Children's Health Insurance Program Reauthorization Act of 2007

Background
SCHIP was set to expire at the end of the 2007 government fiscal year, which ended on Sept. 30, 2007. Under the continuing funding resolution passed in September 2007, funding for the program was extended to Nov. 16, 2007.

Senate passes its initial version in July 2007
In July 2007, the Senate Finance Committee approved the Children's Health Insurance Program Reauthorization Act of 2007 (S.1893 - OpenCongress bill info page) to renew and expand the SCHIP program on a somewhat bipartisan, 17-4 vote (11 Democrats and 6 Republicans in favor, four Republicans opposed). The bill would increase funding for the program by $35 billion over five years (over the baseline of $25 billion) to a total of $60 billion over five years, which was less than Democrats had hoped for but agreed to by Republicans on the committee. The additional funds would be raised through an increase in the tax on tobacco.

On August 1, the contents of S.1893 were placed in H.R.976, the Small Business Tax Relief Act of 2007, a bill providing tax breaks for small businesses to counter the recently approved federal minimum wage increase. The bill was then renamed the Children's Health Insurance Program Reauthorization Act of 2007 (OpenCongress bill info page). 

On August 2, 2007, the Senate passed H.R.976 by 68-31, with "aye" votes from all 48 Democrats (Sen. Tim Johnson (D-S.D.), who was recovering from a stroke, missed the vote), independent Sens. Joe Lieberman (I-Conn.) and Bernie Sanders (I-Vt.), and 18 Republicans. 31 Republicans voted against the bill. (Full details at the OpenCongress vote info page). Several Republican amendments (and one by Sen. John Kerry (D-Mass.) ) were rejected (see the OpenCongress bill info page). 

Summary of initial Senate version
Specifically, the bill would do the following:


 * Expansion in funding: The bill would increase funding for the program by $35 billion over five years (over the baseline of $25 billion) to a total of $60 billion over five years.
 * More children added to the program: The bill would increase children covered under the program partially by making grants for outreach programs, with focuses on minority, under-served and Native American populations. Certain barriers to outreach were removed and assistance with premiums was included.
 * Exclusion of adults: The would phase out coverage of non-pregnant, childless adults over a few years. States may be eligible for a block grant that would allow them to continue that coverage into 2009.
 * Coverage of immigrants: Only citizens are covered under the bill. Citizenship tests are made by submitting the name and Social Security number to the federal government, and dis-enrolls mismatches within 30 days. Pregnant non-citizen women are given natal care under the bill for children born in the U.S.
 * Limits on eligibility based on income: The bill would cap eligibility for coverage to families that make 300% of the federal poverty level. In 2007 only one state had an eligibility level higher than 300% - New Jersey had a eligibility level of 350%.
 * Expansion of services covered: The bill provides for mental health parity and dental care through grants for the purpose of carrying out programs and activities that are designed to improve the availability of dental services and strengthen dental coverage for targeted low-income children.
 * Medicare changes: None significant.
 * Financing The bill is funded by a 61-cent-per-pack increase on the federal tax on tobacco (to $1 per pack).

Veto threat and response
On July 10, after the Senate Finance Committee approved its initial version of the SCHIP expansion bill, President Bush noted his disapproval but stopped short of saying he would veto the bill: "It's now aiming at encouraging more people to go on government health care," he said. Responding to Bush's statement, Republican Sens. Orrin Hatch (Utah) and Chuck Grassley (Iowa) urged Bush not to veto the legislation, saying:

"It’s disappointing, even a little unbelievable, to hear talk about Administration officials wanting a veto of a legislative proposal they haven't even seen yet - because it isn't even finalized yet. The President ought to give Congress a chance to offer a proposal first. As Republican leaders on the committee of jurisdiction, we’ve been working day and night to reach an agreement on children’s health insurance legislation because it is imperative that this important program, which has helped so many children, be continued.

"At the same time, it must be recognized that there are several obstacles that must be overcome. First, against our wishes, the program was expanded to cover childless adults.  Our goal is to refocus the program on low-income children.  Second, the majority party has been interested in spending as much as $50 billion above the baseline of $25 billion which is already locked in. We’re holding the line in limiting additional monies to $35 billion.  So far in negotiations, we've worked to get dropped new mandates, increased Medicaid match rates, allowing more states to cover parents in the program, and coverage of legal immigrants - all of which substantially scale back the cost of the proposal...

"Separate from those issues, the cost of a Democratic-only sponsored extension is also certain to be higher because it would provide additional funding for states to implement other expansions they have in the pipeline. So, a simple extension of the current program could cost as much as $24 billion, on top of the $25 billion baseline, over five years, a far cry from the President's $5 billion request...

"Finally, like the President, we’d like to consider proposals to provide reform of the tax treatment of health care to increase coverage to tens of millions of Americans. Not taking that on is a missed opportunity, but it’s not realistic - given the lack of bipartisan support for the President’s plan - to think that can be accomplished by next week or even before the current children’s health care program runs out in September."

New rules
On August 21, 2007, the White House issued new rules that would severely limit the power states have to expand SCHIP coverage. Administration officials said that the purpose of the new rules was to bring SCHIP back to its original purpose of covering low-income children, rather than becoming an alternative to private health insurance for increasingly well-off families. The new rule would make it nearly impossible for states to increase the eligibility level to include families living at above 250 percent of the poverty level. The poverty level was listed at $20,650 a year for a family of four, meaning that under the new plan, coverage would end for families making above $51,265 a year.

Certain states, like New York, New Jersey, California, and Pennsylvania, already set eligibility levels at 300 percent and above, meaning that under the new rules they would have to take coverage away from many children benefiting from the program.

House passes initial version in August 2007
Following President Bush's veto threat in July 2007, the House moved forward with its own legislation, the Children's Health and Medicare Protection Act of 2007 (H.R. 3162) (OpenCongress info page) that cost far more than the Senate's, covered far more children and incorporated changes to Medicare, including reducing payments to health insurance companies who received higher payments for administering Medicare plans than the government used for its own plan. (See summary of bill below.) 

On August 1, 2007, the House passed the SCHIP reauthorization, in the face of a presidential veto threat, in a 225-204 vote (for individual votes, click on "view details" in the vote box at right). The Senate was expected to vote, and likely pass, their more modest version of the bill, possibly the following day.



Summary of initial House version

 * Expansion of funding:The bill would expand SCHIP by $47 billion over five years, for a total of $72 billion.
 * More children and others added to program: House Democrats estimated that the bill would add 5 million children who were uninsured to the program. It accomplishes part of this expansion through outreach programs to recruit enrollees, with an emphasis on minorities. It also simplified application procedures. The bill would expand health coverage to dental and mental health care services. It would allow SCHIP coverage for those up to age 20, some legal immigrants, and pregnant women. It would provide almost $3 billion specifically for rural health care. While the bill places no restrictions on states to extend coverage to those populations, it does require that states certify that there is no waiting list of children from families that have incomes of less than 200 percent of the federal poverty level and have outreach programs in place to reach such children.
 * Coverage of immigrants:Processes for determining citizenship and legal immigration status are left up to the states, with special funding for translators when needed.


 * Medicare changes:
 * Coordination and prevention of cuts to physician payments: The bill would affect Medicare by preventing scheduled payment cuts to physicians in the program, which are currently scheduled at to be cut by 10 percent in 2008 and then by about 5 percent annually in the next eight years, for a 40 percent reduction by 2016. It also shifted payments to primary care doctors for people in traditional Medicare, to force doctors to coordinate their care and payments, which researchers say saves on costs, especially for patients who see multiple specialists.
 * Encouragement of preventative care:It also provide remove copayments for preventative-care disease screenings for seniors in Medicare to increase their use.
 * Exclusion assets from means testing: and excludes assets like retirement plans or life insurance policies from means-testing.
 * Cuts in payments to companies operating private Medicare plans: To help finance the bill, it would also cut payments made to health insurance companies operating public-private Medicare plans to the level of funding used in the federally-administered Medicare plan. The Congressional Budget Office estimated that the federal government paid 12 to 19 percent more to these plans to administer their Medicare plans than it spent on traditional Medicare. It would also prohibit private Medicare plans from charging higher co-payment fees than federally-administered Medicare.
 * Regulation of marketing of private Medicare plans: State governments would also be given more authority to regulate the marketing and selling of private health plans under Medicare to prevent abuses.
 * Effect on citizens covered by private health care: The bill was opposed by President Bush, who said, "When you expand eligibility... you're really beginning to open up an avenue for people to switch from private insurance to the government."
 * Financing: To finance the bill, included were the cuts in payments to insurance companies that administer Medicare programs that cost more than federally-administrated Medicare and a raise in the federal tobacco tax of 45 cents per pack.

Bicameral agreement forged by Democrats and some Republicans
During a late-night negotiation on September 17, House and Senate lawmakers hammered out an agreement on SCHIP, settling largely on provisions in the Senate bill (see summary below).

White House spokesman Tony Fratto opposed the bill, saying "We should not be creating policy that substitutes a government-run program for private health insurance." Many Republicans were angered by the President's veto threat, as it put them in a position of either opposing the President or angering their constituents. Senator Orrin Hatch (R-Utah), who helped to negotiate the compromise, said, "We're talking about kids who basically don't have coverage. I think the president's had some pretty bad advice on this."

Bill summary

 * Expansion in funding: As in the initial Senate bill, this bill would increase funding for the program by $35 billion over five years to a total of $60 billion over five years. Special funding was appropriated for health care facilities operated by California's Ventura and Merced counties and for indigent health care reimbursements for Tennessee and Hawaii. Rep. John Dingell (D-Mich.) also inserted a raise in federal Medicaid reimbursements for Michigan.
 * More children added to the program: The bill would add about 3.5 million children to the program on top of the 6.6 million already covered.
 * Exclusion of adults: Like the initial Senate bill, this bill would phase out coverage of non-pregnant, childless adults over a two years.
 * Coverage of immigrants: Only citizens are covered under the bill. Legal immigrants are not covered.
 * Limits on eligibility based on income: The bill would block the rule changes Bush imposed last month to limit SCHIP coverage for children from families that make more than 250% of the federal poverty level, or $51,265 a year in 2007. It would also make it very difficult for states to cover children from families that make more than 300% of the federal poverty level.
 * Medicare changes: Like the Senate bill, the bill contains none of the cuts in the House bill for health insurance companies administering plans under Medicare. It likewise does not prevent cuts in payments to Medicare doctors.
 * Financing The bill is funded by a 61-cent-per-pack increase on the federal tax on tobacco (to $1 per pack). Bush and Republican members of Congress stated that the bill would soon outpace the raise in taxes.

House and Senate pass negotiated version
In a 265-159 vote on September 25, the House passed the version of SCHIP agreed to by House and Senate legislators on September 17. Though the new version had significantly greater support than the one passed in July, it still fell short of the 290 votes required to override the Presidential veto that President Bush had threatened to give. The bill was supported by 220 Democrats and 45 Republicans and opposed by 8 Democrats and 151 Republicans. (vote details)



On September 27, the Senate passed the negotiated version of the SCHIP expansion by a vote of 67-29. Every Democrat (except two who were not present) voted for the bill, as did 18 Republicans and independent Sens. Joe Lieberman (Conn.) and Bernie Sanders (Vt.). Twenty-nine Republicans voted against the bill. (vote details) 

Bush makes currently false, but possible claim about income eligibility
"The current bill goes too far toward federalizing health care and turns a program meant to help low-income children into one that covers children in some households with incomes of up to $83,000 a year," said the White House in a statement on September 25, 2007.

However, no state currently covers children from families at that level of income (400% of the federal poverty level). New York state did apply to the federal government to cover families at that level, but it was turned down. Bush argued that a future administration could approve such an application, though some versions of the reauthorization legislation barred levels over 300%.

Republican senators, including Sens. Orrin Hatch (Utah) and Chuck Grassley (Iowa), have publicly stated that the claim was wrong.

Bush vetoes bill in October 2007
President Bush vetoed the expansion of SCHIP on October 3, 3007. At an appearance, Bush said he was willing to put "a little more money" into the program aimed at enrolling more low-income children but accused his congressional opponents of trying to "federalize health care." Bush had called for an increase in health insurance coverage through tax breaks in his 2007 State of the Union address and has tried to get that included in the SCHIP reauthorization, but it has gotten little traction in Congress. Republican Sens. Orrin Hatch (R-Utah) and Chuck Grassley (R-Iowa) publicly criticized Bush for strategic blundering. Hatch said, “Frankly, I think the president has had pretty poor advice on this. I can answer every objection that they’ve made, and I’m very favorable to the president. I know he’s compassionate/ I know he’s concerned about these kids, but he’s been sold a bill of goods.”

Democrats lead attempts to beat veto
On October 3, the House voted 222-197 to postpone a do-over vote on the S-CHIP expansion bill. The Washington Post reported that it was "in hopes that a grass-roots campaign by health-policy advocates and a barrage of television and radio advertisements will win over the 15 or so Republicans they will need to overcome Bush's opposition." (vote details)

House fails to override veto on October 17
On October 18, 2007, Democratic leaders in the House tried but failed to override Bush's veto on the SCHIP expansion bill. Democrats needed 286 votes to beat the veto. All but two Democrats &mdash; Reps. Gene Taylor (Miss.) and Jim Marshall (La.) &mdash; voted to override the veto, as did 44 Republicans. 

After the vote, some moderate Republicans sent a letter to Speaker Nancy Pelosi (D-Calif.) asking her to reintroduce legislation that eliminated coverage for adults, held eligibility levels to 300% of the federal poverty level and excluded legal and illegal immigrants. Another group of 28 Republicans sent a letter to Bush with six general principles for compromise including limiting coverage to poor children and exclusion of illegal immigrants.

However, Democratic leaders protested that the Republican requirements, such as the ban on covering illegal and legal immigrants and limiting coverage to children from families with incomes below 300% of the poverty level, were basically already in the bill, something backed up by media analyses. (See bill summary for the House-Senate compromise version above.) They promised to re-introduce the bill with cosmetic changes that made this clear.

A final group of more conservative lawmakers, however, sent a letter to Bush proposing a compromise consisting of legislation introduced by Sen. Mel Martinez (R-Fla.) on October 18 that cost less and used tax credits to families that earned between 200% and 300% of the federal poverty level to pay for private health insurance.

Polls taken that week showed broad public support for the the expansion of SCHIP to include some middle-class uninsured children. According to a CBS News poll published the day of the vote, 81% of Americans, including 70% of Republicans, supported the expansion. Of those that supported the expansion, 75% said they would pay higher taxes to pay for it.

House Democrats stage vote on revised bill
On October 25, 2007, Democrats unveiled a new version of the legislation that addressed the complaints of some Republicans who voted against the previous veto override. The changes tightened some of the more general measures in earlier legislation that had been the center of Republican complaints. (See bill summary below.)

Some congressional Republicans who had earlier voted for the veto override seemed pleased with the changes, including Rep. Fred Upton (R-Mich.), who said they improved the bill and made it more friendly to Republicans, and Sen. Orrin Hatch (R-Utah), who said the limits on income should "completely obliterate" Bush's argument about families making $83,000 being covered under the program.

Bush administration officials also indicated conciliation due to the changes, saying that Bush may accept a $20 billion expansion - far short of the $35 billion expansion in the compromise but much more than his original $5 billion expansion proposal. They also said that Bush may accept covering children from families over the 200% of poverty level but below 300% if the states could show that they met a "rigorous standard" in attempting to enroll children from families below the lower level. The administration remained opposed to funding the bill through a tax on tobacco, however. 

Rep. John Dingell (D-Mich.) also took issue with Bush's earlier claim that funding the program through the tobacco tax would fall disproportionately on the poor. He cited government figures that 60 percent of adult smokers are from families with incomes higher than 200% of the poverty line.

Republicans, upset with the timing of the vote, attempted to adjourn until nine House members could return from a trip to southern California, the scene of devastating wildfires.

Following hours of debate, the House passed the revised version of the SCHIP expansion by a vote of 265-142. Supporters remained 25 votes short of the 290 required to override Bush's promised veto.

Bill summary
Provisions of the bill included:
 * Expansion in funding: As in the initial Senate bill, this bill would increase funding for the program by $35 billion over five years to a total of $60 billion over five years.
 * More children added to the program: The bill continued to add about 4.5 million children to the program on top of the 6.6 million already covered, for a total of 10 million children covered by SCHIP and Medicare.
 * Exclusion of adults: The bill phase adults out of the program in one year (compared with two in the vetoed version), reserving adult coverage for pregnant and post-natal women.
 * Coverage of immigrants: The bill would generally exclude from eligibility illegal immigrants. It would in limited cases cover legal immigrants. States would verify eligibility by confirming the person's matching name and social security number with the Social Security Administration. If the administration cannot confirm the citizenship of applicants, they are required to show states other documentation.
 * Limits on eligibility based on income: The bill establishes a firm limit of covering only children from families that make less than 300% of the federal poverty level. Additionally, bonuses are offered to states who only enroll more children in Medicaid, which has lower income thresholds. (A direct response to Bush's complaint about coverage for those making 400% of the level and a lower level than New Jersey's 350% level.)
 * Medicare changes: As no changes were mentioned in media accounts, it is assumed that the lack of changes to Medicare was preserved in this version.
 * Effect on citizens covered by private health care: New performance bonuses were offered to states that subsidize the costs of employed parents adding their children to their private policies instead of enrolling them in SCHIP.
 * Financing The bill is funded by a 61-cent-per-pack increase on the federal tax on tobacco (to $1 per pack).

Senate fails to reach compromise with Bush; passes House version
On November 1, 2007 a bipartisan group of senators failed to reach a deal on a new version of the legislation, setting up a second veto by President Bush for the measure. On November 1, 2007 a deal was believed by House Republicans and senators from both parties to be close to agreement. However, Senate Minority Leader Mitch McConnell (R-Ky.) rejected Senate Majority Leader Harry Reid’s (D-Nev.) request to give negotiators of the bill more time, forcing a vote on the House-approved bill. The Senate passed the bill 64-30, 3 short of a veto-proof vote.  According to House Republican aides, House Republicans had been discussing a potential deal with Republican Sens. Hatch and Grassley and Democratic Sens. Jay Rockefeller (W.Va.) and Max Baucus (Mont.) Thursday afternoon in a basement room of the Capitol. The discussions ended abruptly when McConnell forced Reid to schedule a vote. Rep. Judy Biggert (R-Ill.), one of the core group of House Republicans willing to support the bill if some changes were made, said “We were well over 50 percent of the way there. I thought we could finish [Thursday].”

Baucus said “[given] a little more time, Congress could pass a SCHIP bill that could achieve the support of more than two-thirds of both houses of Congress.” Biggert said the group was “not negotiating, but having discussions.” She additionally noted that she kept Minority Leader John Boehner (R-Ohio) and Republican Whip Roy Blunt (Mo.) updated on the discussions.

Second Bush veto in December 2007
On December 12, 2007 President Bush vetoed the bill again, effectively stopping the Democrats' hopes of expanding the program. It was the seventh veto by the president and the second on the children's health bill. "Because the Congress has chosen to send me an essentially identical bill that has the same problems as the flawed bill I previously vetoed, I must veto this legislation, too," Bush said. The chief Senate sponsor of the bill, Max Baucus (D-Mont.) said "It’s disappointing that even after weeks to reconsider, the president remains unwilling to give low-income, uninsured American children the health care they need."

If Congress sustained the veto, leaders of both parties said they hoped to pass a one-year extension of the program. The aim would include enough money in the measure to maintain current level of enrollment, estimated at 6.6 million children. The Congressional Budget Office said to achieve that goal, Congress would need to provide at least $5.8 billion, $800 million more than current spending. The bill sent to Bush brought the total to $60 billion over five years, adding four million children to the program.

Heritage Foundation criticisms
Writers from The Heritage Foundation argued that the proposed SCHIP legislation would pull people away from profitable and efficient private insurance companies and push them towards an inefficient, taxpayer funded form of state health care. Rebecca Hagelin, vice president of communications and marketing at The Heritage Foundation, argued that the debate on SCHIP had been falsely framed as being for "helping low-income kids" or being against it, leaving anyone who opposed the bill looking like a "cold-hearted ogre." Instead, she argued, the debate should be around expanding reliance on the federal government and "establishing a consumer-driven health insurance market."

Other Heritage Foundation writers suggested new approaches for providing low-income children with health coverage. They argued that the unfair tax burden on the health insurance companies was responsible for the high prices of health insurance. They wrote, "Instead of expanding government dependency, Congress should stake out an entirely different policy. SCHIP reauthorization should restore the original intent of the law by reaffirming sensible age and income eligibility parameters. Beyond that, Congress should take decisive steps to address the barriers to affordability, namely the unfair, regressive, and inequitable tax treatment of health insurance and its impact on access to affordable coverage for millions of Americans."

Opposition
The following people, companies and organizations were opposed to the SCHIP expansion:
 * The tobacco industry (opposed increases in tobacco taxes)

Support
The following people and organizations endorsed the more expansive House bill passed at the beginning of August:


 * American Medical Association
 * March of Dimes
 * AARP
 * American Academy of Pediatrics
 * Lance Armstrong

The following people and organizations backed a general expansion of SCHIP:
 * 43 state governors

Switched support
The health insurance industry (opposed cuts in payments for operating private Medicare plans), specifically America's Health Insurance Plans, a health insurance company industry group. The group endorsed the House-Senate compromise bill passed in September after House provisions to make cuts to payments made to insurance companies were dropped.

Related SourceWatch articles

 * health care
 * insurance industry

External articles

 * Christopher Lee, "Bush: No Deal On Children's Health Plan. President Says He Objects On Philosophical Grounds," Washington Post, July 19, 2007.
 * Peter Ferrara, "Veto SCHIP. A healthy debate," National Review Online, September 24, 2007.
 * "41 days in Iraq vs. insuring 10 million children," Think Progress, September 24, 2007.
 * Robert Pear and Carl Hulse, "Congress Set for Veto Fight on Child Health Care," New York Times, September 25, 2007.
 * Robert Pear, "Program Known for Flexibility Trimmed Ranks of Uninsured," New York Times, September 25, 2007.
 * Editorial: "Gunfight at the S-Chip Corral," New York Times, September 25, 2007.