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A decade of progress

By most accounts, the SCHIP program has been a 10-year success story. The number of uninsured children dropped steadily from 11.1 million in 1998, the year after the program began, to its lowest level of 7.9 million in 2004, according to U.S. Census Bureau figures. But the number of kids without insurance grew by about 1 million from the beginning of 2004 through 2005, and according to the Kaiser Family Foundation, half of the newly uninsured children came from families earning from about $40,000 to about $80,000 a year (based on a family of four). "It increased in the last year, probably because both adults and kids are losing job-based coverage," says E. Richard Brown, director of the UCLA Center for Health Policy Research.

Some of those newly uninsured children qualify for SCHIP but their families are unaware of the program. In some cases, states with budget shortfalls have stopped enrolling children. And when a family loses employer coverage, their children must go through a waiting period of a year, extended in August by the Department of Health and Human Services from three months, before being eligible.

What's certain is that SCHIP-insured kids get their checkups. Children in the program are more likely to receive preventive healthcare, specialty care and dental care than uninsured children, and their parents report fewer financial burdens, unmet medical needs and less worry about their children, according to a report in the August 2007 journal Health Services Research. "It has provided access to kids who wouldn't have had coverage," says Brown. "It's cheap, and it'll help produce healthy and productive adults. I don't know what more we could ask for."

The total cost of insuring a child under SCHIP is about $85 a month. Families pay a portion, but no family, regardless of the number of children, pays more than $45 a month. The program insures children, not their parents, with rare state exceptions.

The political fight over its renewal for the next five years caught a lot of health policy experts by surprise, on both sides of the argument. "I think conservatives originally thought it was a good thing to expand coverage for children," says Robert B. Helms, resident scholar at the American Enterprise Institute, a business-oriented think tank. "Children are relatively cheap to insure. They're young and healthy."


Yet both sides are duking it out ideologically. "Most people didn't anticipate it would become this big political issue," says Len Finocchio, a spokesman for the California HealthCare Foundation, a philanthropy that funds healthcare research and programs in the state.

The ideological divide

On one side are mostly congressional Democrats and a number of Republican colleagues who want to insure additional children under SCHIP. (In California, both Gov. Arnold Schwarzenegger and a majority of the California Legislature want to expand the program.)

On the other side are some congressional Republicans, led by the Bush administration, who argue that it's not the government's responsibility to go beyond covering the poorest and most vulnerable children. "It's kind of fundamental," Helms says. "Conservatives see this as another way of expanding government health programs. Everyone agrees that this is a good program, but some people say that we've got to draw the line." It's a line that, if crossed under the most generous congressional proposals, could increase spending on the program by $47 billion, to a total of almost $72 billion, over five years.

"I think both parties are using this as an opportunity to put a stake in the ground," Finocchio says. "Democrats are saying that we have to at least be responsible to provide healthcare for our children. Republicans are saying we shouldn't be covering kids whose parents make a lot of money."

The main point of contention is deciding who makes too much money for their children to get help, and the argument boils down to how many multiples of the federal poverty guidelines should entitle children to health insurance -- two (200%), 2 1/2 (250%), or three (300%). Current federal guidelines say that children whose families earn up to twice the poverty level qualify, and the Bush administration wants to largely hold it to that. Congressional plans would allow states to raise that level to up to 300% and, in a compromise provision, discourage states from going beyond that level by reducing federal matching funds if they did.

Federal guidelines define poverty for an individual, in 2007, as an income of less than $10,210. Except for Alaska and Hawaii, which have slightly higher numbers, the figures are national and don't account for cost-of-living differences across the country. The income number rises with additional family members. A family of four, for example, is defined as poor if their income is below $20,650. Most of those children qualify for Medicaid, called MediCal in California, the health insurance program for the poor.

The intention behind SCHIP was to insure additional children, not just those at the very lowest poverty level. (Exceptions are the children of illegal immigrants. Children of legal immigrants qualify after living in the U.S. for five years.) Nineteen states cover children with higher family incomes and, in California, families can qualify for the SCHIP program if they earn 250% of poverty guidelines.

Funded at $25 billion over the last five years, the SCHIP program would be increased to $30 billion over the next five years under the Bush administration's 2008 proposed budget. Theoretically, income levels could go up to 250% of the poverty level, or $51,625 for a family of four. But there are stiff conditions. Before approving higher-income children, the administration proposes that states first be required to prove that they have enrolled at least 95% of children below the 200% level. No voluntary health program, whether Medicaid or the Medicare drug benefit for seniors, has ever reached a 95% enrollment rate, Brown says.

If Congress fails to act, or even if funding is held to present levels, or increased to administration-recommended levels, the California HealthCare Foundation estimates that up to 600,000 children in California could lose their health insurance beginning in 2008. Because of healthcare inflation, California and many other states would have to begin closing off new enrollments and disenrolling some insured children, according to the foundation's projections. "The funding wouldn't allow California to maintain its present caseload, and keep up with inflation," Finocchio says.

With Washington at a stalemate, the program, which expired in September, is being extended at current funding levels, month by month, with the latest program expiration deadline set at Dec. 14. Until politicians sort it out, a California family of five, under the SCHIP program called Healthy Families, can still earn up to $60,325.

The Wirkkalas make too much money.

But if the Democrats' plan passes, and the governor's and state's legislative proposals are enacted, benefits could extend to children in California households earning up to 300% of poverty levels, or $72,390 for a family of five.

The Wirkkalas would squeak in under the wire.