PUBLISHED: January 11, 2010

A Democratic Party Split On Children’s Health Care

By Rebecca Adams  |  CQ Weekly - In Focus

Henry A. Waxman is known as one of the most ardent champions in Congress for giving children better medical care. And during his 18 terms in the House he's succeeded in patiently bricking together ever-stronger protections for pregnant women and young people through Medicaid, the shared federal and state program for insuring the poor.

So, at least on the surface, it seems particularly peculiar that the California Democrat, who for the past year has been chairman of the powerful Energy and Commerce Committee, is now on the opposite side from his usual allies in child advocacy groups on one of the most important issues affecting children in the current health care overhaul debate.

The version of the health care bill the House passed in November, which Waxman had a strong hand in writing, would bring an end to the Children's Health Insurance Program, which for the past dozen years has been providing health care to young people in low-income families that are not so poor as to qualify for Medicaid. Instead, the language Waxman crafted would cover some of those children through Medicaid but require the parents of others to buy subsidized policies on a new market for private insurers regulated by the federal government.

But the bill the Senate passed in December would essentially do the opposite. At the insistence of one of Waxman's regular allies in the cause of healthy children, Democrat John D. Rockefeller IV of West Virginia, that measure would continue the program roughly as it is, with funding guaranteed for the next six years.

The intraparty policy split - which will have to be resolved in negotiations that are expected to intensify this week - appears all the more curious in light of the recent history of children's health coverage. Soon after they took over Congress, the Democrats started pushing a significant expansion of the program, but their efforts came to naught in the face of vetoes by President George W. Bush in 2007 and 2008. The effort easily succeeded on its third try, however; fellow Democrat Barack Obama signed the legislation two weeks after becoming president, when he declared it a down payment on universal health care coverage.

Many advocates for children prefer the Senate approach because they expect that families getting coverage through the proposed new marketplaces, known as "exchanges," could face higher costs and fewer benefits for their children than they now have under the program, which now goes by the acronym CHIP. (During the Bush years it was known as SCHIP, the first letter emphasizing the role of the states in the program.)

Advocates say they're unwilling to trade in a time-tested system for the uncertainty of the exchanges. "It's indefensible that we'd move so abruptly to end a program that works for children," said Marian Wright Edelman, president of the Children's Defense Fund, and "replace it with a totally untested system."

Clinton-Era Compromise

To be sure, children's advocates say that they support many other provisions that Waxman included in his measure, such as plans to expand Medicaid eligibility and improve the program's payment rates. But on the central question of whether CHIP should continue, many are concerned that children will face worse coverage than they currently have. "We just respectfully disagree on this one," Edelman said of Waxman.

Waxman says that, despite the differences of opinion, he and children's advocates share the same hope that the pending bill will improve medical care for young people. "It's unusual, but people can have different points of view and still want to accomplish the same goal," he said.

His opinion is that CHIP is an imperfect program whose time has passed. The program was created in 1997 as part of a political compromise between Republicans and Democrats. In the wake of the failed Clinton administration health care overhaul effort, Democrats wanted to expand coverage for children, who can suffer lifelong problems if they lack regular care. Republicans, whose main interest then was deficit reduction, agreed to include the program in legislation designed to curb growth in expensive programs such as Medicare and Medicaid, but they insisted on block grants that would permit states to experiment with varying benefit, cost- sharing and eligibility requirements. As a result, CHIP is not an "entitlement" program like Medicaid, where spending is guaranteed for all people who qualify; instead, states facing fiscal problems can stop enrolling eligible children.

Now, the House bill would move low-income children from CHIP to Medicaid if their families' incomes are less than 150 percent of the federal poverty level, or if their families earn more and they live in a state that created its CHIP program by expanding Medicaid. (Last year the federal poverty level was $18,310 for a family of three.) Children in states with a separate CHIP program would have to get coverage through the exchanges if their families earned more than 150 percent of poverty.

The result is that children in families earning between 150 percent and 300 percent of poverty could face different outcomes, depending on whether their states created separate programs or expanded Medicaid to create CHIP. For instance, health policy analysts say such kids in New York and Maine would move toward private insurance, but children of similar circumstances in Arkansas and New Mexico would get coverage under Medicaid. Those kids would probably be better off, because Medicaid's core benefits are guaranteed, unlike those in CHIP, and can be more extensive than those in some CHIPs.

Higher Costs for Many

Children shifted into the exchange insurance would do worse, advocates of the Senate approach say. The Congressional Budget Office director, Douglas Elmendorf, has written that if CHIP were eliminated, some children eligible for subsidized coverage would not enroll, "owing at least in part to the higher premiums and higher out-of-pocket costs that they would typically face" in the exchanges.

Many states, in fact, don't require any co-payments for some services under CHIP, according to surveys by the Kaiser Commission on Medicaid and the Uninsured and the Center for Budget and Policy Priorities. That isn't likely to be the case in exchange plans.

The differences in cost-sharing between CHIP and proposed exchange plans are "not even close," said Bruce Lesley, president of First Focus, an advocacy group that favors the Senate approach. His group also organized a campaign to support a proposal by Bob Casey, a Pennsylvania Democrat, to amend the Senate bill to preserve CHIP, with some program changes, until 2019. The amendment was scuttled without a vote.

Groups such as First Focus and the Children's Defense Fund also worry about the uncertainty of the benefits under plans provided by the proposed exchanges. Most states provide CHIP coverage for standard pediatric care, including vaccinations, dental care and annual checkups. States also contract with pediatricians and pediatric specialists to provide the care, which may not be the case in exchange insurance plans that are not specifically designed for children.

Supporters of the House provision say that children who would move from CHIP into exchange insurance would have the advantage of being in the same coverage program as their parents, which could make enrollment easier for families. The coverage might or might not be as expansive as under CHIP - but, as Waxman reminds his critics, thousands of children could be left uncovered altogether if state officials decide to cap enrollment.

His point can be seen in the recent experience of his home state. Last year, California's budget woes temporarily prevented children who were eligible for CHIP from joining, and state officials warned that hundreds of thousands of kids could lose their existing coverage. The state scrambled to find the money, but some health policy analysts say California's fiscal problems could lead to more coverage issues in the future.

Rockefeller's home state is experiencing the opposite situation, which helps explain why the senator is pushing so hard to keep CHIP going. West Virginia officials are in the process of expanding CHIP from children in families with incomes of up to 220 percent of the poverty level to 300 percent, or $54,930 for a family of three. The program is separate from the state's Medicaid program, so if the House CHIP language were to prevail, then many West Virginia children who would have received the CHIP coverage would have to move to the exchanges.

Many analysts expect that some version of the Senate language will prevail in the final bill. Not only do many child advocacy groups prefer it, but so do health insurers. Lobbyists for America's Health Insurance Plans, an industry trade group, say that shifting people into different programs could be disruptive and confusing, which could lead to some children ending up uninsured.

Rockefeller, for his part, has been insistent that CHIP continue. He is already annoyed that the Senate version and probably the final bill will not have a public health insurance option, as he and other liberals want.

"This is fundamentally important, and I will continue to fight all the way on this," he said in an interview last month.

In a separate interview, Waxman signaled that while he strongly favors his approach, he may not insist on it. "I'm not drawing lines in the sand on anything," he said. Lawmakers in both chambers "want to make sure we protect children's access to health care."