Should a family that qualifies to buy a $250,000 home be eligible for free health insurance?
That is essentially the question currently being debated in Washington, DC.
The State Children’s Health Insurance Program (SCHIP), is receiving a great deal of discussion now as Congress considers its reauthorization. This program, called Healthy Steps in North Dakota, has been a very important tool for providing health care for children through age 18 in low-income families, but the bill recently passed by the US House and Senate is a radical expansion of the existing program.
The new bill would permit coverage up to 300% of the federal poverty level (FPL). 300% would be $61,974/year for a family of four. An earlier version, supported by many in Congress, would have covered families to 400% of the poverty level which is calculated to be $82,629/year for a family of four. That is way above the average income for North Dakotans.
Someone with an annual income of the 300% of poverty level, using standard formulas, can qualify for a monthly payment of $1446, permitting them to purchase a home valued at approximately $175,000. A family earning 400% of poverty level can qualify for $1928/month payment which would permit them to purchase a home valued at approximately $245,000. Should families who can buy homes for $175,000-$250,000 be permitted to receive government-paid health insurance? That is a welfare program for middle income families. The higher the income limits, the more state tax dollars will be needed to provide coverage, since there is a 25% state match required to draw down federal funds.
H.R. 976 as recently passed by Congress would expand the SCHIP program by $35 billion over the next five years, to a $60 billion program. President Bush has supported a $5 billion expansion over 5 years which would be a 20% increase in funding above the baseline. The bill dramatically expands federal spending far beyond what is necessary to reauthorize SCHIP responsibly.
The bill would permit states to expand coverage to “children” up to age 25, as well as to family members and caregivers for children in families whose incomes qualify for coverage. This could cause people who currently have health insurance to drop it and opt into the government program. This would be a dramatic encroachment of government-run health care and is an obvious attempt to move closer to universal health care coverage, way beyond the original intent to provide health care for children.
North Dakota currently permits families up to 140% of the federal poverty to qualify for SCHIP coverage, and that will move to 150% as soon as Congress reauthorizes the program. North Dakota uses net income , rather than gross income, to qualify. In North Dakota, unlike many other states, expenses such as taxes, child care costs, and child support paid are subtracted from gross income before determining the qualifying income level, resulting in more families qualifying, especially those with high child care costs. A North Dakota family of four can have a net income of $28,920/year at 140% and receive SCHIP benefits and will be able to make $30,986/year at 150%.
The Health Steps program in North Dakota includes vision, dental, and prenatal coverage for children up through age 18, which is a significant advantage over many states’ programs. The idea has been to provide as much coverage as possible for those who need it the most
How will this federal increase in coverage be paid? A proposed cigarette tax increase of 83 cents per pack will be imposed and can escalate to $1/pack. Whether or not this is the right way to pay for the additional costs of the expanded program is another discussion. Many existing programs are having the legs cut out from under them in order to fund expansions of pet programs. One serious funding change takes money away from Medicare Advantage which benefits low income seniors by reducing out-of-pocket costs. The payment changes are so draconian that the likely effect will be to eliminate options for many beneficiaries, particularly in rural counties or small, urban communities where earlier sessions of Congress expressly intended to provide choices for beneficiaries. It is wrong to balance health care for middle income families on the backs of low-income seniors.
Enhancing SCHIP so that it can better serve North Dakota children is an appropriate goal, but the current bill has too many flaws. After a Presidential veto, all parties can get down to work to reauthorize a very important program at levels that we all can support.
Senator Judy Lee
Chair, North Dakota Senate Human Services Committee
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