Politics and policy collide: in August of 2007, the Bush Administration's Medicare and Medicaid overseers limited the flexibility of states to set income eligibility requirements for S-CHIP, the major federal/state health insurance program for children. Democrats claimed that the requirements were particularly punitive to certain states and would cut tens of thousands of children off the rolls, children for whom SCHIP was the most efficient source of insurance.

In some ways, the agency directive was an attempt to short-circuit the S-CHIP reauthorization debate because it forced states that wanted to increase coverage to children in families earning more than 250% of the poverty line to cover 95% of those living below 200% of the poverty line; beyond that, states had to record a decline in the coverage rate of employer-sponsored insurance.  Those goals were next to impossible to meet. That was the point.

States have always had flexibility in setting income levels; some, like California, disregarded childcare expenses in its calculation formula, for example.


The Bush Administration had one specific state in mind: New York, which wanted to expand coverage to children in families making less than 400% of the poverty line. Through the prism of politics, it looked like the administration was unfairly punishing blue states, but the reality was different: Edwin Park, a h, notes that 14 states cover children in families with incomes above 200%, including redder states like Oklahoma and Louisiana.


As a result, Democrats alleged, tens of thousands of children were denied access to S-CHIP. 


Today, in single-page memorandum to the Department of Health and Human Services, President Obama asked the Centers for Medicare and Medicaid to officially withdraw the August letter and notify states of their regained income level flexibility.


Republicans protest this as waste, with money being driven to families who don't need it. SCHIP, they contended then and believe now, should focus on the least fortunate.  On the other hand, one of the major purposes of SCHIP is cover those in gaps -- those for whom private insurance is increasingly less affordable but can't qualify for basic Medicaid health services because their income are too high.


Edwin Park, a health policy analyst at the left-leaning Center for Policy and Budget Priorities, said that recent research shows that efforts to promote coverage for those making above 250% of the poverty line - roughly $46,000 - also improves the program's capture of those who make less than that. More than 90% of those receiving SCHIP benefits, Park said, are in families which incomes of less than 250%.  Here's the Obama letter:  02-04-09 CHIP Presidential Memorandum.pdf