Ebbing and Flowing: Some Gains, Some Losses as SCHIP Responds to Third Year of Budget Pressure
By Ian Hill, Brigette Courtot, and Jennifer Sullivan
The Urban Institute
May 2005
Heading into 2004, SCHIP recorded its first-ever decline in enrollment. While it represented just 1 percent of total enrollment, the drop was still a significant turning point, reflecting the cumulative impact of three years of state policy responses to the ongoing economic downturn.
(2004) saw virtually no improvement in outreach, thus dimming SCHIP’s prospects for further reducing the rate of uninsurance among children in the coming year. Further, states like Texas did nothing to reverse the raft of changes made in 2003 that cut eligibility and benefits, raised cost sharing, and made enrollment more challenging. Wisconsin maintained its highest-in-the-nation premium, even in the face of declining enrollment. And Florida, despite lifting its enrollment cap, restricted future growth by closing enrollment except during two 30- day “open” periods each year, while requiring families to play a more active role in eligibility renewal.
In the case of outreach there is no ambiguity – SCHIP outreach has for all intents and purposes ceased to exist. Evidently, states have decided that programs cannot sustain the growth rates of SCHIP’s first four years during an economic downturn. Outreach has been scaled back or eliminated in an effort to curtail growth.
Looking ahead, the future course for SCHIP is uncertain. In 2004, 36 states spent more than 100 percent of their annual allotments. Yet that same year, for the first time, unspent federal funds in the amount of $1.3 billion reverted to the treasury. Federal funds available for redistribution are expected to fall in the coming years while the number of states needing redistributions is expected to rise. The only current prospect for enhanced federal funding for SCHIP has been proposed in the Bush administration’s “Covering the Kids” outreach initiative. However, when we asked SCHIP directors what they thought of this proposal, they expressed appreciation tempered by strong trepidation. That is, federal support for outreach would be welcomed by the states, but only if allotments were increased as well to cover the services new enrollees would need. SCHIP already faces excess demand for coverage. Providing new funding for outreach, without supporting states’ ability to supply additional coverage, would only exacerbate the program’s financing challenge.
http://www.urban.org/UploadedPDF/311166_A-68.pdf
Comment: SCHIP, the children’s health insurance program, is the one bright light on the path of incremental reform. Almost 4 million children are covered by this program. Although overall health care costs and coverage continue to deteriorate, the rate of deterioration would have been significantly greater without this very important program.
But how bright is the SCHIP light? The Bush administration is offering administrative funds to sign up new enrollees, but is not providing adequate funds for the care that would be required by new enrollees. And as a program that serves lower-income individuals, it is vulnerable to the wrath of anti-tax, anti-government politicians (“…strangle the beast…”), enabled by the passivity of their milquetoast colleagues (“…I am not a tax-and-spend liberal…”). Thus the response of the states has been to enact changes that control program costs.
It is ironic that our one successful incremental program, SCHIP, is now contributing to our chronic problems of an increasing number of uninsured and of making care less affordable by shifting more costs to the individual. Incrementalism is not working. All parameters are growing progressively worse.
We need comprehensive reform. But we won’t have that until we replace our milquetoast politicians who are too timid to take on the would-be anarchists who are currently in charge.
