Bush Administration Threatens to Cut Low-income Parents from SCHIP in Minnesota

More news on the Bush administration’s efforts to crack down on SCHIP is coming out of Minnesota. John Graham of the Pacific Research Institute just explained how the administration appears to have backed down on enforcing its rule restricting SCHIP expansion in states that do not demonstrate that they’ve enrolled 95 percent of eligible children. Instead, the administration is flexing its muscle in Minnesota. Last month the Centers for Medicare and Medicaid Services (CMS) denied Minnesota’s application to extend its Medicaid waiver that allows Minnesota to use SCHIP funds for adults. Minnesota had a month to appeal the ruling and just yesterday received a two-week extension.

Many people (especially readers of this blog) might be thinking it’s about time SCHIP stopped funding adults in Minnesota. After all, SCHIP was created to fund health benefits for children. Indeed, Minnesota has long been the whipping state on this issue because nearly all of its SCHIP funds go to adults.

But not so fast. Minnesota only funds adults because it already funded children prior to SCHIP. Because SCHIP was intended to reduce the number of uninsured children, it specifically disallowed extra funding to state programs that already insured children. This SCHIP provision is called the maintenance-of-effort requirement. The idea was that extra federal funds should only go to uninsured kids and so states already putting forth an effort should be forced to maintain that effort as a prerequisite to receive funding for further expansion.

The maintenance-of-effort requirement was patently unfair to taxpayers in Minnesota and those other states that already expanded health care programs for children. Minnesotans were already using their hard-earned tax dollars for their own program and then SCHIP came along and tried to dig more money out of our pockets to pay for children in other states.

CMS gave Minnesota an appropriate level of flexibility to cure this inequity. Without that flexibility, Minnesota would be forced to spend SCHIP dollars on children in families with incomes above 275 percent of federal poverty guidelines as opposed to funding parents in families below 200 percent of FPG. Which families do you suppose need the funding more?

Now CMS wants to take funding away from those parents.

Well, Minnesotans can be forgiven for wanting to keep Minnesota dollars in Minnesota, which is why the entire Minnesota congressional delegation, including stalwart conservatives like Michele Bachman and John Kline have asked HHS Secretary Leavitt and CMS to reconsider pulling its funding for Minnesota’s SCHIP program.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

Scroll to Top