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March 2008

State Efforts to Expand Coverage to Children Face Federal Challenges

Recent efforts of several states to expand coverage to children—including Louisiana, Iowa, and New Jersey—highlight the ongoing issues raised by the Centers for Medicare and Medicaid Services (CMS) directive, dated August 17, 2007, that limits the expansion of the State Children’s Health Insurance Program (SCHIP). The directive includes the following provisions:

  1. States must show that they have enrolled at least 95 percent of all children eligible for Medicaid or SCHIP with incomes below 200 percent of the federal poverty level (FPL) before they can get a federal match for children from families with incomes above 250 percent FPL.
  2. States are not permitted to expand coverage to kids above 250 percent FPL if employer-based coverage has eroded more than two percent over the previous five years.
  3. If states meet those requirements, two additional restrictions apply for children with incomes above 250 percent FPL:
    1. For a child who has had employer-sponsored coverage in the past, there must be a 12-month period of being uninsured before becoming SCHIP eligible; and
    2. Cost-sharing must be comparable to available employer-sponsored coverage or it must be 5 percent of family income.

Ten states have enacted expansions that were not approved by CMS before the directive was issued. Of these, New York received a formal denial of its plan to expand from 250 percent to 400 percent FPL. Indiana has not moved forward with plans to move from 200 to 300 percent FPL. Louisiana and Oklahoma will only go up to 250 percent FPL rather than the planned 300 percent. Wisconsin went ahead with its planned expansion from 200 to 300 percent FPL and they are covering the kids from 250-300 percent FPL with state-only funds.

In addition, another 14 states already cover children above 250 percent FPL. These states have been told they need to come into compliance with the regulations by August 2008 or they may not be able to enroll new children above the directive’s income limit. Legislation has been introduced in Congress to repeal the August 17 CMS directive, but it has not successfully moved through either the House or the Senate.

For a more complete summary of the impact of the directive, click here.