 

Thank you for your time. 

[The prepared statement of Ms. Chester follows:] 

STATEMENT OF CAROLYN TAYLOR CHESTER

My name is Carolyn Taylor Chester and I live in Baltimore, MD, with my husband Jerry and son Keith. He is 11 years old. 

I work at Wesley Assisted Living Center in Baltimore, which just changed from 

a nursing home to an assisted living center. I have worked there for almost 8 years, 

and I do it because I like helping the elderly and taking care of my patients. The 

work is hard, and it doesn’t pay much, but I get to meet special people and their 

families and I like making their days a little bit better. 

Last year my family earned about $20,000. Wesley offers health insurance, but 

it is very, very expensive to cover my family. There’s no way in the world I’d be 

able to afford it. It would cost over $260 per pay period from my check to cover my 

husband and Keith. That would eat up about 30% of my family’s income just for 

health care. On top of that, there are still deductibles and a $30 copay for each primary care visit—and $40 copays for each visit to a specialist. This does not even 

cover dental insurance either—that’s more. Every year, the cost of family coverage 

just keeps going up and up. 

God knows I appreciate SCHIP. We pray on my husband staying healthy without 

insurance but at least our son is covered. Keith has been helped by the Maryland 

CHIP program all his life. With the Maryland CHIP program, Keith sees a pediatrician on a regular basis, gets tested early for allergies and asthma, and sees an allergist when he needs to. My son had a lot of ailments and allergies when he was 

younger. He had asthma pretty bad. With MCHIP, we were able to treat Keith’s 

breathing problems early, and we don’t use the hospital emergency room—which is 

sometimes the only option for families like mine. 

The relationship you have with your doctor is one that needs to be built on trust 

and understanding. Not only has Keith been able to see the same pediatrician his 

entire life, he’s the same pediatrician I went to when I was a child! Keith also gets 

regular dental check-ups with the MCHIP program. 

Since we first enrolled Keith in the CHIP program 12 years ago, Maryland has 

made it easier for families like ours to renew our coverage through the mail. We’ve 

moved a lot so we can live in better places. It’s now easier for us to make sure that 

Keith stays insured under MCHIP. 

I brought a picture of Keith with me today, because I am very proud of him. He 

is a healthy and strong 6th grader who doesn’t have to miss school all the time because he’s sick. He can focus on his schoolwork and just being a kid. 

This is my family’s story. I wanted you to hear it because it’s not just about Keith. 

It’s about people like my coworker Antoinette whose daughter lost her insurance 

when the SCHIP expansion funding was cut. There are millions more like us whose 

children’s lives and health depend on this program. 

Thank you for your time. 

Mr. PALLONE. Thank you, Ms. Chester; appreciate it. 

Dr. Rossiter. 

64 

STATEMENT OF LOUIS F. ROSSITER, RESEARCH PROFESSOR 

AND DIRECTOR, SCHROEDER CENTER FOR HEALTH CARE 

POLICY, COLLEGE OF WILLIAM AND MARY 

Mr. ROSSITER. Good morning, Chairman Pallone, Ranking Member Deal and distinguished members of the committee and subcommittee. I am pleased to be here to discuss missed opportunities 

in covering uninsured families. 

I think the number one missed opportunity, in my opinion, is not 

doing enough to incorporate the principles of welfare reform in 

SCHIP. President Clinton outlined these in 1995. He said, ‘‘Number 1, focus on work.’’ Number 2, ‘‘Have real work requirements.’’ 

He said with regard to—with welfare, with money now spent on 

welfare and food stamps to subsidize private sector jobs the SCHIP 

case would be to subsidize private sector jobs with health insurance. The number 3 quote he said, have real incentives to reward 

States who put people to work. I would add in our case here today 

to put people to work with jobs with health insurance. 

Because we don’t focus on work in the SCHIP program we are 

not maximizing group health coverage. Our experience with SCHIP 

fosters all or nothing welfare-like coverage and it encourages 

uninsurance because some children have their coverage switched 

and there are the required periods of no insurance. It also fragments coverage for families and it lures parents to drop their own 

group coverage. It also encourages small employers with low income workers to abandon coverage. 

We know we are trading off 2 for 1. Adding 2 uninsured children 

to the SCHIP rolls means 1 child who loses existing coverage. The 

tradeoff rises to 1 to 1 at the higher income levels. 

That brings me to the number 2 missed opportunity with this bill 

that we are talking about, which is understanding health insurance 

trends. Since enactment of SCHIP the rate of employer-sponsored 

insurance has declined and the uninsurance rate increased. No one 

really understands why. While we might say these trends would 

have been worse without SCHIP, with millions of children covered 

by SCHIP, neither can we rule out an SCHIP effect on all these 

families. SCHIP is obviously helping some children, but it could 

also be harming the U.S. economy and the health insurance system 

and their ability to cover even more children. 

The number 3 missed opportunity is the opportunity to grow 

group health insurance for small firms with low wage workers. 

I have three recommendations for your consideration as we look 

at this bill. Number 1, focus on work with health insurance. I 

would recommend gradually eliminating the Medicaid expansion 

option the States have under SCHIP. Medicaid expansion programs 

let the States really cop out of the hard work involved with organizing and subsidizing group health insurance. SCHIP should be 

separate from Medicaid, focused on helping parents at work by subsidizing private sector jobs with insurance. 

The second recommendation is to have real work requirements 

on SCHIP participation and cover families, not just children. A welfare recipient must work for benefits, the parents of an SCHIP recipient do not. Whenever possible to strengthen the link to group 

coverage, the State should have sensible work requirement at jobs 

with insurance. 

65 

The third recommendation is to have real incentives for States 

who can place people into publicly organized and subsidized group 

insurance. Don’t merely establish a task force for nationwide education outreach for small business. Low income parents should face 

stiff provisions to enroll their children and use the benefits appropriately. 

The government requires all sorts of things for parents, including 

sending kids to school, immunizations, the paying of taxes and the 

provision of child support. The States should have similar provisions with regard to subsidized health insurance for them and their 

children. 

Mr. Chairman, it is sad when a child goes on Medicaid. The goal 

should be reducing, not increasing the number of children on Medicaid. Bringing SCHIP into alignment with the original principles 

of welfare reform is an opportunity we do not want to miss, especially for the children. 

Thank you. 

[The prepared statement of Dr. Rossiter follows:] 

TESTIMONY OF LOUIS F. ROSSITER, PH.D. 

Good morning Chairman Pallone, Representative Barton, Representative Nathan, 

and distinguished members of the Subcommittee. I am pleased to be here today to 

discuss missed opportunities in covering uninsured families. I am a health economist with Medicaid experience at The Centers for Medicare & Medicaid Services 

(CMS) (1990–1992), and responsibility to the Governor of Virginia on the implementation and operation of our State Children’s Health Insurance Program (SCHIP or 

FAMIS in Virginia) (2000–2002). More recently, I co-authored the Medicaid chapter 

in a recent Brookings Institution Press book (edited by Alice Rivlin of the Brookings 

Institution and Joe Antos of the American Enterprise Institute) entitled Restoring 

Fiscal Sanity 2007: The Health Care Spending Challenge. Based upon this and 

other research I want to share three missed opportunities represented by H.R. 3963 

and why significant improvements can be made. 

NUMBER ONE MISSED OPPORTUNITY: ALIGN SCHIP WITH WELFARE REFORM

No one wants uninsured children. Yet, SCHIP should not be renewed without 

alignment with Welfare Reform1: There are three principles that the current SCHIP 

violates: 

1.‘‘focus on work’’ 

2.‘‘have real work requirements’’ with ‘‘money now spent on welfare and food 

stamps [redirected] to subsidize private sector jobs’’ 

3.‘‘have real incentives to reward states who put people to work’’. 

The provisions of the SCHIP (1997) program are a step backward from the Welfare Reform (1996), passed just one year prior. The capped-grant feature of SCHIP 

is an improvement over the perverse incentives of Medicaid (Weil and Rossiter 

2007). But rather than maximizing group health coverage, our experience with 

SCHIP fosters all-or-nothing welfare-like coverage and: 

1.Encourages uninsurance due to switched coverage for children who may already 

have access to group coverage and a lag in the period of coverage 

2.Fragments coverage for families and lures parents to drop their own group coverage 

3. Encourages small employers with low-income workers to abandon coverage 

We know we are trading off ‘‘two for one’’—we buy two uninsured children SCHIP 

coverage at the cost of existing coverage for one child. The trade off rises to ‘‘one 

to one’’ at the higher income levels. One reason is that SCHIP does not focus on 

work. 

NUMBER TWO MISSED OPPORTUNITY: UNDERSTANDING HEALTH INSURANCE TRENDS

What is wrong with having more children covered by P-SCHIP even though it 

means crowding out private coverage? Since enactment of SCHIP, the rate of employer-sponsored insurance has declined and the uninsurance rate increased. No one 

really understands why. While we might say these trends would have been worse 

66 

without SCHIP, with millions of children covered by SCHIP, neither can we rule 

out an SCHIP effect on all of these families. SCHIP is obviously helping some children but could be harming the U.S. health insurance system and our ability to cover 

even more children. 

NUMBER THREE MISSED OPPORTUNITY: GROUP HEALTH INSURANCE FOR SMALL FIRMS

WITH LOW-WAGE WORKERS

To bring SCHIP into alignment with Welfare Reform and ensure that the unintended consequences of SCHIP are minimized, the authorizing legislation needs to 

be rewritten this Spring to accomplish the following: 

A.‘‘Focus on work’’ and gradually eliminate the Medicaid-expansion option the 

states have under SCHIP. Medicaid expansion programs let the states cop-out of the 

hard work involved with organizing and subsidizing group health insurance. SCHIP 

should be separate from Medicaid, focused on work for the parents and used to subsidize private-sector jobs. 

B.‘‘Have real work requirements’’ on SCHIP participation and cover families, not 

just children. A welfare recipient must work for benefits. The parents of an SCHIP 

recipient do not. Whenever possible, to strengthen the link to group coverage, the 

states should have a sensible work requirement. 

C.‘‘Have real incentives for states who can place people’’ into publicly organized 

and subsidized group health insurance . Do not merely establish a task force for nationwide education and outreach for small business (H.R. 3963). Revise all of the 

provisions in HR 3963 to demand that the states aggressively establish programs 

separately from Medicaid—as 18 states have done—and rapidly grow the separate 

programs we already have. Low income parents should face stiff provisions to enroll 

their children and use the benefits appropriately. Ten years of voluntary SCHIP 

outreach programs is not cost-effective use of public funds. Government requires all 

sorts of things from parents including immunizations, the paying of taxes and the 

provision of child support. We should have similar provisions for subsidized health 

insurance for them and their children. 

It is sad when a child goes on Medicaid. We should set the goal of reducing, not 

increasing, the number of children on Medicaid. Bringing SCHIP into alignment 

with the original principles of Welfare Reform is an opportunity we do not want to 

miss. 

1 President Clinton on Welfare Reform, National Governors’ Association Summit 

on Small Children, June 6, 1995. http://www.libertynet.org/edcivic/welfclin.html 

accessed January 26, 2008. 2 Rosenbaum, Sara, Borzi, Phyllis C., Smith, Vernon. 2001: Allowing Small Businesses and the Self-Employed to Buy Health Care Coverage through Public Programs. Inquiry: Vol. 38, No. 2, pp. 193-201. 

Mr. PALLONE. Mr. Lesley. 

STATEMENT OF BRUCE LESLEY, PRESIDENT, FIRST FOCUS, 

ALEXANDRIA, VA 

Mr. LESLEY. Thank you, Mr. Chairman. My name is Bruce Lesley. I am the President of First Focus, a bipartisan children’s advocacy organization dedicated to making children and families a priority in Federal policy and budget decisions. 

I spent some time working on this committee for Congresswoman 

Diana DeGette and it was a wonderful experience, worked on many 

children’s health issues as that is a priority of hers, worked on 

some SCHIP provisions related to covering pregnant women, presumptive eligibility, but also she championed a pediatric organ 

transplant bill that passed the House I think by 400-something to 

3. So I have spent some time working on this committee working 

on children’s health issues. 

There is a perception in this town that children fare better than 

the reality when it comes to Federal legislation. It is epitomized by 

Dana Milbank’s column in the Washington Post during the middle 

of the SCHIP debate, where he wrote, lawmakers on both sides of 

67 

the aisle know that a piece of legislation stands a much better 

chance of passage if it is about children. He went on to cite eight 

pieces of legislation as examples. However, he didn’t take the next 

step which was then to look to see how they are faring, and none 

of them have passed the Congress. It is a disturbing trend that 

First Focus has increasingly found. 

According to an Urban Institute report that First Focus commissioned this past year, entitled Kids Share 2007, the share of Federal domestic spending on children has actually declined by an astonishing 23 percent since 1960. And based on projections from the 

Congressional Budget Office, that downward trend will drop further over the next decade unless Congress takes specific actions to 

reverse that trend. 

I say that because this I think epitomizes the SCHIP debate. 

Years ago I worked for Senator Jeff Bingaman on the Senate Finance Committee, and we were faced with the task of what are we 

going to do about Medicare prescription drug coverage for senior 

citizens. Congress passed a $400 billion bill very much supported 

by the President of the United States. 

Last year when we were working on SCHIP we had a bill that would have provided $35 billion, far less than the $400 billion provided for senior citizens, and yet we couldn’t get it through the administration, who vetoed it twice. I will note that what finally did 

pass was an $800 million extension. So if you compare 400 billion 

to 800 million, that is a 500:1 ratio when we dealt with how we 

dealt with senior citizens and how we dealt with children, but it 

is not because of the lack of broad public support from the public. 

We commissioned a poll by Republican Frank Luntz that showed 

that 83 percent of Americans supported renewing SCHIP programing, including a 2:1 margin of support from Republican voters. 

I think that some of the issues that people outlined today were 

good ones about how we should move forward. I think that we 

should all keep in mind is three goals. One is that there are 9 million children in this country who are uninsured and we should 

keep that as the first and foremost goal. We should also make, and 

I agree with some of the members who talked about this, the lowest income children the top priority. And last, failing meeting those 

goals, we should always make sure not to backtrack on coverage, 

we should definitely do no harm. 

I used to play basketball in high school and we used to go out 

and do training with the track team, and I always was most 

amazed by the people who did the high hurdles because I tried and 

failed. But the analogy is that in Medicare we saw an end goal of 

we needed to provide prescription drug coverage to 43 million 

Americans, there were hurdles. One thing is that 71 percent of senior citizens had former drug coverage, prescription drug coverage 

already. What Congress didn’t do is say, oh, we can’t jump that 

hurdle, Congress figured out ways around that problem and in the 

end got to the goal of providing drug coverage for senior citizens. 

What I see, I was reading the testimony from CMS, and what instead has happened with the administration this year was that 

first whole hurdle of cut, crowd-out, which was far lower for SCHIP 

if you think the crowd-out rate is 34 percent as opposed to 71 percent potentially for Medicare. What we did was stopped and started 

68 

looking at that, and that became the goal, and it is that issue rather than getting to the end game of getting low income children covered. 

Also the problem is that wasn’t the only issue we were hearing. 

We also heard it was kind of the moving goal. We also—when talking to the White House it was it is not that we have a problem 

with SCHIP, it is that we want to get our tax credits passed. In 

talking with OMB, it was an issue of well it is not that we have 

any problems with any of the legislation, it is the 35 billion is our 

problem. We put in our budget for 5 billion, which we all know 

would have actually meant a million children would have lost 

health insurance. 

So what I appreciated Congressman Deal and Congressman Barton talking about is how can we move forward. And one of the ways 

I think the administration repeated this more than 50 times during 

the SCHIP debate, and it is let’s look at the poorest kids first. I 

would note that as Cindy Mann testified, the CHIPRA bill, actually 

the newly covered children, the 3.9 million children who would 

have been covered, 87 percent of those kids would have been children below 200 percent of poverty. So it took very strong steps toward achieving that goal. 

As we move forward though, what we could do is at least take 

those provisions from that legislation and start there. And some of 

the things that were in that legislation were the outreach enrollment provision, the express lane eligibility provisions. We have 

done a great deal in the Medicare side of using health information 

technology and those kinds of things, and we could do a better job 

on the SCHIP side on that as well. We could also move forward on 

quality provisions. We have passed numerous pieces of legislation 

and CMS has been moving forward on quality for senior citizens. 

We could do the same and take the provisions out of the CHIPRA 

bill on quality and move forward. 

Just a few words about express lane enrollment. When a child 

is eligible for—I know I am running out of time, so I will hurry. 

Mr. PALLONE. You are about a minute over. 

Mr. LESLEY. Over, okay. I will just finish up then. On express 

lane enrollment, the issue is that if a child is enrolled in food 

stamps or school lunch or those other kind of programs, States 

have in their systems that data, the eligibility data, that shows 

that these kids are—you know for a fact are eligible for Medicaid 

or SCHIP. So one of the things that was really great about the 

CHIPRA bill is that it had language that allowed that data to be 

used for eligibility determination for the SCHIP and Medicaid programs. It is in that vein that I think we can move forward. That 

is something that I did not hear any opposition for, and I hope we 

will start from there and move forward. 

Thank you very much. 

[The prepared statement of Mr. Lesley follows:] 

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Mr. PALLONE. Thank you, and I thank all of the panel for your 

opening statements. Now we will go to questions and I will recognize myself initially for 5 minutes. I wanted to start with Ms. 

Mann. 

Just so you understand my perspective, I remember a year ago 

when the State delegations were coming here and saying, you 

know, we are running out of money, we are going to have to take 

kids off SCHIP. So we passed a temporary measure then. I think 

it was part of the supplemental to carry them. But the main goal 

was to have the much larger program to cover up to 10 million 

kids, which was the CHAMP bill, which unfortunately was vetoed 

twice by the President. 

We then, as you know, passed as part of the omnibus, I guess, 

to continue SCHIP and theoretically at least hold harmless and 

make sure there was enough money for the next year. My concern 

obviously is that there won’t be and with the economic slump we 

will start to see more and more people that need SCHIP as well 

as Medicaid. But even beyond that, the August 17th directive, instead of allowing us to expand the kids, puts such a crimp on it 

that States are going to now actually have to not be able to enroll 

kids who are currently enrolled. So my fear is that we just can’t 

wait around here until 2009 or the next President or whatever, 

that we are going to face an increasing crisis. 

So I wanted to ask you, Ms. Mann, you have spent a lot of time 

studying this August 17th directive, and CMS says it was a way 

to improve coverage for low income children. Do you believe that 

that will be the result or is this directive going to have the opposite 

impact? And if you don’t agree with the administration that this 

is actually going to improve coverage, what do you think is going 

to happen? How will kids be affected? How many States, or kids 

are going to be negatively impacted? We’re just trying to get a handle on it. 

Ms. MANN. Well, thank you for the question, Chairman Pallone. 

There is not even a theoretical answer anymore, there is an actual 

answer. We have had activity taking place since the directive was 

issued between CMS and with States and no State has gotten an 

approval of their coverage plan to go forward to cover kids over 250 

percent over the poverty line since the directive. We have had two 

States that have had denials and we have had other States that 

have cut back their planned expansions, expansions that their 

State legislatures had determined were needed in their States because of the directive. As a result, we have already seen just in the 

short time since the directive has been in place tens of thousands 

of children who otherwise would have had coverage not get the coverage that their State has already determined that they needed. 

When we come around to August ’08, even more States will be 

under the requirements of the directive that CMS gave the States 

that had already been covering children above 250 percent of poverty, States like your State of New Jersey, until August ’08 to come 

into compliance. CMS has said that the children in those States 

who are already enrolled do not have to come off the program, but 

the State will not be able to enroll any new children, including the 

children who might have income fluctuating and go off and on 

again. 

83 

So it will have a decimating effect, and it is very important to 

think about it in light of the worsening, weakening economy. 

We are going to be seeing more children become uninsured, children who are eligible for Medicaid, children eligible for CHIP and 

children in that in between area who simply don’t have an opportunity to buy affordable health insurance coverage. That really was 

CHIP’s original intent. There was a lot of discussion about did 

CHIP go beyond its original intent. Its intent was to bridge that 

affordability gap between Medicaid and private health insurance 

coverage. That gap has been growing, and we need to take into account that that gap has been growing. 

Mr. PALLONE. So there is no doubt on your part that over the 

next year because of the economy, because of this directive, we are 

just going to have a lot more kids that are not going to be covered. 

Ms. MANN. We will go backward over this year, absolutely. 

CHIPRA would have helped the States move forward by giving stable and predictable funding, by helping with the performance based 

payments for Medicaid as States enrolled children. The Medicaid 

eligible children have a lower Federal match rate so States, particularly when they are in a weakened economic circumstance, are 

reluctant to enroll those Medicaid eligible children, they bring less 

Federal dollars. CHIPRA would have addressed that. CHIPRA 

would have given States new tools like express lane to encourage 

the enrollment of eligible children, focusing the resources on the 

lowest income children. All of those opportunities are not now on 

the table as well as the August 17th directive that stops States in 

their tracks from moving forward for families who have a growing 

affordability problem purchasing health insurance. 

Mr. PALLONE. Mr. Lesley, you wanted to talk about the missed 

opportunities in terms of outreach and all that. Just briefly because 

my time is pretty much over. 

Mr. LESLEY. Sure. Just to build on that. As Ms. Mann pointed 

out and your question is that if the third principle of what Congress did last year in passing the extension was really affirming 

that no, that we should at least maintain the status quo and we 

should not go backtrack. The problem with the regulations is that 

that is exactly what we are doing, and we will see increased numbers of uninsured children. 

On outreach and enrollment, I do believe that we do have an opportunity. The President when he was running for reelection stood 

on the platform at the Republican National Convention and declared he would do everything in his second term to address this 

issue of eligible but unenrolled children. He put in the budget a few 

years ago a billion dollars for outreach and enrollment. Somehow 

that has disappeared. And what we would like to do is to take up 

that promise, and I think that that is something we could do now 

and really take some of the aspects of CHIPRA, and they were not 

controversial, and move forward in terms of trying to get express 

lane enrollment and outreach enrollment. A part of that is dealing 

with the regulations because they do cause a backward momentum 

for kids. 

Thank you. 

Mr. Deal. 

84 

Mr. DEAL. I would observe at the beginning that my understanding is that CBO has said that there would be a 3.3 percent 

annual rate of growth in the SCHIP program under the extension 

that we have already passed, so I think that is a question of whether there is a regression or a continued state of growth. 

Dr. Rossiter, you are an economist and many people here on the 

Hill as we talk about a stimulus package today in all of our States 

are concerned about the economy. Let me ask you a question as to 

whether you think the CHIPRA bill would have a positive or a negative effect on the American economy? 

Mr. ROSSITER. I guess I have a different view than has been expressed regarding the impact of these expansions, because my concern is that we have not ruled out the possibility that SCHIP and 

especially in its form of Medicaid expansions is really doing more 

harm to our health insurance system and employers, especially to 

small employers than if the States worked really hard, as some 

States are doing. Some States have separate programs and seem 

very happy with them and are working real hard. And by the way, 

they happen to be States that are also working on general health 

insurance reform. 

The missed opportunities that we have allowed SCHIP to morph 

into in many parts of a Medicaid only program and forgotten the 

welfare principals. And because of that it is having a negative impact on small employers who will probably be the first to be hard 

hit by a recession if that is what we are in. 

Mr. DEAL. Would you expand upon the implications if a State 

were to eliminate the Medicaid expansion options to a State? What 

effect would that have for the SCHIP program? 

Mr. ROSSITER. Well, there are only nine States that are Medicaid 

only, and then there is a mixture. There are other States like Virginia who are a mixture, so they could reduce their Medicaid only 

portion. But there are other States that are separate programs entirely, and those include Georgia, Pennsylvania, New York and 

Texas. 

One thing I could see is that in a revised bill that you bring the 

match level in line for those who are in SCHIP who are Medicaid 

only, make it the same match rate as Medicaid. Why should the 

match rate be higher than for a higher income child and lower income? Why should there be no work requirements or any other requirements, including asset tests, and yet the Federal Government 

is paying a higher rate? It would save money and you would be 

able to expand and encourage States to put in place separate programs that would better blend and merge and support the private 

health insurance industry. 

Mr. DEAL. Thank you. 

Mr. Peterson, I have just a very brief question. Looking at the 

CBO scoring of the CHIPRA bill, it appears to me that they are 

projecting that only 800,000 individuals who are currently enrolled 

for SCHIP would be enrolled in the expansion; is that the way that 

you read that? 

Mr. PETERSON. Say that again, please? 

Mr. DEAL. That in terms of expanding coverage for currently eligible SCHIP children that there would only be 800,000 that would 

fit that category. 

85 

Mr. PETERSON. I would have to look up the CBO. 

Mr. DEAL. Well, that would be those who are eligible, but 

unenrolled. I will share the chart with you. 

Mr. PETERSON. Yeah. I will follow up with you. 

Mr. DEAL. All right. 

One of the things that I think concerns all of us is that we have 

different numbers that people are throwing around here. In looking 

at that CBO score it appears to me that if you look at the bottom 

line they say that under the bill that was proposed there would be 

7.4 million enrollees in SCHIP and yet we hear the figure of 10 

million children thrown around. And yet even in the 7.4 there is 

a significant crowd-out of children who currently have private insurance that would be included in that number. 

Dr. Rossiter, can you give us some insight as to why the numbers 

don’t seem to add up? 

Mr. ROSSITER. The numbers don’t add up probably because that 

crowd-out figure, it could be underestimated and I think also it 

tends to be a question of tactics rather than strategy that gets applied when we use these numbers. By that I mean we talk about 

the children. Of course no one wants uninsured children, but what 

kind of system are we building if we continue to use Federal funds 

to match the State funds that possibly could be harming private 

health insurance industry? And after all, where do we want it to 

go in the long run? So I think the figures are important, but they 

come into question because we haven’t agreed upon what kind of 

health care system we would like for our children in the future. 

Mr. DEAL. Thank you, Mr. Chair. 

Mr. PALLONE. Thank you, Mr. Deal. The gentlewoman from California, Ms. Eshoo. 

Ms. ESHOO. Thank you, Mr. Chairman, and thank you to all of 

the witnesses. I think you did an excellent job. I just want to make 

a couple of comments about some of the things that were said and 

then quickly go to my questions. 

Mr. Lesley, thank you for everything that you said and your good 

work, and I was very pleased that in your testimony that you mentioned the benefits of Health Information Technology, HIT. It is an 

area that the Congress I believe needs to address. I think it is a 

nonpartisan issue. I think that billions of dollars potentially could 

be saved. We put into place an effective system and I am proud to 

have introduced bipartisan legislation on it and look forward to the 

committee taking that up. 

To Dr. Rossiter, I am a bit puzzled about some of your testimony. 

The whole issue of tying children’s health insurance to people that 

work. I don’t think that is the basis by which we solely establish 

health care coverage for children. Children don’t work and their 

parents, many parents, have a huge problem getting coverage. And 

so the incentive was to offer this so the children are insured. So 

I am kind of puzzled by that nexus that you established in your 

testimony. 

But let me get to my questions. To Ms. Mann, thank you for the 

work that you do at the Center for Children and Families at 

Georgetown. Much has been made about the phenomenon called 

crowd-out. You know what crowd-out is, we know what it is. For 

the record, they are workers who may be able to get private insurVerDate Nov 24 2008 13:30 Oct 07, 2010 Jkt 037690 PO 00000 Frm 00091 Fmt 6633 Sfmt 6633 Q:\PRINT EDITOR-110\HEARINGS 110\110-85 SCOM1 PsN: JIMC
86 

ance for their families at work and they instead opt out for coverage under SCHIP. 

To what degree does crowd-out exist? Can you give us some information about that and what factors lead to it? If you can set 

that down for the record, I think it would be helpful to us. 

Again, if you could briefly restate for us, you began to touch on 

this, but your time ran out in your testimony about States that 

wanted to expand their health insurance for children and the directive that has come from the Federal Government which I think myself is absolutely punitive. I mean it is like we are going to show 

you you are not going to be able to do this. 

So if you could address those two things. Again, Mr. Chairman, 

thank you for having the hearing. 

Ms. MANN. Thank you. First, let me address crowd-out. It is unfortunately not as simple a topic on—different measures of crowdout look at different things. The CBO analysis is a very broad conception looking more at the population as a whole, looking at the 

economy. What might have happened in terms of public or private 

coverage or uninsured rates had CHIP not been in place or had the 

Congress not passed the CHIPRA law. 

States often look at the issue of crowd-out to examine what coverage did families have before they went into CHIP, and did they 

drop private coverage, and if they dropped private coverage for 

what reasons. When States have examined that question, and the 

congressionally mandated evaluation of CHIP also looked at that 

question, they have found a very small portion of crowd-out, very 

small, around 7 percent of families that had private coverage drop 

them. A lot of families that might have had private coverage in the 

income range of the CHIP program had it at a very high cost. They 

were paying very high premiums. The average family premium last 

year, according to the Kaiser study, is about $12,000 per year without an employer contribution. So if your employer doesn’t contribute towards family coverage, it is very difficult to afford. 

Ms. ESHOO. If I might jump in, that is an extraordinary number, 

and it goes to the heart of this debate about both the directive and 

how it presses down, depresses the whole situation, but the huge 

criticism that my colleagues on the other side of the aisle have leveled about the costs and what families would be eligible for this. 

I mean, one child, $12,000 a year? 

Ms. MANN. For family coverage. 

Ms. ESHOO. You know, we make some $160,000 a year. What 

about each one of us, with the number of children that we have, 

paying $12,000 a year for a policy? 

Ms. DEGETTE. And will the gentlelady yield? In some States, like 

New York and New Jersey, for a family of four that is an average, 

$12,000 is an average in some of those States, like Mr. Pallone’s 

State insurance premiums for that same family can be $20,000. 

Ms. ESHOO. Thank you. 

Ms. MANN. And I think that is Ms. Chester’s point as well, is 

that she had an offer of health insurance from her job but it was 

simply unaffordable, and that is increasingly the case. 

The other point to remember, as CHIP States go up the income 

ladder a bit and address the affordability problem, they are not 

providing free coverage for families. Families pay premiums in the 

87 

CHIP program, so CHIP does not give out free coverage. It provides 

affordable coverage, which is of course exactly the goal. 

Ms. ESHOO. Thank you, Mr. Chairman. 

Mr. PALLONE. Thank you. 

Ranking Member, Mr. Barton. 

Mr. BARTON. Thank you, Mr. Chairman, and I thank the witnesses. I want to talk a little bit about adults in SCHIP. I know 

the focus is children in SCHIP, as it should be. I am told that if 

we didn’t cover adults we would have a lot more money for children, which we all support. So I want to ask Mr. Peterson, do you 

have any information about what it costs to cover an adult under 

SCHIP and how much money would be freed up if we didn’t cover 

adults under SCHIP? 

Mr. PETERSON. Well, we had done an analysis that adults’ cost 

on average doubles what children cost. Adult coverage, however, 

when it was first offered through waivers, it was specified under 

the Clinton administration that if the administration was going to 

approve that, that the State would have to ensure that they were 

doing a good job of covering those targeted low income children. 

But on the per capita cost in particular, yes, it is true that adults 

are approximately double. 

Mr. BARTON. Okay. Dr. Mann, do you up support phasing adults 

out of SCHIP so we have more money for children? 

Ms. MANN. The action taken by the Congress in CHIPRA shows 

that there is support for coverage generally and that the tradeoff 

is between a child at $42,000 versus a child at $18,000. 

Mr. BARTON. I am asking do you support adults being covered 

under SCHIP? 

Ms. MANN. I support the opportunity for States to cover adults 

when they are also able to cover children. 

Mr. BARTON. So you think it is okay for us all to be under 

SCHIP? 

Ms. MANN. The earlier waivers that Mr. Peterson talked about, 

I was actually at the Health Care Financing Administration when 

those were issued. We issued that policy and it said explicitly to 

States that were looking to cover adults, to cover parents. We 

didn’t allow States to cover childless adults through that waiver 

policy, that you had to be doing a good job covering children. 

States have found when they covered their parents they have increased enrollment of children. I think our experiences in New Jersey that will testify in the next panel substantiates that. It has not 

been a trade off in terms of covering parents versus children. 

Mr. BARTON. So you dispute what Mr. Peterson says, that it will 

cost twice as much to cover an adult? 

Ms. MANN. My understanding is that it is about 1.6 difference. 

Mr. PETERSON. Yeah, that was our original analysis. There has 

been new data. 

Ms. MANN. And there are also adults that are covered in CHIP 

that are pregnant women, and they are far more expensive than 

the parents who are covered. So it varies. 

If I might point out, one of the reasons why a few States, and 

there is really only at this point 11 States with parent waivers, 10 

States that are operating them still, some of the reasons why 

States used waivers is that they were not able to use their CHIP 

88 

dollars to cover children. They had already expanded coverage for 

children—— 

Mr. BARTON. They had 100 percent coverage in the eligible population. That is not true. 

Ms. MANN. No, what I am saying is they weren’t allowed by the 

provisions of CHIP law to use any of their CHIP dollars to cover 

children. They didn’t have 100 percent participation rate, but they 

were blocked from using CHIP dollars because the State that had 

already expanded Medicaid before CHIP was enacted were foreclosed from using CHIP dollars for children. And so some of those 

States were then given the opportunity to use some of their CHIP 

dollars. 

Mr. BARTON. Dr. Rossiter, what is your position on adults in 

SCHIP? 

Mr. ROSSITER. I think the childless adults don’t make sense to 

me in SCHIP, but—— 

Mr. PALLONE. I don’t think his mike is on. 

Mr. ROSSITER. Childless adults should not be covered under 

SCHIP. They do cost more, we can cover more children, but family 

coverage does make some sense to me, especially when you have 

a separate program that is not Medicaid and you can use those 

funds to subsidize private based insurance. Just as an example, 

Maryland is a Medicaid only State, and she commented that her 

husband is without insurance. If Maryland had set up a separate 

program and used the funds, perhaps they could have bought coverage for the entire family. 

Mr. BARTON. Mr. Lesley? 

Mr. LESLEY. On this issue I agree with Mr. Rossiter, in that 

when this issue came before Congress we did a study and asked 

Sarah Rosenbaum of George Washington University to look at this 

issue. So we agree that childless adults make no sense in the 

SCHIP program, but do see some value in instances of having family coverage. For example, in the premium support provisions that 

people support you are basically doing premium support for family 

coverage. So there are instances where it does make sense for us 

to allow, but childless adults we agree should not be covered by 

SCHIP. 

Mr. BARTON. Mrs. Chester, do you have a position? 

Ms. CHESTER. My position is that each family is different. 

Mr. PALLONE. Is your mike on? 

Ms. CHESTER. I pushed it. 

Mr. BARTON. She is just very polite, Mr. Chairman. 

Ms. CHESTER. Thank you. My position is that each family is different and they need to investigate instead of cutting and taking. 

You need to check and see what is going on. Things change and 

different things happen. So that is why people don’t have insurance. 

Mr. BARTON. Thank you. Final question—— 

Mr. PALLONE. You are—— 

Mr. BARTON. Am I out of time? 

Mr. PALLONE. Yes, you are a minute over. 

Mr. BARTON. I am sorry. 

Mr. PALLONE. That is all right. 

89 

Ms. DEGETTE. Just to follow up on Mr. Barton’s question, putting 

the childless adults aside, which I think a lot of us agreed, if you 

could rewrite SCHIP the right way then States would be able to 

use their funds to really target the children and they wouldn’t have 

extra money so that they would be covering extra people like childless adults. But one of the rationales that some States had in covering parents, covering adults with children in outreach and enrollment, it helped get the kids in when they could put the whole family in; is that correct? 

Ms. MANN. That is correct. And if I can just review a bit. The 

legislation does not allow States to cover parents with—the 1997 

legislation does not allow States to cover any adults with CHIP dollars except in a very narrow instance of premium—— 

Ms. DEGETTE. But what I am saying is there is some public policy reason to allows States the option when they have met other 

requirements to do outreach to parents who don’t have health insurance who meet the income eligibility requirements in order to 

get the kids in, right? 

Ms. MANN. Absolutely, and there has been solid experience that 

that has worked in many States. 

Ms. DEGETTE. And so that helps get more kids enrolled? 

Ms. MANN. That is correct. 

Ms. DEGETTE. I want to follow up on the questions Ms. Eshoo 

was asking about crowd-out. I think there is a miscommunication 

or misunderstanding about crowd-out. Some people say we 

shouldn’t invest in Medicaid and SCHIP because of crowd-out, because families will drop their employer coverage in order to cover 

children under SCHIP. How much evidence is there that this is 

really a problem? 

Ms. MANN. There is very little evidence that we have had families actually dropping coverage. And to the extent that families 

have dropped coverage, the coverage that they had often had been 

unaffordable. They have been—it is sustaining it because they have 

had no other way to do it. 

Ms. DEGETTE. I have a chart and I have staff making copies of 

this chart. It was a congressionally mandated evaluation of SCHIP 

that showed that coverage of recent SCHIP enrollees during the 6 

months before they enrolled, and it shows that there was in fact 

28 percent of those people—43 percent were uninsured, 29 percent 

had been on Medicaid. So I guess they got a job and that bumped 

them up to SCHIP, but then 28 percent had been in private insurance, which might seem like a big number, except for when you 

look at that 28 percent, a lot of those people didn’t just move over 

from private insurance. It is as you are saying, they had private 

insurance but they lost their job or their family structure changed, 

someone was divorced or whatever. They couldn’t afford their premiums. Only 2 percent shifted because they preferred SCHIP to 

their insurance. 

So really it really seems to me if you get below the surface of the 

28 percent it is actually not a huge number that are leaving private 

insurance for the SCHIP program; would that be correct? 

Ms. MANN. That’s right. Small numbers have private insurance 

and most of those families lost their private insurance because of 

a job change, or because the parent died, or because the employer 

90 

himself or herself dropped insurance and the insurance was no 

longer available. So that you have really about 7 percent who have 

dropped coverage for other, what are considered to be more voluntary reasons. And some of those voluntary reasons also relate to 

the issues of affordability. 

If we can go back to the August 17th directive, we talked about 

it would require participation rates. It would require if a State met 

those participation rates, every child they covered would have to 

have a 12-month waiting period regardless of any of these factors, 

including if the employer had dropped the coverage, including if the 

parents had gotten divorced, and so it would force uninsurance on 

children regardless of the reasons for why they no longer have private health insurance. 

Ms. DEGETTE. Ms. Chester, when I heard you talk about your 

son, I am just so grateful he’s been able to have that insurance. 

Can you imagine if somebody said to you, you know, your status 

has changed so your son can’t now have insurance for 12 months 

until we are sure he is eligible. I don’t think that would be a very 

satisfactory result for kids, do you? 

Ms. CHESTER. I do not think that would be a very good result because then we would have to use the emergency room. I cannot 

treat my child and say you are sick and it is okay. It is not right. 

Ms. DEGETTE. Right, I agree. Thank you very much. I yield back. 

Mr. PALLONE. The gentleman from Pennsylvania, Mr. Pitts. 

Mr. PITTS. Thank you, Mr. Chairman. Mr. Peterson, just one 

clarification on what Mr. Deal had asked about on the CBO score 

on H.R. 3963. I understand that CBO projects that only 800,000 

currently SCHIP eligible but unenrolled people would be added to 

SCHIP by fiscal year 2012, is that true? 

Mr. PETERSON. Yes, that is true. I was able to turn to the chart, 

and that is indeed what it says. 

Mr. PITTS. In talking about the cost of covering an adult, I think 

you said it would be about twice as much as it costs to cover a child 

on SCHIP. Assuming this is true and a State has 100,000 adults 

in their SCHIP program, is it accurate to say that it is possible for 

that State to enroll over 200,000 additional kids in their SCHIP 

program without increasing their SCHIP spending if they would 

simply transition their adults out of their SCHIP program? 

Mr. PETERSON. I suppose on average that is the case, but it is 

still true that there is remarkable variance across States in terms 

of what adults cost, because some States only cover pregnant 

women. So you can imagine that their costs are even higher on a 

per capita basis. So there are tradeoffs in terms of again who these 

non-targeted people are. If they are pregnant women, maybe the 

calculation is a little different. 

And then to an earlier point as well, the structure matters. So 

if one wants premium assistance, then the best way to do that, one 

might argue, is to try to get the whole family enrolled. So in that 

case you do get parents enrolled and it may not be as expensive. 

So there are those tradeoffs. 

Mr. PITTS. Dr. Rossiter, if you think adults should not be covered 

in SCHIP, what would be a reasonable transition period to take the 

adults off of SCHIP? 

91 

Mr. ROSSITER. I think about 2 years would be a reasonable transition time. Also, it seems to me it is a reasonable compromise to 

cover families—families are important, families are important to 

providing health care. Probably most of us in this room with private insurance have family coverage. It is a staple of health insurance, and so a good compromise would be to cover those parents 

of SCHIP eligible children and gradually reduce the childless 

adults on the SCHIP program. 

Mr. PITTS. Now is it true that H.R. 3963 will increase taxes on 

smokers by over $71 billion over the next 10 years in order to pay 

for only 5 years of SCHIP? Can you explain why that is fiscally responsible? 

Mr. ROSSITER. Well, it probably isn’t fiscally responsible, but we 

are in Washington and it is a way to get us going in the first 5 

years, but it leaves a big cliff at the end. By the way, that will hit 

at about the same time the boomers are hitting the Medicaid program. It is a problem that is discussed in a new book that I hope 

everyone will get, Restoring Fiscal Sanity: The 2007 Health Care 

Spending Challenge, and I and Alan Weil wrote the Medicaid chapter in that book from Brookings Institution, and it covers it clearly 

and shows that this kind of financing, it doesn’t make a whole lot 

of sense given what we are facing in the future in health care 

spending. 

Mr. PITTS. And what you are referring to as the cliff, fiscal year 

2013 to -17, no funding for SCHIP but the increased tax on smokers would be kept in place? 

Mr. ROSSITER. And it would probably have to increase further to 

keep pace with rising SCHIP costs. And also for the record, taxes 

on tobacco are very regressive and hit the lowest income people the 

most. 

Mr. PITTS. Mr. Peterson, could you explain how income disregards work; for instance, how the State of New Jersey is able to 

cover populations at greater incomes, far greater than what appears to be the statutory limit? 

Mr. PETERSON. Well, this gets back to the point I had made earlier in terms of the tension between State flexibility and Federal 

control. The SCHIP statute states very clearly that eligibility is for 

children up to 200 percent of poverty, plus 50 percentage points 

above those pre-CHIP Medicaid levels. 

On the other hand, the statute says that income is defined by the 

State and the same is true for Medicaid as well. So in New Jersey 

what they did is they disregarded all income between 200 percent 

of poverty and 350 percent of poverty and they used that flexibility. 

So really what we are talking about is that tension between the 

State flexibility versus the Federal control and then who those nontargeted individuals are. 

Mr. PITTS. Finally, Dr. Rossiter, we were talking about crowding 

out. What impact would crowding out over 2 million people from 

their private health insurance coverage and placing them in a government run, taxpayer financed program have on our economy? 

Mr. ROSSITER. As I said, it hits the small businesses the most. 

And as I said in my testimony, it just gives me great concern that 

in the 10 years of SCHIP that it doesn’t make sense to me that we 

are covering more children and some more adults and yet we still 

92 

see the uninsurance rates go up and we still see the most troubling 

figure is the percent covered by employment-based health insurance. And I just ask the question is SCHIP contributing to this, 

does it have anything to do with it or nothing at all? We want children covered, but are we having ill effects and unintended effects 

on our private health insurance market. It seems like it should be 

fairly easy in this bill, it is a missed opportunity that we haven’t 

done it yet, to do some things that will help support private health 

insurance, not harm it. 

Mr. PITTS. I yield back. 

Mr. PALLONE. Thank you. Ms. Solis. 

Ms. SOLIS. Thank you, Mr. Chairman. I apologize for coming in 

late. I was at another event talking about expanding services to 

HIV/AIDS population in low income communities, but this is a very 

important issue and I want to thank the chairman for having a 

very good panel and the discussion that is taking place. 

I have a lot of concerns and questions. Obviously I represent a 

very large State, and a disproportionate number of low income and 

minorities are affected by the lack of health care insurance. And 

we know in California that there is a large number of continued 

uninsured Latino families and African American families. 

I just want to know from Ms. Mann and also from Mr. Lesley, 

why is it important that we continue to look at trying to expand 

access and different outreach efforts, and what kinds of—maybe 

you can give me an idea which programs did work or do work. We 

know now we are coming back and we are regressing, we are actually going in the opposite direction, and our population continues 

to grow. We continue to see the recession really having a devastating effect in cities that I represent where unemployment is 

over 7 percent and no one really talks about what is going to happen to these families. They are working families, but they are 

working poor. So if you could shed a light on that, and I would 

start with you, Ms. Mann. 

Ms. MANN. Thank you. Well, a large problem in terms of the uninsured rate among children, which has been actually dropping significantly over the last decade, is with respect, however, to the remaining children who are uninsured, and many of them are uninsured for reasons of language access. Many of them are uninsured 

because their parents may be working two or three jobs. It is difficult to learn about the programs, it is difficult to get to apply for 

the programs. States have made progress over the last 10 years, 

some more than others, in terms of easing their application system. 

California started with a 28-page application, you had to have an 

in-person interview at the county welfare offices to get children 

health care coverage in California. That is no longer the case. 

So there are important steps going forward. However, we had a 

change also in the Deficit Reduction Act of 2005 which required 

States to ask for more paperwork on citizen children, and that has 

led to an extensive backward movement, a loss of coverage for children, the poorest children who are in the Medicaid program. 

Ms. SOLIS. Would you on that point—I often look at reports that 

state that in fact because of the Deficit Reduction Act and the fact 

that you have to provide more documentation that we are actually 

hurting more citizen children. Can you elaborate on that? 

93 

Ms. MANN. It is a provision that explicitly goes to the citizen children. The Deficit Reduction Act did not change the rules for documenting for eligibility for immigrant kids. They had to provide documentation of immigration status. It changed the rules for citizen 

children and required a lot more paperwork both for citizenship 

and the issue of identity. And there are documents that I would 

have trouble finding for my children and that in fact many families 

have had trouble finding. 

Ms. SOLIS. Give me an example of what that means though just 

quickly. 

Ms. MANN. It means you have to provide an original birth certificate, for example. 

Ms. SOLIS. If you were born in your home you might not have 

that birth certificate. If you were born in Louisiana and Hurricane 

Katrina wiped away your documents, if you were born in Nebraska 

but now you are applying in California and don’t have your original 

birth certificate, it would at least take time and money to be able 

to get that original birth certificate. You also need different identity documents in order to now show citizen children—show that 

they are eligible. 

Ms. SOLIS. Has there been any evidence to show that more actual 

citizen children have been excluded because of this maybe? Mr. 

Lesley, you are nodding your head there. 

Mr. LESLEY. Yes, absolutely, there has been several studies that 

show that hundreds of thousands of kids have been—in various 

States have lost coverage due to these barriers and very little evidence that it has actually excluded immigrant children. And so citizenship documentation is one problem, and back to your original 

question, if you look at the eligible but unenrolled children, I grew 

up in El Paso, Texas and worked at the public hospital there, and 

we would go around on the pediatric ward, and you could see all 

the kids because they were uninsured, there are preventable diseases that were lost opportunities for these kids, that if they had 

had insurance—and if you look at the eligible but unenrolled they 

are disproportionately Hispanic. And so providing health insurance 

to those children you reduce health disparities, and so getting kids 

enrolled in things that work are one of your bills, the Community 

Health Workers bill. 

Ms. SOLIS. Can you talk about that? 

Mr. LESLEY. Yeah, absolutely. The Community Health Workers 

bill that you have introduced, one of the things we did was one of 

those dreaded earmarks, but there was an earmark that Senator 

Bingaman put in a few years ago to test this program and to see. 

And we provided an earmark of funding for community health 

workers in some community health centers in New Mexico. For example, the earmark that went for Dona Ana County, which is in 

Los Cruces, New Mexico, right on the border, it was so effective, 

it was so effective that they actually enrolled more children than 

they thought were eligible because the two women who got the 

grant would go around, they were like block mothers and they 

would go to the fair and they would go to the schools and they 

would enroll these children, and it was wildly successful. 

And also the other thing about getting coverage is it does reduce 

health disparities, and an express lane would also—which was in 

94 

the CHIPRA bill, would also be very beneficial to the Hispanic community. 

Mr. PALLONE. We are a minute over. 

Ms. SOLIS. Thank you. 

Mr. PALLONE. Thank you. 

The gentlewoman from Wyoming. 

Mrs. CUBIN. Thank you, Mr. Chairman. This is better anyway 

because I am sitting up higher, I feel like I can see all of you. I 

usually carry a box with me I am so short. 

I just have a couple questions, and I would like to start with Mr. 

Peterson. Can you confirm that H.R. 3963, the second CHIPRA 

which was vetoed by President Bush, scheduled a precipitous drop 

in funding in the fifth year of the program? In fact, it is so precipitous that the funding went to zero in 2013? 

Mr. PETERSON. Well, the bill was meant to provide SCHIP funding through 2012. 

So just as the original CHIP bill provided funding for 2007, necessitating taking action. CHIPRA was structured the same similarly, except it was a 4- or 5-year period. But CBO, however, is required to—notwithstanding the fact it was on a 5-year bill essentially to do 10-year cost estimates. So that is why you see that. 

Mrs. CUBIN. And that is because that is the only way—for 5 

years is the only way that it would meet the PAYGO rules, isn’t 

that right? 

Mr. PETERSON. Well, they structured the bill to meet the PAYGO 

rules using what spending and the Federal revenue offsets that 

were raised. So yes. 

Mrs. CUBIN. Okay. Well, is the tobacco tax that is being used to 

pay for the program counted—taken up 10 years of the tobacco tax? 

Mr. PETERSON. Yes. 

Mrs. CUBIN. And paying for only 5 years of the program; is that 

correct? 

Mr. PETERSON. In terms of what the program was intended to 

provide in this bill, yes. 

Mrs. CUBIN. And Dr. Rossiter, I understand that you are a father. And I was just curious, would you rather have your children 

on State Medicare or would you rather have them on a quality private policy like Blue Cross/Blue Shield offers for example? 

Mr. ROSSITER. Well, yes. I would prefer a private policy. I didn’t 

know we could bring pictures of children today. I would have liked 

to bring my daughter’s picture, although Ms. Chester’s son looks 

like a wonderful young man. 

Mrs. CUBIN. We can always bring pictures of babies. 

Mr. ROSSITER. The big concern for me is, we recently did a study 

at the Center For Health Care Policy, and we were trying to figure 

out access to physician care. And guess what, it was very interesting because the fee-for-service Medicaid recipients who were in 

the survey had very similar access to care as those uninsured. Part 

of the reason is that not that many doctors accept Medicaid. We 

are pretty well off in Virginia. But there are some States, I understand, like Michigan who are having terrible problems with physician participation in Medicaid and partly—and because of the fees, 

but also because we heard billing problems. 

95 

So access to care was actually not unlike being uninsured. I 

think that is because some of the uninsured are wealthy enough to 

pay the doctor bills when they come in the door and the doctors 

know that and they accept that. So you know it is a problem. And 

I often—I used to be responsible for the Medicaid program in Virginia when I was Secretary of Health and Human Resources and 

often thought in the spirit of Virginia that those who run Medicaid 

programs and those who are responsible for them should also have 

the option to enroll in the Medicaid program just to keep—to 

keep—to help them understand what kind of program they are 

running, and to take ownership of that program and that notion 

would extend to the Congress as well. 

Mrs. CUBIN. Not a bad idea. I think I didn’t make my point very 

well about the funding for the program. I do understand your 

point, Mr. Peterson, that you know most of the things that we fund 

are for a certain period and then you know it drops off. But actually, I think it is just more slight of hand to pass an expensive program that we can’t afford because we are just pushing that responsibility off for 5 years to the people that are going to be here in 

5 years. 

And they are either going to have to raise taxes or cut drastically 

someplace else to make up for that money that isn’t coming in for 

the program. Could you respond to that? 

Mr. PETERSON. Probably that the argument could have been the 

same 10 years ago, that if this is not done beyond 10 years in the 

money provided up front, then that is pushing it off on a future 

Congress. And to some extent there is truth to that. So once the 

program’s funding is over with and the new Congress has to revisit 

that, and that is put into effect, both in 1997 and CHIP reauthorization, then that is a concern one could raise. 

Mrs. CUBIN. But my point is that the bill actually does break the 

PAYGO rules because it goes, you know, 10 years forward on the 

tobacco tax and only 5 years forward on the program. Is my time 

up? 

Mr. PALLONE. Yeah. You are over a minute. 

Mrs. CUBIN. Sorry. 

Mr. PALLONE. That is all right. 

Mrs. CUBIN. Thank you, Mr. Chairman. 

Mr. PALLONE. It is almost 2:00 so I have to move on. Mr. Shadegg. 

Mr. SHADEGG. Thank you, Mr. Chairman. I apologize I had to 

leave, but I am glad to be back. Ms. Mann, I would like to ask you 

this question now, and I would like to ask a couple other witnesses 

the same question. Do you think that a tax policy that says, employers get a deduction for providing health care to employees and 

the value of that health care is not income to an employee, but 

which tax policy goes on and says that if you don’t get health insurance from your employer, you have to buy it with after-tax dollars, 

meaning it costs 25 to 30 to 33 percent or more for the individual 

that does not get it from their employer, do you think that tax policy is rational or fair or defensible? 

Ms. MANN. I am sorry. Is that question directed to me? 

Mr. SHADEGG. Yeah. Basically should we say, should we be saying to everyone in America, it doesn’t matter if you get your health 

96 

insurance from your employer or you go out and get it yourself, the 

Tax Code will treat you the same and it is not going to punish people who have to go out and buy it on their own? 

Ms. MANN. I suppose I would maybe be the last person, but I will 

be the first person to say that I think there is nothing personally 

rational about our entire health care system and how we finance 

it, and that would include our tax code. 

Mr. SHADEGG. So I will take that as a yes on that point? 

Ms. MANN. I will take it as a yes on that but I think there are 

debates about what the right solution is. 

Mr. SHADEGG. Fair enough. I just wanted to get to whether or 

not this policy is rational. Mr. Rossiter, do you think that a policy 

that says if you get your health insurance from your employer, it 

is tax free but if you buy it on your own, you have to pay for it 

after tax dollars, do you think that is rational or fair? 

Mr. ROSSITER. No, I don’t, and I think it is actually one of the 

biggest things that we could change in the health care system to 

make it more rational and to provide the right incentives to encourage private insurance with employers. And, for example, I grew up 

in a restaurant family. The waitresses in that restaurant, they had 

to pay, of course, their wage taxes, they had to pay their income 

taxes, but they didn’t have health insurance. So it doesn’t make 

sense for them to have to subsidize coverage for everyone else. And 

then seeing that those funds go, actually as in the case of SCHIP 

is what I have been talking about, having them go toward subsidizing coverage for someone else’s children. 

Mr. SHADEGG. Mr. Lesley, I see you raising your hand. Do you 

think that is rational or fair? 

Mr. LESLEY. I worked for Senator Bingaman and we worked on 

legislation to do exactly what you are talking about, which is to address that unfairness. And one of the things that as a children’s organization that we are concerned about too in the Tax Code is that 

when, for example, in some of the proposals that people had for tax 

credits, you have got to make sure that you address the fact that 

family policies cost almost three times that of an individual. 

And some of the tax proposals put forth, for example, the administration’s proposal is a 2-to-1 ratio. The effect of that you are adding the spouse but you are leaving the kids completely out. So one 

of the things we are really encouraging people who are looking at 

the Tax Code is to really address the fact that family policies cost 

almost three times that of an individual. 

Mr. SHADEGG. I ask the question because it drives me insane 

that by and large, people who don’t get their health insurance from 

their employer are the least among us, at least there are some people who are self-employed and do well and don’t get health insurance from their employer. But there are many people who don’t get 

health insurance from their employer who are on the bottom rung 

of our society. We say to them that it is responsible and it is an 

appropriate thing for you to go out and get health insurance. But 

then we give them the back of our hand and say, oh, by the way 

if you do, you have to do it with after tax dollars, which I just think 

is unfair, outrageous and indiscriminatory. 

Mr. ROSSITER. It is a missed opportunity that this bill doesn’t address that. 

97 

Mr. SHADEGG. I agree with you completely. 

Ms. MANN. It is also a question of what is the most efficient way 

to provide that health insurance coverage. 

Mr. SHADEGG. I completely agree. I think the efficient way to 

provide it and the way that I believe will both bring down cost and 

increase quality is to put more people in charge. But the debate 

goes beyond our discussion today. 

Mr. Peterson, you talked about crowd-out. And you analyzed 

crowd-out. Crowd-out—maybe you can briefly explain the effect of 

crowd-out by when we expand SCHIP, what does crowd-out do? 

Mr. PETERSON. Well, you know there are many choices in terms 

of what is the impact of people going to private coverage? And you 

know people often raise the issues of, well, does CHIP cost more 

or less than private coverage? 

Mr. SHADEGG. Was it true that under this bill at certain levels, 

the crowd-out effect would have been up to 50 percent? Isn’t that 

what—— 

Mr. PETERSON. CBO found that at the higher income levels that 

was true. 

Mr. SHADEGG. If alternatively—because I am running out of 

time—we said, look you have a choice, you can stay on the SCHIP 

program or we will give you cash, a premium support to stay in 

your employer’s plan, assuming you are already in your employer’s 

plan or to stay in a plan you purchased yourself, then the issue of 

crowd-out would go away, wouldn’t it? 

Mr. PALLONE. This has got to be the last question because it is 

a minute over again. 

Mr. PETERSON. That depends on how it is structured again because you can think of individuals who are currently in employersponsored coverage who are paying out of pocket for the entire 

thing. And then suddenly this—you can provide public dollars. So 

in that sense, there may be crowd-out in the sense of what was formerly being paid by individuals entirely for the coverage, now the 

public sector is kicking in for that. 

Mr. SHADEGG. The crowd-out, if you give them cash to buy that 

same insurance whether it is a part of the premium or all of the 

premium, that enables them to choose to either stay in that private 

insurance or go into SCHIP, right? 

Mr. PALLONE. We have to move on, yes. 

Mr. PETERSON. Depending on the structure. 

Mr. SHADEGG. Thank you. 

Mr. PALLONE. I want to thank this panel. Thank you very much. 

This has been very helpful. And as I expressed before, the concern 

is what is going to happen over the next year? So you are certainly 

helping us in that regard as we move forward on trying to deal 

with SCHIP and look at an expansion. So thank you again. You 

wanted to—— 

Mr. LESLEY. Yeah, Mr. Chairman. Can I provide—— 

Mr. PALLONE. Very briefly please. 

Mr. LESLEY. I will say one thing for the record. We did an analysis of at 250 percent of poverty for each of the congressional districts representing. For example, your congressional district, if you 

look at what that income level provides you, and you deduct housing costs, food costs, child care costs, transportation, taxes and then 

98 

add private health insurance, it leaves a family in New Jersey with 

negative $1,723 a month. So that is one of the issues that there is 

a disparity in terms of what 50 percent of poverty means in New 

Jersey as opposed to in Tulsa, Oklahoma. And I would like to provide this to you. 

Mr. PALLONE. You make a very good point. And if you would like 

to submit that for the record, I would ask unanimous consent that 

you submit that and get back to us. 

Mr. LESLEY. Thank you. 

Mr. PALLONE. So ordered. Thank you again. I am just moving on 

because we have another panel. But I appreciate everything that 

you said to us this morning. Thank you. And I will ask the second 

panel to come forward please. 

Okay. Thank you. Welcome again. Let me introduce each of the 

members of the second panel. They are representing different 

states. First, from my home State of New Jersey, Ms. Ann Kohler, 

who is deputy commissioner of the New Jersey Department of 

Human Services. Welcome; Mr. Dennis Smith, who is director of 

the Center for Medicaid and State Operations at the Centers for 

Medicare & Medicaid Services here in D.C. obviously. And last is 

Tricia Brooks, who is President and CEO of the New Hampshire 

Healthy Kids Corporation from Concord. 

Mr. PALLONE. I had the opportunity to spend a little time in Concord during the primary. We get to go to New Hampshire every 4 

years. Okay. I will say you know 5-minute opening statements 

again. They will be part of the record. We may submit additional 

questions to you later that you would respond to. But let’s start 

today with Ms. Kohler. Thank you for being here. You see how New 

Jersey is often the focus of attention when we come to SCHIP. 

STATEMENT OF ANN C. KOHLER, DEPUTY COMMISSIONER, 

NEW JERSEY DEPARTMENT OF HUMAN SERVICES 

Ms. KOHLER. Well, good morning, Mr. Chair. And thank you very 

much for having me here. My name is Ann Kohler, as you know, 

and I am over both the Medicaid and the SCHIP committee programs in New Jersey. I very much appreciate the opportunity to be 

here today to talk to you about the importance of both Medicaid 

and SCHIP across the Nation, and especially in New Jersey. Providing affordable health care coverage has become increasingly important given the state of our current economy and the difficulties 

faced by many of our vulnerable citizens. Medicaid and SCHIP has 

significantly reduced the number of uninsured children in New Jersey. We currently provide health care coverage to over 1 million individuals, that is one out of every eight people in the State are covered. We cover 430,000 adults and 570,000 children between Medicaid and SCHIP. Since Governor Corzine has taken office, we have 

had enrolled over 180,000 new children into our programs. As you 

know, New Jersey has made a very strong commitment to both 

Medicaid and SCHIP and any proposals to limit our ability to cover 

these children are a serious concern to us. While New Jersey uses 

a higher percentage of the Federal poverty level for eligibility for 

SCHIP, we also have one of the highest median family incomes in 

the Nation. 

99 

The median family income for a family of four in New Jersey is 

$90,261. However, in our 10 largest cities, the median income is 

only $30,000, slightly over $30,000. And over 30 percent of that income goes to cover the families’ housing cost. Over 34 percent of 

all the children in our major cities live in poverty. And in Camden, 

our poorest city over 58 percent of the children live in poverty. Currently over 80 percent of the children we have in our Medicaid— 

in our SCHIP program have families below 133 percent of the Federal poverty level, which is just over $27,000 for a family of four. 

And the very small number of children, 1.7 percent of our population, with incomes above 250 percent of the Federal poverty level, 

pay $125 each month for their coverage under SCHIP. We are concerned that recent Federal proposals to change SCHIP may prevent 

our ability to continue to provide this critical health care coverage 

to the working poor. 

As the economy worsens, these families must rely on the safety 

net provided by Medicaid and SCHIP to provide health insurance 

for their children. The proposed regulation regarding crowd-out in 

SCHIP would require children to remain uninsured for a full year 

before they can become eligible. This cannot happen. New Jersey’s 

own experience with the crowd-out provisions has shown that reducing—that increasing coverage and reducing the period that the 

child remains uninsured has not significantly resulted in an increase in people dropping their private insurance. We believe that 

the CMS requirement that children remain uninsured for a year 

would cause havoc with our program and jeopardize coverage of 

needy children. I know there has been a great deal of discussion 

over what is being called the private insurance decline. The August 

2007 CMS letter prohibits States from covering children above 250 

percent of the Federal poverty level if employer based coverage of 

children among the targeted population has declined in their State 

by more than a certain percentage. 

In New Jersey, we do require that our families enroll in private 

insurance if it is offered through their employers. However, fewer 

employer plans provide fewer benefits and include high copays and 

deductibles, and therefore, become unaffordable to the families. In 

addition, many of the part-time employees are not covered by their 

employer plans and often work rules are designed to make sure 

they never obtain coverage. 

As our country enters a recession, cutting health benefits flies in 

the face of many efforts needed to stimulate our economy and provide the needed services to our working poor. Providing health care 

benefits improves health outcomes in school attendance for our 

children, reducing caretaker absenteeism from work, keeping people at work and earning a paycheck. It also creates job opportunities for allied health care professionals in the health care arena. 

There is a multitude of reasons to expand our coverage of children, 

not decrease it. I believe that we all agree that providing health 

care insurance for our children is vital to the Nation. 

Healthier children create healthier families. And I believe it is in 

our collective best interest to urge the administration to take a 

more reasoned approach towards our Nation’s children, one of our 

most important national assets. Thank you again for the opporVerDate Nov 24 2008 13:30 Oct 07, 2010 Jkt 037690 PO 00000 Frm 00105 Fmt 6633 Sfmt 6633 Q:\PRINT EDITOR-110\HEARINGS 110\110-85 SCOM1 PsN: JIMC
100 

tunity to be here and speak to you this morning. And I am happy 

to answer any questions that you may have. 

Mr. PALLONE. Thank you very much. 

[The prepared statement of Ms. Kohler follows:] 

STATEMENT OF ANN CLEMENCY KOHLER

•Good morning, I am Ann Clemency Kohler, Deputy Commissioner with the New 

Jersey Department of Human Services. As Deputy Commissioner, I oversee both the 

SCHIP and Medicaid programs in New Jersey. 

•I very much appreciate the opportunity to be here today to talk to you about the 

importance of the Medicaid and SCHIP programs across the nation and in New Jersey. Providing affordable health care coverage has become increasingly important 

given the state of our current economy and the difficulties faced by many of the 

most vulnerable in our society. 

•Medicaid and SCHIP have significantly reduced the number of children without 

access to quality medical care. 

•In New Jersey, we provide health care coverage to well over one million individuals. We cover over 430,000 adults and 570,000 children through our SCHIP program and Medicaid programs. 

•Since Governor Corzine took office, New Jersey has enrolled just under 180,000 

new children. 

•New Jersey has made a strong commitment to the Medicaid and SCHIP programs. 

•Any proposals to limiting our Medicaid and SCHIP programs are of serious concern to us. 

•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 

median family income levels in the nation. 

•The median family income for a family of four in New Jersey is $90,261. However, in our 10 largest cities, the median income is only $30,110 and over 30% of 

that income goes to cover the families housing costs. Over 34% of all children living 

in these cities live in poverty. In Camden, our poorest city, over 58% of all children 

live in poverty. 

•Currently, almost 80% of the children covered under Medicaid and SCHIP live 

in families with incomes below 133% of the federal poverty level—which is just over 

$27,000 for a family of four. 

•Both Medicaid and SCHIP are essential programs to these families. By keeping 

the children healthy they allow the parents to go to work. 

•However, recent federal proposals to change SCHIP may prevent our ability to 

continue to provide this critical health care coverage to the working poor. 

• As the economy worsens, these families must rely on the safety net provided 

by Medicaid and SCHIP to provide health insurance for their children. 

•The proposed regulation regarding crowd out in SCHIP would require children 

to remain uninsured for a full year before they can receive SCHIP coverage. This 

cannot happen. 

•New Jersey’s own experience with the crowd out provision has shown that reducing crowd out does not have a significant impact on enrollment. 

•We believe that the CMS requirement of one year will cause havoc with our program and could jeopardize coverage for thousands of children. 

•I know there has also been much discussion over what is being called ‘‘the private insurance decline standard.’’ The August 2007 CMS directive prohibits states 

from covering children above 250 percent of the FPL through SCHIP if employer 

based coverage of children among the target population has declined in their state 

by more than a certain percentage. 

•In New Jersey, we do require that clients enroll into private insurance plans 

through our premium support program. However, because private employer plans 

provide fewer benefits and include copay and deductibles, these plans fail to meet 

the ‘‘cost effectiveness’’ test to qualify for premium support. 

•In addition, part time employees are not covered by employer plans and often 

work rules are designed so that a large percentage of employees are part time. 

•As our country enters a recession, cutting health benefits flies in the face of any 

efforts to stimulate the economy and provide much needed services to the poor. 

•Providing health care benefits improves health outcomes and school attendance 

thus reducing caretaker absenteeism from work, keeping people at work and earning a paycheck. It also creates job opportunities for health care and allied profesVerDate Nov 24 2008 13:30 Oct 07, 2010 Jkt 037690 PO 00000 Frm 00106 Fmt 6633 Sfmt 6633 Q:\PRINT EDITOR-110\HEARINGS 110\110-85 SCOM1 PsN: JIMC
101 

sional workers in the health care arena. There are a multitude of reasons to expand 

our efforts to provide health care to our children. 

•I believe that we can all agree that providing health insurance for children is 

vital to the health of this nation. Healthier children create healthier families 

•And so I believe it is in our collective best interest to urge the administration 

to take a more reasoned approach towards our nation’s children and one of our most 

important national assets—their health. 

•Thank you again for the opportunity to speak here this morning and I would be 

happy to answer any questions you may have. 

Mr. PALLONE. Mr. Smith. 

STATEMENT OF DENNIS G. SMITH, DIRECTOR, CENTER FOR 

MEDICAID AND STATE OPERATIONS, CENTERS FOR MEDICARE AND MEDICAID SERVICES 

Mr. SMITH. Thank you, Mr. Chairman. It is a pleasure to be with 

you. I have a statement for the record. And I think, given the time, 

perhaps it would be most helpful to the subcommittee if I sort of 

address some of the things that came up in the previous panel that 

would be helpful as we do look forward to the full reauthorization 

of SCHIP. I first want to hasten to emphatically say, the administration strongly supports the SCHIP program and its reauthorization. The funding has been provided for the program to assure stability through March 2009. I think—as we take this time to work 

with all Members during this period to achieve the goal of reauthorization through 2013. 

Last night, the President said in his State of the Union remarks, 

we share a common goal, making health care more affordable and 

accessible for all Americans. So we do believe that there is a vision 

to look at the entire system and how we provide health insurance 

coverage and access to affordable health insurance coverage. A couple of things—and obviously the August 17 guidelines have been 

the topic of some discussion and questions. And I would say we 

have three lawsuits that we are looking at from various States and 

beneficiary groups regarding the S&D letter. 

So it has gained a great deal of attention. But I want to emphasize the purpose of the S&D letter. A to say, find your poorer children first. They must come first. I think that in that respect, we 

have been far more successful. States have been far more successful in achieving that 95 percent goal than many people here in 

Washington have given them credit for. 

So we do believe the number of States will be able to achieve the 

95 percent threshold and we move on from there. In our discussions with States, we have reached out to the States affected by the 

policy to engage them in a discussion and go through data and 

their policies over the next few weeks to work on implementing the 

August 17 goals. We are also saying that it should be—States do 

have an obligation under the SCHIP statute. We have talked a lot 

about crowd-out. There is different ways to measure it. There is 

different ways to view it. But I think the SCHIP original statute 

is clear. 

States do have an obligation to try to prevent it. And when we 

have seen States that come in with very high income levels with 

no cost sharing or very little cost sharing, no waiting period or very 

little waiting period, then we do question whether or not that they 

102 

are meeting their obligation to prevent the substitution of private 

insurance for the public. Substituting insurance does not insure 

more kids. It is only shifting the cost. A couple of things in the previous panel, I think, that are helpful to talk about. The income disregards—and again I think there is a lot of misinformation and a 

lot of misunderstanding in the previous SCHIP. 

What was the Secretary’s authority? There are supporters of the 

SCHIP—supporters of the legislation that said the Secretary had 

full authority to deny State planning amendments that went to 

higher income levels. Income disregards. Is there a really a cap on 

income or not? And we have talked about the State flexibility to define what income is. And yet that flexibility was given in context 

of capped allotments. So there was—obviously 10 years ago there 

was an understanding that there would be competing pressures 

and competing interest and States would work accordingly. But 

now it is virtually, fund any decisions that the States make at any 

income level and regardless of what their strategies to prevent 

crowd-out is. Then we are simply paying the States to make any 

decision. That is not the way the original statute worked. 

On employer-sponsored health insurance, I think it is important—Ms. Mann from the previous panel. We are talking about in 

different States the cost of health insurance. Employer-sponsored 

health insurance U.S. total in 2005, the coverage was $728. Roughly a third of that the employee is paying directly. So yes, that insurance has increased over time. But the vast majority of cases, the 

employer is also contributing and contributing at least much of the 

cost. So I don’t want Members to think $12,000 is the rule and 

families are paying the full freight. But I think it is also important 

to then——— 

Mr. PALLONE. You are almost at a minute. So if you could wrap 

it up. 

Mr. SMITH. Yes, sir. And also in the context of the cost of that. 

When we look at, for example, comparing the cost to the SCHIP of 

what family coverage would cost in New York, there is an example 

using 2005, the employee contribution for the family premium was 

$217 on average. The PMPM that New York Medicaid—New York 

SCHIP pays is $154 PMPM. So if you have two children in New 

York, you have—for the price of what you pay for those two children—— 

Mr. PALLONE. I am sorry, Mr. Smith. It is like a minute and a 

half over. 

Mr. SMITH. Thank you, Mr. Chairman. I look forward to your 

questions. 

Mr. PALLONE. Sure. 

[The prepared statement of Mr. Smith follows:] 

STATEMENT OF DENNIS G. SMITH

Chairman Pallone, Congressman Deal, thank you for inviting me to testify on today’s topic as you renew the important work of reauthorizing the State Children’s 

Health Insurance Program (SCHIP). The Administration strongly supports this important program and its full reauthorization. Last year, additional funding for the 

program was provided to ensure stability in the program through March 2009. We 

look forward to working with all members during this time to achieve the goal of 

reauthorization through 2013. 

103 

The full picture of our commitment to insuring low-income children includes Medicaid as well as SCHIP. Medicaid is approximately four times larger than SCHIP 

in terms of enrollment of children and just over six times larger in terms of expenditures for children. Total Federal and State Medicaid spending on children will exceed $400 billion over the next five years and $1 trillion over the next ten years. 

There are important budgetary and programmatic interactions between SCHIP and 

Medicaid that are appropriate to consider in the context of reauthorization. 

BACKGROUND

When Congress was considering the legislation that became Title XXI more than 

ten years ago, there was a widely held view that 10 million children in the United 

States lacked health insurance. It was recognized that many of these children were 

already eligible for Medicaid but were not enrolled, and that many of these children 

were uninsured but lived in families with sufficient income to be able to afford coverage. Congress ultimately adopted an approach that was targeted to children with 

family incomes above existing Medicaid levels who lived in families for which the 

cost of insurance was beyond their reach. It set a general upper limit of income eligibility at the higher of 200 percent of the federal poverty level (FPL) or 50 percentage points above a state’s Medicaid level. Under the FPL guidelines released last 

week for 2008, 200 percent of FPL is $42,400 for a family of four and 250 percent 

of FPL is $53,000 for a family of four. Just by way of comparison: the median income in the United States for a family of four is approximately $59,000. 

SCHIP is a unique compound of incentives and checks and balances. Congress rejected the idea of simply re-creating Medicaid and its complexities. States with an 

approved SCHIP plan are eligible for Federal matching payments drawn from a 

state-specific capped allotment. While the program provides states with a great deal 

of program flexibility, including using Medicaid as their vehicle for administering 

Title XXI, it also creates the expectation that states will adopt policies to stay within their capped allotments. Capped appropriations and capped allotments were critical features of that bipartisan compromise. The legislation appropriated $40 billion 

over ten years, an amount that would support the number of children thought to 

be in the target population group. That level of funding clearly was not designed 

or intended to serve children at all income levels, nor was it intended to create a 

new entitlement for coverage. 

Congress also realized that millions of children were eligible for Medicaid but 

were not enrolled. To ensure the success of SCHIP and avoid the possibility of creating a new program that would not be taken up by the states, the idea of an enhanced match rate was ultimately adopted as the means of providing states with 

sufficient incentive to aggressively find and enroll uninsured low-income children. 

Thus, SCHIP provides a 70 percent federal match rate on an average national basis 

compared to the 57 percent average match rate for Medicaid. But central to the bipartisan discussion at that time was the question, ‘‘for whom is the enhanced match 

intended?’’ That question remains central to reauthorization today. 

ENROLLMENT EXCEEDS EXPECTATIONS

If the goal ten years ago was to enroll 10 million children, then expectations have 

been exceeded. In 1998, the number of children ‘‘ever-enrolled’’ in Medicaid (enrolled 

at least for some period of time) was 19.6 million. States enrolled approximately 

670,000 children in SCHIP in that first year for a combined total of more than 20 

million children. Since then, combined Medicaid and SCHIP enrollment has increased every year. In FY 2006, more than 36 million children were enrolled (at 

least for some period of time) in Medicaid and SCHIP combined, an increase of 16 

million children above the 1998 Medicaid level. 

Since 1998, enrollment of children in SCHIP and Medicaid has increased nearly 

80 percent, while growth in the total number of children in the U.S. population as 

well as the number of children in families below 200 percent FPL over the same 

period has been nominal. Enrollment in Medicaid and SCHIP now exceeds the number of children below 200 percent FPL. Therefore, it is clear that Medicaid and 

SCHIP are covering children in higher-income families. 

‘‘95 PERCENT ENROLLMENT GOAL’’ 

It is because of this tremendous growth in Medicaid and SCHIP enrollment relative to the overall population and to the low-income population specifically that we 

believe our adopted goal of 95 percent enrollment of low-income children before expanding eligibility to higher income populations is both reasonable, in light of the 

statutory purpose of SCHIP to serve low-income children, and is achievable. 

104 

We anticipate working with states to determine their specific rates of coverage. 

It is unfortunate that some groups have prejudged compliance as they have relied 

on flawed national data to make comparisons regarding state performance. For example, it is widely recognized that the Current Population Survey (CPS) undercounts Medicaid participation. In the most recent CPS data released last year, the 

Census Bureau reported 20.7 million children ever enrolled in FY 2006, when enrollment reported by states for Medicaid and SCHIP combined in that same period 

was over 36 million. 

We believe the 95 percent goal is further supported by last year’s work conducted 

by the Urban Institute which shows much lower uninsurance rates among Medicaid 

and SCHIP eligible children than expected.1 This study was not unanimously received as good news at the time, but we believe it demonstrates that states are far 

more successful than given credit. Therefore the 95 percent goal is not only achievable, but should be expected and demanded. Indeed, our view is that a number of 

states are already meeting the 95 percent goal. 

We strongly believe, as the future of SCHIP as a program is considered, that 

states be required to put poor children first before they expand to higher income 

levels. The federal government has tied financial incentives to performance standards in other public benefits programs with good results. 

I want to reaffirm our previously stated position that children currently enrolled 

in SCHIP should not be affected as we work with states to implement the August 

17, 2007 State Health Official (SHO) letter. The guidance sets out procedures and 

assurances that should be in place when states enroll new applicants with family 

incomes in excess of 250 percent of the federal poverty level (FPL)—that is, in excess of the median family income in the United States. But the guidance is not intended to affect enrollment, procedures, or other terms for such individuals currently enrolled in State programs. 

‘‘CROWD-OUT’’ 

The goal of SCHIP is to increase the rate of insurance among our nation’s children in low-income families. ‘‘Crowd-out’’ or the substitution of existing coverage 

does not increase insurance rates, it merely shifts the source of funding. It is a public policy concern because it increases public expenditures without necessarily improving access to care or health status. It is also a concern because, as healthy lives 

are shifted out of the private sector insurance pools, there is a detrimental impact 

on those who remain. Insurance fundamentally means the sharing of risk. When the 

private pool of healthy insured lives shrinks and the risk cannot be spread as widely 

as before, the cost will rise for those who remain, triggering another cost increase 

which is likely to displace yet another group of people, whether employers or employees or both. 

Crowd-out is not a new topic. There were numerous papers written on Medicaid 

and crowd-out prior to the enactment of SCHIP and it remains a popular subject 

today. The pre-SCHIP papers on crowd-out dealt primarily with populations below 

200 percent of FPL, many of whom were assumed to not have access to employersponsored health insurance or the means to contribute the employee share of costs. 

There are a variety of opinions on how to define crowd-out, how to measure it, and 

how to prevent it. In its paper on SCHIP last May, the Congressional Budget Office 

(CBO) neatly summarized the research on this topic and concluded that, ‘‘. in general, expanding the program to children in higher-income families is likely to generate more of an offsetting reduction in private coverage (and therefore less of a net 

reduction in uninsurance) than expanding the program to more children in low-income families.’’ The CBO estimates on the SCHIP legislation that the President vetoed reinforce the findings of its May study. 

As early as February 1998, the federal government released instructions to the 

states on how it would review strategies to protect against substitution of private 

coverage. In a February 13, 1998 State Health Official letter, co-signed by the Director of the Center for Medicaid and State Operations at the Health Care Financing 

Administration and the Acting Administrator of the Health Resources and Services 

Administration, the federal government provided that, ‘‘States that provide insurance coverage through a children’s only and/or a State plan (as opposed to subsidizing employer-sponsored coverage) or expand through Medicaid will be required 

to describe procedures in their State CHIP plans that reduce the potential for substitution. . After a reasonable period of time, the Department will review States’ 

procedures to limit substitution. If this review shows they have not adequately addressed substitution, the Department may require States to alter their plans.’’ 

105 

Another federal agency within the Department of Health and Human Services, 

the Agency for Healthcare Research and Quality, listed several strategies to prevent 

crowd-out at that time which included:2

•Institute waiting periods (3, 6, or 12 months) 

•Limit eligibility to uninsured or under-insured 

•Subsidize employer-based coverage 

•Impose premium contributions for families above 150 percent of the Federal poverty level 

•Set premiums and coverage and levels comparable to employer-sponsored coverage 

•Monitor crowd-out and implement prevention strategies if crowd-out becomes a 

problem 

States faced competing pressures as they designed their SCHIP programs. Effective crowd-out strategies were measured against pressures to quickly build enrollment. Decision makers at the state level faced strong public criticism for ‘‘turning 

back’’ federal funds that would go to other states or be returned to the Federal 

Treasury. 

As the 16 million children were being added to Medicaid and SCHIP, the percent 

of children between 100 and 200 percent of poverty with private insurance declined. 

In 1997 according to data from the 2006 National Health Interview Survey, 55 percent of children in families with income at this level had private insurance. But by 

2006, the percentage had declined to 36 percent.3

ELIGIBILITY EXPANSIONS

Currently there are 20 jurisdictions (19 states and the District of Columbia) that 

cover children in families with income greater than 200 percent of FPL, of which 

17 jurisdictions cover children in families with income equal to or greater than 250 

percent FPL. In addition, there are three states that cover children in families with 

income thresholds above 200 percent of FPL that apply income disregards in an 

amount we believe is likely to exceed the 250 percent FPL threshold. Expansions 

of SCHIP to higher income levels occurred early in the program or just in the past 

two years. Of the 19 states and the District of Columbia that provide coverage above 

200 percent of the poverty level, 13 of them received approval to cover those higher 

incomes by July 2001 or earlier. Of those 13 states, eight were ‘‘qualifying states,’’ 

that had increased Medicaid eligibility prior to the creation of SCHIP. 

The other seven states that have expanded eligibility above 200 percent FPL occurred in January 2006 or later. With the exception of Hawaii, the eligibility limits 

were approved as state plan amendments, not as waivers as has been widely reported. After a five-year period in which no state raised their eligibility level, there 

clearly are growing interests or pressures among additional states to expand eligibility beyond the statutory definition. It is important to understand those interests 

or pressures in order to design an appropriate response. 

Federal responses may be different than the choices made ten years ago and 

should include approaches outside of SCHIP as well as within the program. One 

area that seems particularly ripe for a new approach within SCHIP is premium assistance. Perhaps some of the crowd-out effect could have been prevented if SCHIP 

were used to a greater extent to support private coverage rather than replace it. 

CONCLUSION

SCHIP has been highly successful in the mission it was given to increase coverage 

among uninsured low-income children. But that success does not mean SCHIP can 

or will be as successful when populations at higher incomes are involved. 

We hope that the lessons of the past will guide how we use the fresh opportunity 

before us and the Administration looks forward to working with all members to 

forge reauthorization in the same bipartisan spirit in which SCHIP was created. 

1 ‘‘Eligible But Not Enrolled: How SCHIP Reauthorization Can Help,’’ September 

24, 2007 [available at http://www.urban.org/publications/411549.html]. 2 See http://www.ahrq.gov/chip/Content/crowd—out/crowd—out—topics.htm. 3 See http://www.cdc.gov/nchs/data/nhis/earlyrelease/insur200712.pdf. The data 

are derived from the Family Core component of the 1997-2007 NHIS, which collects 

information on all family members in each household. Data analyses for the January–June 2007 NHIS were based on 41,823 persons in the Family Core. 

Mr. PALLONE. Ms. Brooks. 

106 

STATEMENT OF TRICIA BROOKS, PRESIDENT AND CEO, NEW 

HAMPSHIRE HEALTHY KIDS CORPORATION 

Ms. BROOKS. Thank you, Mr. Chairman. Thank you for your patience, and I welcome the opportunity to share New Hampshire’s 

story with you. For the record, my name is Tricia Brooks. I run a 

legislatively-created nonprofit by statute administers our SCHIP 

program. We also take the lead in coordinating outreach application assistance for both Medicaid and SCHIP. New Hampshire is 

fiscally conservative State, but we have made children’s health insurance coverage our top priority. Our SCHIP program was specifically designed to be responsive to the needs of working families and 

self-employed who want to insure their children but cannot afford 

to do so in the private market. 

We also recognize the need to provide transitional coverage to 

families who encounter disruptions in employment and income. To 

do so, it was imperative in New Hampshire that we address the 

high cost of living and high cost of insurance by setting eligibility 

at three times the poverty level. This level was approved by CMS 

in our very original plan and it has been in place for the past decade. 

Much of the debate around SCHIP has been around whether the 

lowest income children are getting served first. In New Hampshire, 

the numbers speak for themselves. For every one child that is enrolled in SCHIP by our mail-in unit, six children and one pregnant 

woman is enrolled in Medicaid. Of the 71,000 children covered by 

Medicaid and SCHIP, 91 percent have incomes below two times the 

poverty level. After celebrating Congress’s success in passing the 

bipartisan CHIPRA bill last year, I am really discouraged that 

progress has been thwarted by the subsequent presidential vetoes. 

States need the predictability of the SCHIP reauthorization and 

the many positive provisions of CHIPRA to move forward in covering kids. I am not going to go into some of those positive items. 

They have been covered by other speakers. But on another front, 

I do want to talk about the fact that the CHIPRA bill would have 

eased the administrative barriers and unintended consequences of 

new requirements for verifying citizenship and identity. When the 

so-called CIT-DOC rules went into effect, New Hampshire already 

had in place a system for verifying citizenship of our applicants. 

This system has been disrupted by additional unnecessary requirements that have left eligible children uninsured. 

Although Congress extended the current SCHIP program with 

sufficient funding to offset expected shortfalls in States, States are 

still being stopped from taking full advantage of the flexibility allowed under current SCHIP rules by the so-called CMS 8/17 directive. Furthermore, a number of States, including New Hampshire, 

face the untenable task of cutting back their programs unless Congress intervenes. This directive is the single biggest threat to the 

gains we have made in covering kids in New Hampshire over the 

past decade. This directive was issued arbitrarily without any public notice or any public process or advanced notice. It establishes 

preconditions to cover kids above 250 percent based on unreasonable and unattainable benchmarks for which no reliable data 

sources exists. It imposes new eligibility criteria. 

107 

For example, a waiting period of a year does not allow a child 

access if their parent has lost a job or worse, if the child has lost 

a parent. Cost sharing comparable to the private market means eligible children and their families will not be able to afford to participate. This directive is even broader because it eliminates the use 

of deductions from income such as child care expenses that have 

long been a standard in Medicaid. In New Hampshire, we understand the importance of ensuring public coverage does not substitute for private coverages. 

Our outreach efforts and eligibility requirements strictly target 

uninsured children, but we also recognize that certain circumstances are beyond the control of families and warrant exceptions. Our policies have been effective in that employer-sponsored 

insurance of children has remained steady while enrollment in 

Medicaid and SCHIP have grown. Assertions that currently enrolled children are not affected by this directive puts forth false expectations about its true impact. SCHIP provides transitional coverage. 

In New Hampshire, 75 percent of children enrolled above 2-1/2 

times the poverty level were on the program for 12 months or less. 

While currently enrolled children will stay on, the children who 

lose coverage will not be able to come in and fill their places. And 

they will be uninsured and they will not have continuity of care. 

Like many States, New Hampshire’s State budget is in trouble. I 

know $50 million sounds like a rounding era down here. But it is 

a lot of money in our State budget and there are no surplus State 

funds that can be used as a stop gap to fill the void if this directive 

is allowed to stand. So in closing, let me reiterate. 

The predictability of a full SCHIP reauthorization is essential to 

States to move forward in covering kids. But more urgently, time 

is running out for States that must come into compliance with the 

8/17 directive. Unless Congress places a moratorium on the directive, New Hampshire and other States will be force to the move 

backward, not forward in covering kids. Thank you. 

[The prepared statement of Tricia Brooks appears at the conclusion of the hearing:] 

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Mr. PALLONE. Thank you. And I thank all of the panel. Let’s go 

now to questions. And I will recognize myself for 5 minutes. 

I guess I am going to ask of this of Ms. Kohler because I think 

that Ms. Brooks sort of answered it for New Hampshire, although 

I may get back to you. Again, going back to my opening statement, 

I was very happy at the beginning of 2007 because obviously in 

New Jersey, as you said, the Governor was going out of his way 

to try to enroll new kids. You mentioned 180,000 new kids were enrolled. And part of what we were trying to do with the CHAMP bill 

was to essentially put the vices in place so you could capture more 

kids and go out and do outreach and all that. 

So I kind of wanted to ask, you know, what you did to get to that 

180,000 new kids, you know, what the CHAMP bill allows you to 

do even better you know in terms of some of the initiatives that 

were in there? But at the same time going back to this directive, 

what is going to be the practical effect of that? You know, what is 

that going to mean if you are not successful in barring the August 

17 directive from taking place, what kind of changes would you 

have to make to the CHIP programs in terms of eligibility and all 

that? So I will ask you first, and then if Ms. Brooks has anything 

to add. 

Ms. KOHLER. Okay. We have implemented a number of things in 

New Jersey to help us identify enrolled children. We have an entire 

cabinet to help us in this effort. So, for example, the Department 

of Education when they collect information on No Child Left Behind, they put in their database whether the child has insurance 

and sends out outreach material. Similarly, our division of taxation, if it appears the child may be eligible, the family may be eligible for our program, they will also mail them information to help 

enroll them. We have liked a lot of provisions in the express lane 

enrollment that were in the bill, in the champs bill that would 

allow us to just use other Federal programs, such as food stamps 

to automatically enroll people into our SCHIP and our Medicaid 

program. We think all of those things are very helpful and they 

have helped us enroll so many new children. Unfortunately on the 

downside, some of the new provisions coming out—for example, the 

citizenship provision—— 

Mr. PALLONE. You are talking about the August 17 directive? 

Ms. KOHLER. I am sorry. The August 17 directive will slow down 

our ability because it will require children to remain uninsured for 

up to a year before we can enroll them. The other provision that 

I think was mentioned in the last panel is the new requirement on 

citizenship verification that was part of the Deficit Reduction Act. 

At any one time, we have over 7,000 children in the process of us 

trying to verify their citizenship because we had to take down our 

existing program. And we do try and do as much electronically as 

we can. We match all of our statistic records in-house. But we still 

have a large number of children whose enrollment is delayed. 

Mr. PALLONE. What is going to be the practical effect of this August 17 directive if you are not able to, you know, to bar it from 

taking effect? 

Ms. KOHLER. Well, we are concerned that children will lose eligibility. Some of our children do go on and off as their family income 

changes. And of course, if they lose eligibility—well, CMS has indiVerDate Nov 24 2008 13:30 Oct 07, 2010 Jkt 037690 PO 00000 Frm 00125 Fmt 6633 Sfmt 6633 Q:\PRINT EDITOR-110\HEARINGS 110\110-85 SCOM1 PsN: JIMC
120 

cated possibly the current enrollment, enrolled children can remain. And a new child could not come on. Similarly, we enroll children if they lose their employer-sponsored insurance through no 

fault of their own. If their parent dies, we allow them to enroll in 

our program. Under the August 17 program, they would have to 

stay uninsured for a full year before we could enroll them, and we 

do not think that is fair to children. 

Mr. PALLONE. Did you want to add anything in this regard, Ms. 

Brooks, in terms of your State? 

Ms. BROOKS. Yes. We believe ultimately half of our SCHIP children will be affected between either their more rigid eligibility, the 

loss of deductions as well as just the straight income tiers. And we 

know that this group has been a steady group of about 3,500 kids. 

The numbers are small. But if they are not allowed an option to 

come onto SCHIP as a transition between bridging between their 

public program or their private program coverage periods, then it 

will increase the number of uninsured children by as much as 20 

percent within 2 years in our State. 

Mr. PALLONE. And Ms. Kohler, earlier Dr. Rossiter spoke about 

eliminating the Medicaid option for States to operate their CHIP 

program and reducing the CHIP match to the level of the Medicaid 

match. What would the impact of that be on New Jersey? 

Ms. KOHLER. What that would do is reduce the amount of Federal funding that we have say over 15 percent. That would be a significant loss of Federal funding in New Jersey. We also are facing 

a significant budget deficit. Ours is $2.5 billion. And there is no 

way the State could make up those additional Federal dollars. New 

Jersey has a mixed program. A portion of our program is a Medicaid localized to the lowest-income children. And the bulk of our 

program is free standing. So any loss in Federal funding would be 

disastrous for us. 

Mr. PALLONE. I just wanted to mention, Mr. Smith—and I am 

just going to end with this. For the record, you mention on page 

2 of your written testimony, you state that the median income for 

a family of four in the U.S. is approximately $59,000. But actually, 

the median income is $73,415. The median income for all families 

in the U.S. is the $58,407 figure. And then on page 3, you state 

enrollment in Medicaid and SCHIP exceeds the number of children 

below 200 percent of the Federal poverty level. But according to the 

current population survey, there are 30.2 million children in families with incomes below 200 percent of the Federal poverty level. 

And there are 20.75 million children in families at or below that 

income level enrolled in Medicaid and SCHIP. Mr. Deal? 

Mr. SMITH. Did you want me to respond? 

Mr. PALLONE. I am just saying the facts of what I have. 

Mr. DEAL. You know, one of the things that I have been concerned about in the reauthorization of SCHIP is the creation of 

great inequities between rich States and poor States. Richer States, 

which I presume from standards of my State of Georgia, New Jersey and New Hampshire qualify as those richer States, although 

when I hear you talking about budget deficits there, and my State 

doesn’t have a deficit, and my State is being able to cover children, 

for example, it makes me wonder. 

121 

Ms. Kohler, the last time we had a hearing, which was roughly 

a year ago on this issue, we had a panel of people from all over 

the spectrum. And one of the questions that I asked was whether 

or not—what percentage should we insist on of covering children 

that are eligible for Medicare and Medicaid? What is an achievable 

percentage? And as I recall, the panel unanimously all agreed 90 

percent was a realistic and achievable goal. 

Now, that same hearing or one shortly thereafter, the statistic 

was presented that New Jersey at that time had some 23 percent 

of its eligible children, that is those who are eligible for SCHIP and 

Medicaid and/or Medicaid, that were still enrolled in neither. Now 

I have been told that now the Census Bureau says that you 

dropped to 22 percent of those eligible children that are still 

unenrolled. It would seem to me that if there was any one thing 

we all ought to agree on, and that is that the program was designed to fill the gap for the near poor and that they ought to have 

a priority, and yet we continue to hear witnesses railing against 

the letter, the August letter that had some of those criteria in it. 

Now I am short on time, so I will try to move as quickly as possible. 

One thing I would like to ask Mr. Smith is this, a recent GAO 

report that I alluded to earlier said that in the nine States that 

had high percentages of adults enrolled in their program that they 

cost about 54 percent of the total of the SCHIP programs in those 

States. I would like to know, when a State is spending over 50 percent of its funding on adults, I think it clearly is not having the 

goal of SCHIP in mind. 

Could you please tell us what the administration is doing to help 

ensure that needy children who are the top priority for this SCHIP 

program are actually going to be reached and covered? That is a 

broad question, but it needs an answer. 

Mr. SMITH. Thank you, Mr. Deal. And obviously our coverage of 

adults has been controversial in SCHIP. And to sort of help put 

things into perspective, in those original waivers in which States 

agreed to terms and conditions under that waiver, there were specific provisions on what the State would do if, in fact, they ran out 

of their allotment. So the States from the very beginning agreed 

that they were running out of their allotment. To some States, 

most States were then to go to transition those adults into Medicaid, come back with a Medicaid waiver. And I believe one respect, 

the State agreed to fund those adults with State-only money entirely. 

So from the very beginning we always had an agreement with 

States, what would happen if they exceeded their allotments. So we 

believed we were always preserving SCHIP for children to assure 

that no children would be denied coverage in those States by virtue 

of covering adults. To sort of bring you up to date in the adult coverage, last year in 2007, three States that had had waivers to cover 

adults, Illinois, Oregon and Wisconsin, those States have agreed to 

move those adults out of SCHIP into Medicaid. And again, we 

aren’t talking about them losing coverage. What we are talking 

about is the difference between Medicaid match and SCHIP match. 

In 2008, Rhode Island will also be in that category, they come up 

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newing. In 2009, then five States, including New Jersey and Michigan, come up for renewal in January of 2009. 

All these—Nevada we have already entered into discussions. 

They are out to 2011. But they have had so few uptake on the administrative side, they are already saying we are going to end this 

now. So we think it is appropriate just to—again, transition all of 

the adults to Medicaid. In many respects, take the argument off 

the table now by getting all of those adults into Medicaid by the 

end of this year. 

Mr. DEAL. Thank you. My time is up. I appreciate the answers. 

Thank you, Mr. Chairman. 

Mr. PALLONE. Dr. Burgess. 

Mr. BURGESS. Again there is no clock. So watch me like a hawk. 

Mr. Smith, you started to talk about the per member, per month 

allocation when you were finishing your testimony and you ran out 

of time. Would you mind just finishing your thought for us? 

Mr. SMITH. Yes, Dr. Burgess. And again, what I was trying to 

convey is in the respect of States going up to higher income levels, 

what families are paying for their share of family coverage, to insure the entire family, usually which means the addition of a 

spouse and however many children are in the family—— 

Mr. BURGESS. Those figures were not exclusively for adding a 

child to the coverage. 

Mr. SMITH. That is correct. But I could break down what the employee’s shares and the rest of the family coverage. But what we 

were trying to convey is, when you get—for family coverage, then 

you are covering all of the family, whether it is one child or two 

children or three children. In the case of myself, four children. It 

is all the same price because you have purchased that. In Medicaid 

and SCHIP, if they are in a managed care plan, what you are typically doing is paying a per member, per month amount. So what 

I was trying to relate was, for the price of two children that we are 

paying now a managed care plan, for that same price you can cover 

the entire family was the point that I was trying to make. 

Mr. BURGESS. Now, would the administration be okay—because 

presumably a spouse could be covered under that, that is an adult 

that could be covered under SCHIP, would that be okay? 

Mr. SMITH. Well, again, in family coverage and employer sponsored, I think we have set that premium assistance, the way to 

build on that, again, then you are not replacing private coverage. 

You are building on that private coverage for less cost than what 

you are paying now if you are paying for at least two children. 

Mr. BURGESS. Now in the bill that was up when we were reauthorizing the SCHIP, the bill that came up in September and October, I think on the second generation of that, I spoke on—or engaged with our Chairman of the full committee, Chairman Dingell, 

in colloquy on the House floor, trying to ascertain what the upper 

limit of income was that would be eligible for coverage under 

SCHIP. 

The stated amount on the bill or the amount that was referred 

to in the debates that morning was a figure somewhat over $60,000 

a year that was in the bill. But there was also a possibility for income set-asides. And I think we have heard one of them alluded 

to this morning because of the child care exclusion, and the ChairVerDate Nov 24 2008 13:30 Oct 07, 2010 Jkt 037690 PO 00000 Frm 00128 Fmt 6633 Sfmt 6633 Q:\PRINT EDITOR-110\HEARINGS 110\110-85 SCOM1 PsN: JIMC
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man agreed with the fact that a $500 a year for a family’s income 

could be excluded for child care expense. Do you agree with the 

Chairman? It was probably not an unreasonable position. But was 

the Chairman accurate on that? 

Mr. SMITH. I think that it was accurate. And I listened to the debate and I read the statements afterwards. And again, I think it 

goes back to the question, for whom is the enhanced match really 

intended to be? And to some extent, is there really an upper limit 

to get around those rules? 

Mr. BURGESS. And that was the furtherance of that colloquy. Because then we talked about a $20,000 exclusion for living expenses, 

$10,000 for transportation expenditures, and $10,000 for clothing 

allowance. And it seemed to me just doing simple math that I am 

capable of doing that we were already somewhat north of $100,000 

for a family of four. Was that accurate that what the Chairman related? 

Mr. SMITH. I think the Chairman did speak accurately. Part of 

this is all a bit ironic. In terms of the very history and the purpose 

of what income disregards in public benefit programs were for in 

the first place, which was to help families who were on welfare. 

That is where they were starting. They were on welfare. And it was 

meant as a work incentive to help those families return to work so 

they weren’t penalized by losing their health insurance. 

So income disregards were where you are starting at a higher income level but subtracting earned income, for example, the old $90 

in the old AFDC rules, or a 30-1/3 or work-related expenses such 

as child care. Those were all intended for people leaving welfare. 

Now we have sort of turned it upside down and said, now we are 

going to use income disregards to people who are well above poverty levels, or even near poverty levels in order to start subtracting 

out their income in order to qualify them for these programs. It is 

almost the absolute reverse of what income disregards were historically used for. 

Mr. BURGESS. Okay. I appreciate the clarification. Ms. Kohler, in 

the little bit of time I have left, if we could get some clarification 

on the citizenship verification issue that you alluded to. 

Under the existing law that expired September 30, what were 

the citizenship verification requirements under the existing law? 

Mr. PALLONE. This is going to be the last one because he is over 

his time limit. 

Ms. KOHLER. Okay. 

Mr. BURGESS. See, I don’t know that. So it is okay. I can’t possibly—— 

Mr. PALLONE. You have to take my word for it. 

Ms. KOHLER. Under the existing law, you have to prove both 

your citizenship plus your identification. So I think, as Cindy Mann 

explained, you need to come in with an original birth certificate. 

Mr. BURGESS. And briefly under the new bill, the CHIPRA bill 

that was vetoed and sustained, what was the citizenship 

verification under that law? 

Ms. KOHLER. There could be some attestations available to the 

families. But you didn’t have to come in with your original document. 

124 

Mr. BURGESS. Attestation meaning you say that this is, in fact, 

correct. But was there at any point of documentation requirement 

or was it just simply the attestation? 

Mr. PALLONE. Okay. That is the last one. 

Ms. KOHLER. Okay. It was a combination. We had attestations 

plus we did require some verification. 

Mr. BURGESS. Well, Mr. Chairman, this is an important point because we heard over and over again from your side when the second bill came up that there would be no relaxation of the citizenship verification. My side, in fact, was criticized when we brought 

up the fact that there might be a relaxation for citizenship 

verification. And while it may not be an issue in New Jersey or 

New Hampshire, I promise you, in the State of Texas, we have a 

lot of people in our State without the benefit of an accurate Social 

Security number. And not casting any other aspersions on why 

they don’t have a Social Security number, it is a huge problem. 

And if we provide that type of relaxation of the citizenship requirement we are going to suddenly shift the burden significantly to border States like Texas. And I just think it is an important—— 

Mr. PALLONE. I understand your concern. 

Ms. KOHLER. If I could just say, we actually did a study prior to 

the new requirements, and we found that we did not have any significant number of people on the program who were not citizens. 

Mr. BURGESS. And I don’t doubt that in New Jersey. I suspect 

in Texas it is different. 

Mr. PALLONE. Let’s move on. Mr. Green. 

Mr. GREEN. Mr. Chairman, I have some other questions. I want 

to follow up with my colleague from Texas, because I think obviously we have some difference of opinion on it. The citizenship requirements may have been relaxed, but I can tell you there are examples in Texas, particularly south Texas or even in an urban area 

like I have, that it is much more difficult to get that certified copy 

of a birth certificate, particularly when we have children born at 

home, even in urban areas with midwives. 

And again there is a cultural issue here. But wasn’t the bill—and 

CMS can join in on this. I think the bill that we passed, that was 

vetoed, if someone who is not a citizen—and CMS did an audit, the 

State paid for that child because it was the State’s decision, Staterun program with Federal money. But wasn’t that correct that if 

there was an audit by CMS, whether it be Medicaid or the CHIP 

program, that if you found out someone didn’t have proper documentation, it was the State sticking it, not the Federal taxpayer? 

Mr. SMITH. Actually, Mr. Green the penalty would have been 

only for the individual and could not be extrapolated to the rest of 

the population. So literally the—— 

Mr. GREEN. Oh, I know it would be the individual. But if you did 

an audit of the State of Texas and found you know, we have 10,000 

of these children—you didn’t have the verification, you think questionable, the State taxpayer picked that up, that individual that 

they found. 

Mr. SMITH. Actually, Mr. Green, no. Because you would have 

done it on a sample and you would have found 20. Usually in audits, you extrapolate to the rest of the population. But the way it 

was drafted, it literally was only the 20. 

125 

Mr. GREEN. But if you showed 20, then depending on what your 

universe would be, 20 out of, you know, 10,000 may be much smaller. But it would show you evidence that maybe you need to—— 

Didn’t CMS have the ability to require the State to also do other 

verifications other than maybe weighing too much on attestations, 

and if you found a high significance of children who were undocumented on there? 

Mr. SMITH. Well, again, what the bill provided for itself, a State 

might be very well willing to take the risk because the penalty was 

so small. There are other provisions in the bill on the express lane, 

for example, that we believed were loopholes in the eligibility. For 

example, at the school, you might not be asking about the insurance status. So where in SCHIP specifically you have to be uninsured, but if you weren’t asking all the right questions, then the 

potential was you would be letting people who were not eligible for 

the program. 

Mr. GREEN. It sounds like CMS, if we want to run a Federal program we can. And frankly, I consider the percentages—for example, State of Texas receives from SCHIP is higher than the percentages we receive for Medicaid. You know, if we want to do that, then 

why would we want to trust the States to do it? Maybe it goes to 

the original concept of the SCHIP. I don’t mind putting whatever 

requirements. But sometimes I see—particularly this CMS with 

the new regulations—and I have a question on that. 

Mr. Chairman, I know I am running out of time. But you know, 

if you want to put all these barriers in place, then the program will 

not get to those folks, and particularly in a poorer population. My 

children, I have no trouble with getting them their certified copies 

of their birth certificates, or even our grandchildren. But if my children were born with a midwife in south Texas, then it is much 

more difficult. So that is why I think States who know that history 

and who use it for other verification, we use it for other 

verification, for example, in Harris County, our main issue in Harris County is that you need to first be a resident of the county because our public health system serves the Harris County residents. 

I guess that is the frustration that we had the differences in the 

CHIP bill. And of course, I come from a different part of the State 

than my colleague, in a different district. I also know that if I am 

going to err, I would rather err on the side of getting that child 

health care. And that is what I think ought to be the concern of 

the Federal Government. And hopefully some day, even State government. 

Let me get back to my questions, Mr. Chairman. This is a question for both Ms. Brooks and Ms. Kohler. With the recession we are 

talking about, and we are getting ready to vote on the stimulus 

that puts money back into the economy. In previous times with economic stimulus, the last time Congress passed a stimulus bill, it 

included $20 billion, for example, for State fiscal relief, $10 billion 

increased medicaid funding and $10 billion for State grants. 

My concern is that, what we are doing today may be hardly even 

putting on our finger in the dike in what we are doing. And considering recent Congress commission on Medicaid and uninsured report that States Medicaid directors note that many States are now 

facing economic situations. It will either level off in the last of 2007 

126 

due to troubles in the housing market, targeted across-the-board 

Medicaid cuts before the end of the calendar year 2008, the coming 

possibility. Would you agree that the assessment with the economic 

downturn affects the state’s ability to fund Medicaid and CHIP, 

Ms. Kohler? 

Ms. KOHLER. Yes. It is a significant issue. As I said, in New Jer- sey we are basically in $2.5 billion deficit that we are trying to find 

ways to reduce our spending to live within our means. If I could 

say the last time Congress passed an economic stimulus package, 

it did include money for both Medicaid as well as block grants to 

the States. And that was a very, very effective way of getting the 

money very quickly out there in the economy. And it really did help 

prevent the recession. 

Mr. PALLONE. I am going to let whoever wants to answer this 

and that is—because his time is over too. Go ahead. 

Ms. BROOK. Just very briefly. 43 percent of the deficit in New 

Hampshire is going to have to be made up by the Department of 

Health and Human Services. Certainly an enhanced F map in New 

Hampshire would help us go a long way to help us bridge that. But 

also we know there is going to be increased demand if there continues to be an downturn in the economy, people are going to lose 

jobs and they are going to need health coverage. 

Mr. GREEN. Mr. Chairman, my concern about it, if we don’t assist the States and if you are in some States, the States will have 

trouble coming up with the money, we will just see our uninsured 

population go up even more, particularly with the Medicaid population. So thank you, Mr. Chairman, for your patience. 

Mr. PALLONE. Thank you. And thank you to all of you. I will end 

with this and say that you know we are going to have more discussion of this. We have Mr. Leavitt coming in to talk, I guess, during 

the budget review. In February, we are going to have another panel 

like this. There is the concern that as we move on, as the economic 

slump becomes worse, you know, what the impact is going to be. 

So this is a very important part of what we are looking at as a subcommittee in terms of where we go with not only SCHIP, but Medicaid and the need, as you said, to do something in terms of the 

match. So I appreciate it. 

I know we are ending on this note. But I think it is sort of a beginning of what we will have to look at in the subcommittee over 

the next few months. 

Thank you all very much. Let me mention that Members may 

submit additional questions for the record to be answered by you. 

They should be submitted to the committee clerk within the next 

10 days, and then you would be notified. So we may get some additional questions in writing for you to answer. But thank you again. 

And without objection, this meeting of the subcommittee is adjourned. 

[Whereupon, at 1:19 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

STATEMENT OF HON. JAN SCHAKOWSKY

Thank you, Mr. Chairman. You have been a real leader on the issue of covering 

more children, and I know this Committee appreciates your leadership and persistence. 

127 

Over the next 2 years, 27 million American children will be uninsured for some 

period of time. They will go without preventive care. They won’t be able to see a 

doctor or a dentist, and some will grow up with life-long health care problems that 

could have been prevented with early care. 

When a bill to cover 10 million children—which is supported by the House and 

the Senate, Governors in both parties, consumers, people of faith, medical associations, hospitals, pharmacies and insurers—is held back by the very few—truly this 

was a missed opportunity. 

The House SCHIP reauthorization legislation would have brought health coverage 

to approximately ten million children in need—preserving coverage for all 6.6 million children currently covered by SCHIP, and extending coverage to 3.8 million 

children who are currently uninsured. In my home state of Illinois, this would have 

meant covering a total of 300,000 Illinois children—constituting an expansion to 

over 150,000 eligible, but not yet enrolled Illinois children. 

How can anyone justify leaving millions of our own children so vulnerable? It is 

a black mark on our country. It is a moral issue as well as a health issue. People 

in every other industrialized nation must shake their head in disbelief. We are a 

powerful and wealthy nation—the wealthiest in fact—and we know that we can do 

better. I am grateful to be having this hearing today because, though we extended 

SCHIP through to March 2009, and will continue to work at expanding and improving children’s health insurance in the meantime, the Administration seems set on 

a course to fight us every step of the way. 

By issuing regulations that chip away at critical services, CMS is acting in direct 

opposition to numerous states—including my own—that are working hard to expand 

on the coverage they currently provide through SCHIP, Medicaid, or a combination 

of both. By tying the hands of states who want to help children get access to essential services through its draconian regulations, the Bush Administration is preventing assistance from reaching families who are truly hurting. 

Given the worsening economic conditions and slow job growth, states that are already cash-strapped will soon face between 700,000 and 1.1 million additional applicants for their SCHIP and or Medicaid programs. This is no time to cut back on 

working families. 

I am glad to be starting the year off with such an important and timely hearing. 

I’d like to thank our witnesses for being here and with that, I yield back. Thank 

you, Mr. Chairman. 

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