Protecting Insurance Companies on the Backs of the Poor, Part 4
Sat Apr 19, 2008 at 10:24:25 AM PDT
crossposted from unbossed
This is the final part in this series covering testimony at the hearing on the state of SCHIP, especially in the aftermath of the Bush Administration's August 17 directive imposing hurdles on the coverage of poor children.
The first post included testimony of a mother struggling to find healthcare for her child. The second included the Senator's introductory statements. The third included testimony from panel one and a critique of the way they were playing fast and loose with statistics, all with a goal of ensuring that insurance companies make money, even if it means that poor children have no health insurance. Links to the earlier posts, if you missed them - or just want to relive them - are at the end.
These are statements from the second panel of witnesses at the April 9, 2008 hearing on the Bush Administration's directive on SCHIP.
Statement of Mr. Alan Weil, Executive Director, National Academy for State Health Policy, Washington, DC
This witness makes three points:
* The directive was written and issued without any input from states. As a result, it includes provisions that are unattainable, outside the control of states, and poorly suited for achieving the purported goal of minimizing crowd out.
* The directive usurps Congressional authority with respect to both SCHIP and Medicaid.
* The directive adds yet another level of uncertainty to states in a manner that impedes state action designed to achieve the statutory goal of reducing the number of children without health insurance.
On August 17, 2007, the Centers for Medicare and Medicaid Services (CMS) released a letter to state health officials (SHO #07-001) directing significant changes in policy for SCHIP and children’s health coverage. This directive was issued without any notice and comment period, without consultation with states, and was not issued as part of a formal rulemaking process.
. . . Although states have sought further guidance from CMS to address their concerns, CMS so far has not responded in writing to many of the detailed questions about the directive posed by individual states or to questions compiled from states by NASHP and submitted at the suggestion of CMS. Without further guidance, many states are struggling to determine whether they will be able to come into compliance.
He adds:
Additionally, a number of states that cover children with family incomes above 250 percent of the federal poverty level have found that increasing eligibility has been instrumental in reaching more eligible low-income children below 200 percent of the federal poverty level. For example, under Illinois’ universal children’s coverage program, AllKids, approximately 70 percent of the 166,000 children that were enrolled when the program started had been lowincome children previously eligible for Medicaid and SCHIP but unenrolled. Establishing higher eligibility levels can reinforce the message that children can qualify even if their parents are working and earning low to moderate incomes.
Another significant challenge states face is the difficulty with measuring participation of low-income children. States cannot easily measure participation rates for SCHIP and Medicaid using available data sources. National surveys, such as the Census Bureau’s Current Population Survey (CPS), have very small sample sizes for individual states, and many states view their own state estimates as a more accurate representation of the number of uninsured. In addition, survey respondents in the CPS tend to underreport Medicaid or SCHIP coverage (instead saying they have private coverage or are uninsured). Other surveys, such as the Survey of Income and Program Participation or the National Health Information Survey, do not contain recent enough data or have other limitations for measuring participation rates in SCHIP and Medicaid.
. . .
The 95 percent requirement appears arbitrary to states. CMS has not provided a rationale for selecting this figure. The participation rates for Medicaid and SCHIP are already higher than for most other voluntary programs targeting low-income Americans. Participation in the federal Food Stamp Program is approximately 50 percent, roughly 30 percent below the participation rate for SCHIP. Even in a program like Medicare Part B, in which seniors are enrolled automatically unless they opt-out, the participation rate is at 95.5 percentiv. Since no state has met this standard under CPS estimates or has yet successfully convinced CMS that it has reached the standard, many states believe it is unrealistic and unattainable.
The witness notes that these requirements create enormous administrative complexity, because it will mean running two systems with two different standards. At the same time, as family income fluctuates, determining coverage may be impossible and result in children losing coverage.
Research indicates that children with gaps in health coverage greater than 6 months have the highest rates of unmet needsx, and that children with gaps in coverage are less likely to report they have a usual source of care other than an emergency room compared with children insured for a full year. Gaps in coverage may deny children the preventative and diagnostic care that could have lasting implications for their healthy development.
There are a number of other interesting issues raised in this testimony that deserve to be read in full.
Statement of Nina Owcharenko, Senior Health Policy Analyst, Center for Health Policy Studies The Heritage Foundation
As a Heritage Foundation representative, it is not surprising that the witness' focus is on the bottomline but also on obfuscation. She notes that research shows that many children from poor families are covered by private health insurance, suggesting that there is no need to extend SCHIP. Other witness testified to problems in ascertaining whether these children are covered. Here main concern is to protect private insurance.
Many low-income children have private health insurance. The Congressional Budget Office estimates that 50 percent of children between 100 and 200 percent of poverty have private coverage, and 77 percent of children between 200 and 300 percent of poverty have private coverage. Thus, it is critical to appreciate these numbers when considering expanding public programs, such as SCHIP, beyond the 200 percent threshold.
There is wide and varying degrees of estimates on the impact that public program expansions has on the availability and enrollment in private coverage. Economists Jonathan Gruber and Kosali Simon, looking at public programs in general, found that "the number of privately insured falls by about 60 percent as much as the number of publicly insured rises." Gruber and Simon also concluded that this "crowd out" phenomenon is far more dramatic when considering the entire family.
This last point suggests that the data show causation, rather than correlation, that is does falling access to private health insurance lead to coverage by public insurance of vice versa. Or is there any direct connection. Are people substituting one for the other? Or are people losing jobs with insurance coverage and then moving to public insurance?
The last witness was Cindy Mann, Research Professor and Executive Director Center for Children and Families, Georgetown University Health Policy Institute
This witness refers to the August 17 directive as imposing "new and likely insurmountable hurdles for states covering or planning to cover children with family incomes above 250 percent of the federal poverty level (FPL), the equivalent of $44,000 in annual income for a family of three." She also points out that needs among the states vary, but the directive fails to allow states to decide how best to cover their poor children.
The directive already has taken a significant toll on state efforts to cover children at a time when the number of uninsured children is rising and more families are experiencing hardship due to the downturn in the economy. SCHIP was specifically designed to bridge the gap for families with incomes above Medicaid levels but still too low to afford private health insurance. Many children in families with incomes above 250 percent of the FPL have access to affordable employer-based insurance, but in light of rising health care costs and the evolving job market increasingly some do not. SCHIP has been a remarkably successful program in part because it has always provided states the discretion to decide which families need help purchasing affordable coverage in their state, within the limits of available funding. SCHIP coverage is not free for families with more moderate incomes, but it is affordable.
The directive abruptly and unilaterally changes SCHIP and Medicaid rules and disrupts longstanding SCHIP programs without any evidence that the policies it mandates will further what we can all agree is the top priority of SCHIP and Medicaid – covering the lowest income children. The members of this Subcommittee and Committee, most notably Senators Baucus, Grassley, Rockefeller and Hatch, crafted a bipartisan SCHIP reauthorization bill last year that addressed these important and complex issues in thoughtful, constructive ways. Later in the year, the Congress enacted a SCHIP extension bill to keep SCHIP coverage and state coverage plans intact until SCHIP could be reauthorized. That goal, however, is being undermined through the backdoor by a set of policy prescriptions that lack support in the research literature or in state experiences and that did not even go through normal rulemaking procedures.
The witness also points out the irony of preventing coverage of children in poverty, just as we are entering a recession that will lead to increases in children in need.
Between 1996 and 2006, the percent of low income children without health insurance dropped by more than one-third, largely as the result of enrollment in Medicaid and SCHIP. The most recent Census Bureau data, however, show that the number of children without health insurance has begun to climb. If children continue to lose coverage at the same rate they lost coverage in 2006, almost 2,000 children a day will join the ranks of the uninsured. Sadly, it is likely that the number of children losing coverage this year will be even higher because of the economic downturn.
This witness also points out that the cost of private insurance is so high now that, unless an employer provides highly subsidised health insurance, it is out of reach for families with even moderate incomes.
Over the past decade, the cost to families of buying into employer-sponsored coverage rose by 103 percent while their earnings grew by only 33 percent. The average total cost of family coverage through a private group health insurance plan is now more than $12,000 a year. A family with moderate income whose employer contributes a substantial portion of that premium cost might be able to afford to purchase that coverage, but if the employer does not make a significant contribution to the cost of the insurance the coverage may be well beyond the family’s reach. A $12,000 premium would consume more than one fourth (27 percent) of the total annual income for a family of three at 250 percent of the FPL.
Additionally, parents working for firms that do not offer family coverage or who are not eligible for employer based coverage or who are self-employed face particular challenges affording private insurance for their children. Given rising costs and job market trends, it is not surprising that nearly half of the additional 710,000 children who became uninsured between 2005 and 2006 were in families with more moderate incomes.
I have only been able to include key points in the witnesses' testimony. There is much more at the links provided.
For more resources on the demographics of poverty:
Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2006 (Aug. 2007)
For more information, the Census Bureau tables on families with income that is 250% of the poverty level is here.
The other parts in this series are:
Part 1
Part 2
Part 3
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