[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
           COVERING THE UNINSURED THROUGH THE EYES OF A CHILD

=======================================================================



                                HEARINGS

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                       FEBRUARY 14, MARCH 1, 2007

                               __________

                            Serial No. 110-6


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov



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                    COMMITTEE ON ENERGY AND COMMERCE

    JOHN D. DINGELL, Michigan, 
             Chairman
HENRY A. WAXMAN, California
EDWARD J. MARKEY, Massachusetts
RICK BOUCHER, Virginia
EDOLPHUS TOWNS, New York
FRANK PALLONE, Jr., New Jersey
BART GORDON, Tennessee
BOBBY L. RUSH, Illinois
ANNA G. ESHOO, California
BART STUPAK, Michigan
ELIOT L. ENGEL, New York
ALBERT R. WYNN, Maryland
GENE GREEN, Texas
DIANA DeGETTE, Colorado
    Vice Chairman
LOIS CAPPS, California
MIKE DOYLE, Pennsylvania
JANE HARMAN, California
TOM ALLEN, Maine
JAN SCHAKOWSKY, Illinois
HILDA L. SOLIS, California
CHARLES A. GONZALEZ, Texas
JAY INSLEE, Washington
TAMMY BALDWIN, Wisconsin
MIKE ROSS, Arkansas
DARLENE HOOLEY, Oregon
ANTHONY D. WEINER, New York
JIM MATHESON, Utah
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana               JOE BARTON, Texas
                                         Ranking Member
                                     RALPH M. HALL, Texas
                                     J. DENNIS HASTERT, Illinois
                                     FRED UPTON, Michigan
                                     CLIFF STEARNS, Florida
                                     NATHAN DEAL, Georgia
                                     ED WHITFIELD, Kentucky
                                     BARBARA CUBIN, Wyoming
                                     JOHN SHIMKUS, Illinois
                                     HEATHER WILSON, New Mexico
                                     JOHN SHADEGG, Arizona
                                     CHARLES W. ``CHIP'' PICKERING, 
                                         Mississippi
                                     VITO FOSSELLA, New York
                                     STEVE BUYER, Indiana
                                     GEORGE RADANOVICH, California
                                     JOSEPH R. PITTS, Pennsylvania
                                     MARY BONO, California
                                     GREG WALDEN, Oregon
                                     LEE TERRY, Nebraska
                                     MIKE FERGUSON, New Jersey
                                     MIKE ROGERS, Michigan
                                     SUE MYRICK, North Carolina
                                     JOHN SULLIVAN, Oklahoma
                                     TIM MURPHY, Pennsylvania
                                     MICHAEL C. BURGESS, Texas
                                     MARSHA BLACKBURN, Tennessee

                           Professional Staff

 Dennis B. Fitzgibbons, Chief of 
               Staff
Gregg A. Rothschild, Chief Counsel
   Sharon E. Davis, Chief Clerk
   Bud Albright, Minority Staff 
             Director
_________________________________________________________________

                         Subcommittee on Health

 FRANK PALLONE, Jr., New Jersey, 
             Chairman
HENRY A. WAXMAN, California
EDOLPHUS TOWNS, New York
BART GORDON, Tennessee
ANNA G. ESHOO, California
GENE GREEN, Texas
DIANA DEGETTE, Colorado
LOIS CAPPS, California
TOM ALLEN, Maine
ELIOT L. ENGEL, New York
JAN SCHAKOWSKY, Illinois
HILDA L. SOLIS, California
MIKE ROSS, Arkansas
DARLENE HOOLEY, Oregon
ANTHONY D. WEINER, New York
JIM MATHESON, Utah                   NATHAN DEAL, Georgia,
                                         Ranking Member
                                     RALPH M. HALL, Texas
                                     BARBARA CUBIN, Wyoming
                                     HEATHER WILSON, New Mexico
                                     JOHN B. SHADEGG, Arizona
                                     STEVE BUYER, Indiana
                                     JOSEPH R. PITTS, Pennsylvania
                                     MIKE FERGUSON, New Jersey
                                     MIKE ROGERS, Michigan
                                     SUE MYRICK, North Carolina
                                     JOHN SULLIVAN, Oklahoma
                                     TIM MURPHY, Pennsylvania
                                     MICHAEL C. BURGESS, Texas
                                     MARSHA BLACKBURN, Tennessee

                                  (ii)
                             C O N T E N T S

                              ----------                              

                           FEBRUARY 14, 2007

                                                                   Page
Allen, Hon. Tom, a Representative in Congress from the State of 
  Maine, opening statement.......................................    15
Baldwin, Hon. Tammy, a Representative in Congress from the State 
  of Wisconsin, opening statement................................    16
Barton, Hon. Joe, a Representative in Congress from the State of 
  Texas, opening statement.......................................     6
Burgess, Hon. Michael C., a Representative in Congress from the 
  State of Texas, opening statement..............................    10
Capps, Hon. Lois, a Representative in Congress from the State of 
  California, opening statement..................................    13
Deal, Hon. Nathan, a Representative in Congress from the State of 
  Georgia, opening statement.....................................     3
DeGette, Hon. Diana, a Representative in Congress from the State 
  of Colorado, opening statement.................................     9
Dingell, Hon. John D., a Representative in Congress from the 
  State of Michigan, opening statement...........................     7
Engel, Hon. Eliot L., a Representative in Congress from the State 
  of New York, opening statement.................................    22
Eshoo, Hon. Anna G., a Representative in Congress from the State 
  of California, opening statement...............................     5
Ferguson, Hon. Mike, a Representative in Congress from the State 
  of New Jersey..................................................     8
Green, Hon. Gene, a Representative in Congress from the State of 
  Texas, opening statement.......................................    11
Hooley, Hon. Darlene, a Representative in Congress from the State 
  of Oregon, opening statement...................................    20
Matheson, Hon. Jim, a Representative in Congress from the State 
  of Utah, opening statement.....................................    17
Murphy, Hon. Tim, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................    17
Pallone, Hon. Frank, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     2
Schakowsky, Hon. Jan, a Representative in Congress from the State 
  of Illinois, opening statement.................................    19
Solis, Hon. Hilda L., a Representative in Congress from the State 
  of California, opening statement...............................    18
Waxman, Hon. Henry A., a Representative in Congress from the 
  State of California, opening statement.........................    21
Wilson, Hon. Heather, a Representative in Congress from the State 
  of New Mexico, opening statement...............................    14

                               Witnesses

Berkelhamer, Jay E., M.D., president, American Academy of 
  Pediatrics.....................................................    29
    Prepared statement...........................................    65
Lambrew, Jeanne M., Ph.D., associate professor, Department of 
  Health Policy, The George Washington University School of 
  Public Health and Health Services..............................    25
    Prepared statement...........................................    69
Mingledorff, Kathy Paz, mission volunteer, March of Dimes, 
  Springfield, VA................................................    32
    Prepared statement...........................................    59
Molina, Susan, community leader, PICO Colorado, Denver, CO.......    24
    Prepared statement...........................................    55
Owcharenko, Nina, senior policy analyst, Center for Health Policy 
  Studies, the Heritage Foundation...............................    30
    Prepared statement...........................................    82
Peterson, Chris L., specialist, social legislation, Congressional 
  Research Service...............................................    27
    Prepared statement...........................................    91

                           Submitted Material

America's Health Insurance Plans, statement......................    62

                             MARCH 1, 2007

Pallone, Hon. Frank Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................   103

                               Witnesses

Allen, Kathryn G., Director, Health Care, U.S. Government 
  Accountability Office..........................................   112
    Prepared statement...........................................   132
McDavid, Lolita M., M.D., medical director, Child Advocacy and 
  Protection, Cleveland, OH......................................   104
    Prepared statement...........................................   180
Sloyer, Phyllis, R.N., Ph.D, division director, Children's 
  Medical Services, Department of Health, Tallahassee, FL........   109
    Prepared statement...........................................   175
Vitale, Hon. Joseph F., New Jersey State Senator. Woodbridge, NJ.   106
    Prepared statement...........................................   183
Weil, Alan, executive director, National Academy for State Health 
  Policy, Washington, DC.........................................   108
    Prepared statement...........................................   184

                           Submitted Material

Trautwein, Janet Stokes, National Association of Health 
  Underwriters, statement........................................   188


           COVERING THE UNINSURED THROUGH THE EYES OF A CHILD

                              ----------                              


                      WEDNESDAY, FEBRUARY 14, 2007

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:08 p.m., in 
room 2322 of the Rayburn House Office Building, Hon. Frank 
Pallone, Jr. (chairman of the subcommittee) presiding.
    Members present: Representatives Waxman, Deal, Eshoo, 
Green, DeGette, Capps, Allen, Baldwin, Engel, Schakowsky, 
Solis, Hooley, Matheson, Dingell [ex officio], Ferguson, 
Myrick, Sullivan, Murphy, Burgess, Barton [ex officio], and 
Wilson.
    Staff present: Jonathan Cordone, Bridgett Taylor, Amy Hall, 
Purvee Kempf, Christie Houlihan, Elizabeth Ertel, Ryan Long, 
Katherine Morton, Brenda Clark, and Chad Grant.

    Mr. Pallone. I will call this meeting to order. And I 
wanted to mention that today we have a hearing on covering the 
uninsured through the eyes of a child. But before we begin, I 
just did want to mention there was originally a second hearing 
tomorrow focusing more specifically on SCHIP and the 
reauthorization. That was postponed due to the death of our 
colleague, Charlie Norwood. That hearing most likely will take 
place on Thursday, March 1, 2 weeks from today. But before we 
proceed if I could, I just wanted to ask if we could have a 
moment of silence for our colleague. Needless to say, he was a 
great American and someone who cared deeply and contributed so 
much to the healthcare debate and if we could just now have a 
minute silence.
    [Moment of silence observed.]
    Thank you very much. I understand that the funeral is 
tomorrow, Mr. Deal?
    Mr. Deal. Yes, Mr. Chairman. If I could maybe just briefly 
give the outline of the details. My understanding is that the 
Sergeant at Arms will be coordinating an airplane for those who 
wish to attend the funeral that will leave the horseshoe at 
about 10:30 tomorrow morning. The funeral is at 2:00. The plane 
will fly directly into Augusta which is where the funeral will 
be held and then we will return tomorrow evening about 6:30 is 
the anticipated return time.
    Thank you.
    Mr. Pallone. Thank you very much.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. I now recognize myself for an opening 
statement. Today, the subcommittee will examine the problem of 
the uninsured and how it specifically impacts children. We will 
also explore the program Congress established nearly 10 years 
ago to help alleviate this problem, the State Children's Health 
Insurance Program or SCHIP which must be reauthorized this 
year.
    As a father of three young children, I realize how 
important it is for children to have access to quality 
healthcare. My wife and I are fortunate that we have the means 
to provide health insurance coverage to our three children 
through the Federal Employees Health Benefits Plan, the same 
program that many of my colleagues use to provide health 
insurance to their families. But not every family is quite as 
lucky. For too many American families they are simply 
struggling day to day to afford the cost of health insurance. 
And as healthcare costs continue to rise, employer sponsored 
insurance is eroding. Employers are shifting more cost to 
workers or they are dropping coverage all together. Nor has the 
individual market been a viable source of insurance coverage 
for most Americans and the result has been a steady increase in 
the number of uninsured Americans since 2001.
    Today, there are nearly 47 million Americans who do not 
have health insurance. Millions more are underinsured. And what 
is even more appalling is that approximately 9 million of those 
who are uninsured are children. Now I am going to repeat that 
again because I think it is worth emphasizing: 9 million 
children in this country do not have health insurance. I think 
that is a national disgrace in a country as wealthy and 
compassionate as ours. No child should be left behind without 
health insurance, let alone 9 million children.
    Now this disturbing statistic would undoubtedly be worse if 
were not for the State Children's Health Insurance Program or 
SCHIP. Since this was established by Congress 10 years ago, 
SCHIP has helped reduce the number of uninsured children in our 
Nation. Thanks to SCHIP, the percentage of low income children 
in the U.S. without health insurance has fallen by one-fourth 
since it was created in 1997. And more than 6 million low 
income children, most of who would otherwise be uninsured are 
enrolled in SCHIP.
    While the program has largely been a success, it is now 
being threatened. Last year for the first time since 1998, the 
number of uninsured children in the country actually increased. 
And I think we have to stop this alarming trend. Part of our 
effort must include strengthening SCHIP so it can continue to 
serve those in need. The most immediate and glaring problem is 
the lack of funding for the program. Simply stated more money 
is needed in order to ensure the viability of SCHIP. Various 
healthcare experts have estimated that we need additional 
funding over the next 5 years simply to help maintain the 
program for those who are already enrolled. And if we are going 
to find the funds, I should say find the approximately 6 
million children who are eligible for SCHIP or Medicaid but who 
are not enrolled. We would need at least a total of $50 billion 
over the next 5 years. Now some people may say that this figure 
is unreasonable or unrealistic and will be difficult to fund 
given the budget constraints. But I say how can we afford not 
to spend this money on this country's most vital asset, our 
children? It is simply a sound investment in our Nation's 
future. Republicans had no problem spending $534 billion on the 
Medicare prescription drug benefit. And aren't our children 
worth even a fraction of what it costs us just to get seniors 
prescription drugs?
    I have to say and I have already said when we had our 
hearing with Secretary Leavitt that I strongly disagree with 
President Bush who has come up with his own plan for SCHIP 
reauthorization. In his recent budget, the President proposed a 
meager $4.8 billion for SCHIP over the next 5 years and would 
limit eligibility to 200 percent of the Federal poverty level. 
His plan shortchanges America's children and will do nothing to 
solve the problems we current face with SCHIP. In fact, it will 
make matters worse. I have little doubt that if enacted, the 
President's proposal would result in fewer children with health 
insurance coverage than there are today. What is worse is that 
the administration knows this. They have to know it. Common 
sense tells us that restricted funding and limited eligibility 
is going to result in fewer insured children. Yet the 
administration and Republicans in Congress try to shift the 
debate by arguing about returning to the original objective of 
SCHIP by leaving out the parents that are covered today.
    The time has come to cut through all the smoke and mirrors. 
The truth of the matter is that a mere 10 percent of those 
covered under SCHIP are adults including pregnant women. And 
once you start to talk about reducing eligibility levels, 
cutting people from the roles and under-funding the program, 
then that is when you are moving away from SCHIP's original 
purpose. We have a unique opportunity before us this year. 
Finally we have the chance to really do something about the 
uninsured. It is no longer good enough to simply say that we 
cannot do t his because it costs us too much money. We as a 
Nation must choices about how we allocate our resources and I 
would submit that there are fewer needs more important than 
those of our children and we should be willing to spend the 
money necessary to ensure every child has access to meaningful 
healthcare. Ten years ago, we were able to come together in a 
bipartisan spirit and work together to establish SCHIP. Ten 
years later let us work together again to strengthen it. I am 
committed to that effort and I hope that my colleagues on both 
sides of the aisle will join with me. And I want to thank again 
our witnesses for attending today. And with that, I would now 
recognize the ranking member of the subcommittee, Mr. Deal for 
an opening statement.

  OPENING STATEMENT OF HON. NATHAN DEAL, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF GEORGIA

    Mr. Deal. I want to thank the chairman for calling this 
hearing today and to thank our panel of expert witnesses for 
attendance at the hearing. We look forward to your testimony 
and I am sure that it will enlighten us as we approach this 
subject.
    I think it is certainly appropriate the committee take this 
opportunity to examine the characteristics of uninsured 
children in our country. This is something we need to 
understand before we attempt to reauthorize SCHIP. As we all 
know, the health of a child without coverage is put at risk by 
having no health insurance coverage. And we also know that lack 
of health coverage impacts the broader society by increasing 
the cost of healthcare and the cost of insurance to other 
people.
    One of the biggest barriers preventing the uninsured from 
receiving coverage is the cost of insurance in this country 
today. I am certain that these prices continue to escalate more 
and more and more and more families face the difficult decision 
or the choice of whether to buy insurance or not. I would hope 
that on another day the committee might take an opportunity to 
evaluate the mechanisms that would lower the cost of coverage 
not only for children but for adults as well.
    States such as mine have taken some steps to try to make 
health insurance more affordable for everyone. They have 
removed and repealed some of the mandates that they had built 
up over the years. And one of the impediments to people buying 
health insurance we are told is that State mandates for what 
the coverage must look like has driven the price and the cost 
up. I have seen however firsthand in my State the success of 
the SCHIP which we call Peach Care. You would think we would in 
Georgia in covering low income children. For instance, almost 
70 percent of the children covered by the program in my State 
are between the 100 and 150 percent of poverty. Ninety-five 
percent of them are less than 200 percent of poverty, although 
our eligibility is currently at 235 percent of poverty.
    Nevertheless, the variety of different SCHIP Programs 
across the country have made it apparent to me that in some 
States the program has lost its focus; that is to cover low 
income children. I am also very concerned about Federal dollars 
intended for children being spent on childless adults. 
Specifically, I look to the four States where adult enrollment 
exceeds child enrollment under SCHIP. While I believe continued 
flexibility for States is important as we designed the program 
to fit their needs. I think this flexibility should have some 
limits so that the primary focus remains on low income, 
uninsured children. Current income eligibility requirements 
also must be addressed. Coming from a State where the median 
household income is around $42,000, some of the income levels 
covered by SCHIP Programs in other States would to us seem 
excessive.
    I believe the funding allocation formula also deserves 
attention through the course of this hearing and I know that 
Chairman Pallone and I both come from shortfall States where 
our block grant money has not been adequate to see us through 
this current fiscal year and we are in a shortfall as is the 
State of New Jersey. One of the complaints, a legitimate 
complaint that my State and others have voiced is that the 
funding formula allocation is not appropriate. For example, 
once you enroll a child in SCHIP, you therefore lose the 
ability to count that child in your uninsured population 
calculations. That seems to me to be contradictory in the way 
the formula currently works. I am concerned that it does focus 
too much on giving money to States with higher uninsured 
populations and penalize those States which have done a good 
job and they are successful enrolling their SCHIP population.
    Ultimately though, I fear that SCHIP that if it is expanded 
it could have the possibility of crowding out individuals in 
the private insurance market. For instance, a family with 
private coverage may drop that coverage and put their children 
on the Government program. In doing this, the parents may 
decide to continue without any coverage. So rather than 
decreasing the uninsured population, we would simply shift that 
into a Government program and might leave the adults in the 
family who previously had coverage without any.
    I am sure the committee will closely examine each of these 
and other issues as we consider the reauthorization of SCHIP 
and I think the chairman for the time.
    Mr. Pallone. Thank you. Thank you, Mr. Deal.
    I now recognize the gentlewoman from California, Ms. Eshoo 
for an opening statement.

 OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Eshoo. Thank you, Mr. Chairman and welcome to the 
witnesses that are here today.
    I think it is really fitting that in your first hearing as 
chairman of this subcommittee that you speak on the issue of 
insuring children. I think it is a fitting tribute to you and 
what you have cared about for so many years.
    The fact is that there are nearly 9 million children 
without guaranteed healthcare in our country. And I do not 
think that statistic is synonymous with the word America, so we 
have work to do. In the short-term, we are going to have to 
obviously reauthorize SCHIP because it does provide coverage 
for approximately 5.5 million children in our country today. We 
also have to make sure that there is appropriate funding that 
goes along with the policy so that we cover all children, all 
eligible children under the law.
    I think we also have to look at how we can better enroll 
those who are eligible. There are children in my congressional 
district and I think in every member's congressional district 
that are eligible but for one reason or another have not 
stepped up to be enrolled and I hope that our witnesses will 
speak to that. I think it is encouraging that there is so many 
groups and entities that are looking to tackle the program of 
the uninsured. In California, Governor Schwarzenegger has put 
out his proposal to cover all the uninsured. That is not just 
children but adults. His Health and Human Services director, 
Kim Belshey, met with some members of the California Democratic 
delegation today. So we welcome all comers to this debate. In 
the county that I live in, the county is working to put 
together a program for insuring all of its residents as well so 
this is good news.
    But we have a responsibility when it comes to SCHIP. There 
are many obstacles. We are not creating a new program. I think 
the reauthorization of SCHIP gives us the opportunity to cast 
some very important light on it and how we can build on this 
very important block that is part of the healthcare system, 
most importantly for our kids.
    So thank you for having the hearing. Again, I think it is 
fitting, Mr. Chairman, that you are starting with children and 
I look forward to hearing the testimony and then being able to 
ask some questions. And we will be able to submit questions to 
our witnesses if we cannot stay for the entire hearing, Mr. 
Chairman?
    Mr. Pallone. Absolutely.
    Ms. Eshoo. All right, thank you very much.
    I yield back.
    Mr. Pallone. And thank you. Thank you for those comments, I 
appreciate it.
    I now recognize the ranking member of the full committee, 
Mr. Barton of Texas.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. Thank you, Chairman Pallone.
    I have a nine page statement. I am just going to submit 
that for the record to save us all the grief of listening to 
that.
    I do want to say a few things. I think it is very 
appropriate that you have held this hearing on the 
reauthorization of SCHIP. This is one of our newer programs. It 
was created, I believe in 1997 or 1998. And I think people on 
both sides of the aisle obviously want to reauthorize it. There 
will be some differences of opinions about what we do as we do 
that reauthorization. I would hope that we can have a consensus 
that we should maintain its status a block grant program that 
is a State-Federal partnership. I do hope that we can refocus 
that it is a children's health insurance program and really was 
not intended to be for adults. I think it is going to be 
obvious that we are going to have to take a look at the formula 
and how the moneys are allocated between the various States. 
And we may want to set some criteria above what percent of the 
Federal poverty level do we expect the States to pick up the 
funds as opposed to the Federal dollars going above a certain 
level.
    There are broader health issues that impinge on this as we 
look at our children's programs. And some of the areas that 
some of our friends on the Democrat side may want to bring into 
the SCHIP, I think will oppose it within SCHIP but in the 
broader context we will not oppose at all. I support additional 
funding for community health centers. I support State high risk 
insurance pools. I think the President's idea in terms of using 
some Medicaid funds for health insurance and giving a tax 
credit to the individual for health insurance as opposed to 
giving that tax credit to the business is a good idea. And I 
think small business health insurance pools are a good idea. I 
hope we can look at Medicaid reform and in the context of that 
create some sort of a permanent long-term healthcare program 
for our adults and senior citizens. It would take a lot of 
pressure off of Medicaid.
    So this subcommittee is going to have many, many issues. I 
have not even enumerated half the ones that need to be 
discussed but for today we look forward to listening to our 
witnesses on SCHIP and we want to thank you. I have not 
received any complaints about the lack of minority witnesses so 
you have obviously worked well with the minority staff and Mr. 
Deal and I commend you for that.
    On a personal note, I think everybody knows this but 
Congressman Norwood's funeral is tomorrow afternoon at 2 
o'clock in Georgia. There is a congressional delegation if 
anyone wants to go, they need to alert the Speaker's office and 
I think we are leaving from the steps of the Capitol at 10:30 
tomorrow morning. Charlie Norwood was a member of this 
committee. He was a member of this subcommittee. I have a 
letter on my desk dated February 8 from him asking about some 
issues and his positions. As he was going home to Georgia, he 
dictated a letter and said that he wanted some things done and 
it is dated February 8 which is the day he left to go home so 
we are going to miss him and I yield back.
    Mr. Pallone. Thank you.
    Earlier, we had a moment of silence for Congressman Norwood 
and we expressed our feelings about him but I do appreciate 
your mentioning that letter and all that he has done for the 
issue of healthcare and for the Congress in general. Thank you.
    I wanted now we will ask the chairman of the full 
committee, Mr. Dingell for an opening statement. Thank you.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    The Chairman. Mr. Chairman, thank you and congratulations 
on your first hearing as chairman of this subcommittee and you 
have chosen an admirable subject on which to bring to bear your 
very fine and able talents.
    First of all, this hearing is about a critical and 
straightforward subject, one in which there is a great national 
need, healthcare for kids. It has been 8 years since this 
matter was addressed in the committee and it is time that we 
should take a careful look at it.
    The fact is we know how to provide healthcare for children 
in a cost effective way. Medicaid and SCHIP or the State 
Children's Health Insurance Program have been remarkably 
successfully programs in this regard. Today more than one in 
every four children receives healthcare through these programs. 
This year, the State Children's Health Insurance Program will 
mark a decade since its enactment. Its success story is that 6 
million children are no longer without health insurance but 
more needs to be done. Today, seven out of 10 uninsured 
children eligible for Medicaid or SCHIP are not enrolled. We 
need to give the States the tools and the financial incentives 
to reach these children. In so doing, we can make significant 
headway towards ensuring healthcare for children in low and 
moderate income families.
    Now is the time to reauthorize the program and to build on 
the success which we have seen so far. Many may question 
whether we can afford to do so, however, the real question is 
can our country afford not to do it? The President has provided 
us with a roadmap leading us regrettably in exactly the wrong 
direction. His fiscal year 2008 budget proposal only preserves 
one-fifth of the half million children who are expected to lose 
coverage over the next 5 years. Coverage for pregnant women, 
parents, and other adults is at risk under his budget as well. 
The evidence is clear. Covering parents helps increase the 
coverage of children. We know that providing healthcare for 
pregnant women improves birth outcomes and the health and the 
wellbeing of the child. Providing healthcare now will provide 
greater benefits down the road and prevent greater costs at the 
same time.
    I look forward to the testimony of the witnesses. They will 
not only report on what SCHIP has done well but also what can 
be done better and how we can improve the program. This is 
important as we focus on ensuring the youngest amongst us will 
receive the healthcare they need.
    I would like to just say a word at this point in the time 
remaining to me. Charlie Norwood was a very valuable member of 
this committee. And like his colleagues all across the 
committee on both sides of the aisle, I was very fond of him. I 
greatly regret his loss and grieve that we will not have him 
with us to work with us on important health matters. He was a 
wise and a good and a decent man and we will pray to God for 
his soul and for the comfort of his family.
    And I thank you, Mr. Chairman. You will note I have 
concluded in 2 minutes and 5 seconds.
    Mr. Pallone. The gentleman from New Jersey, Mr. Ferguson.

 OPENING STATEMENT OF HON. MIKE FERGUSON, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Ferguson. Thank you, Mr. Chairman.
    Congratulations on your first hearing as chairman of the 
subcommittee and thank you also for recognizing the passing of 
Charlie Norwood who was a dear friend to many of us and a 
committed public servant and we certainly offer our prayers to 
his family and friends today.
    Thank you also for holding this hearing. I appreciate the 
opportunity to speak today on an issue that I think many of us 
can agree on. Certainly all of us can agree that taking care of 
our vulnerable children in our home States is a huge priority. 
My home State of New Jersey and one that I share with our 
chairman has had a SCHIP Program up and running since 1998. And 
the program currently provides health insurance to some 200,000 
individuals. I support New Jersey's program and believe that 
our work in this committee is vital to ensure that SCHIP 
services are there for the people who rely upon them.
    SCHIP is nearing the end of its authorization. There are 
many issues we will face as we work to reauthorize the program. 
The hallmark of the program, the flexibility offered to States 
to provide a targeted approach to covering children must be 
maintained, I believe. Proper funding is also vital for State 
programs to execute their mission. New Jersey has faced a 
shortfall in funding each of the last 3 years and I want to 
work hard with others on this committee to ensure that my home 
State receives the money that it needs to provide this 
coverage. But most importantly, it remains clear SCHIP is a 
good program and it must be funded adequately.
    I look forward to hearing from our panelists today. I look 
forward to hearing further panelists in future hearings. Their 
commentary on what SCHIP is doing right and what can be done to 
improve the program is vital as we begin this conversation.
    Thank you again, Mr. Chairman, I yield back.
    Mr. Pallone. Thank you.
    Now we will have an opening statement from the gentlewoman 
from Colorado, Ms. DeGette.

 OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Ms. DeGette. Thank you so much, Mr. Chairman and I add my 
congratulations on your chairmanship.
    I also want to thank my constituent, Susan Molina for 
coming out from my hometown of Denver. I apologize we have snow 
here as well as in Denver. We had hoped to give you some dry 
weather. But she is a compelling witness and she is the 
chairman of the board of the Metro Organization for People, 
MOP, in Denver which is a fantastic faith based community 
organization. Any time they tell me to show up wherever it is I 
always do because they do wonderful work.
    Mr. Chairman, I think there are three primary issues that 
need to be addressed in the SCHIP Program; first, ensuring the 
stability of the program to continue coverage for those already 
receiving benefits; second, improving outreach to those who are 
already eligible for coverage but who are not yet enrolled; and 
third, expanding coverage to those who despite being ineligible 
for the current program still find access to health insurance 
difficult if not impossible to attain.
    Since SCHIP's creation, millions of children have benefited 
from the program and many children in some States--adults too, 
through waivers from the Bush administration, have access to 
primary care that catches illnesses early and keeps them out of 
the emergency room. The access to care has a profound positive 
impact on their health and I think in the end it will save 
money. But despite the best efforts of States, many children 
who are eligible for SCHIP are not enrolled. There are several 
things we can do to fix that. First, I think we need to allow 
verification for eligibility for one income based safety net 
program to count for SCHIP as well. That will simplify the 
process for recipients and also it will be cut down on a 
significant administrative burden to States and make it easier 
for children to enroll in SCHIP. We also need to work with 
States to limit roadblocks to SCHIP coverage.
    Something else that I think we need to look at is how we 
figure out a way to score SCHIP so that we understand the 
significant savings that preventative care for children can 
have on our health system. In my district for example, our 
public safety net system Denver Health provides millions of 
dollars of care to the uninsured that is covered partially with 
disproportionate share hospital dish funds through Medicaid. If 
we could give more kids coverage through SCHIP, then we could 
take the dish money and focus it on providing care for other 
serious patients in the hospitals.
    So Mr. Chairman, I think that reauthorization of this 
program will be one of the two or three most important issues 
that the Energy and Commerce Committee attacks this year. I 
look forward to starting the process today and I hope that we 
do reauthorize the program, that we do authorize adequate 
funding for the program, and that we do it without delay so 
that everybody can have the assurance that this program will be 
there for them and will work.
    Thank you.
    Mr. Pallone. Thank you.
    Mr. Burgess of Texas.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. Thank you, Mr. Chairman.
    And like so many of my colleagues up here, I too will miss 
Charlie Norwood. He was a friend long before I came to this 
Congress. He was a mentor on healthcare policy when I was but a 
simple country doctor and I too will miss him.
    Mr. Chairman, I too, will congratulate you for holding this 
hearing today. The part of me that studies irony cannot help 
but notice that our hearing on global climate change was closed 
on account of ice but children are clearly more important and 
you pressed ahead and had this hearing so I am grateful that 
you have done that.
    And I am encouraged to hear the gentle lady from Colorado 
talk about what I would call dynamic scoring from a CBO. I 
agree. I think that is something that we do need to consider. 
We all know that a dollar spent early in the course of a 
disease is much more valuable to the dollar spent at the end 
stage of disease and certainly a dollar spent at the early part 
of life is going to deliver more value over time.
    I agree with our ranking member, Mr. Barton that there is 
broad support for the reauthorization for this program. And the 
issue of providing health insurance for uninsured children is 
indeed critical, particularly in my home State of Texas. And I 
am eager to hear from the witnesses about ways that we can 
ensure that SCHIP continues to grow and improve. Overall, I 
believe the program has been a resounding success but as 
Chairman Dingell alluded to there is always more that can be 
done. So I get 7 minutes, great.
    SCHIP was created in 1997 to provide health insurance for 
children from low income families who made too much money to 
qualify for Medicaid. When SCHIP was created, each State was 
given three options for program funds: No. 1, enroll more 
children in Medicaid, No. 2 create a separate SCHIP Program, or 
No. 3, devise a hybrid program. Both Medicaid and SCHIP are 
Federal State matching programs but rather than being an 
automatically funded entitlement program, SCHIP is funded 
through a block grant with a fixed annual allotment. This means 
that SCHIP funding does not automatically keep up with rising 
healthcare costs but it also means that we are not giving 
anyone a blank check to spend taxpayer dollars and I appreciate 
that concept as well. No one has ever solved a problem for the 
Federal Government by simply throwing money at it. We have seen 
multiple examples of that over the past several years and I 
certainly hope that we will not be doing that here. We may 
choose to expand SCHIP but we should also be looking for ways 
to utilize our existing resources more wisely.
    I am particularly interested in how private health 
insurance may interact with SCHIP. I noticed that Mr. 
Peterson's testimony indicates that ``private health insurance 
among children has declined, while public coverage has 
increased.'' And that is something that does concern me, Mr. 
Chairman that we may tend to crowd out or drive out the private 
sector and I believe the private sector does still have 
something to offer in the coverage of children with insurance. 
Also, Mrs. Mingledorff with the March of Dimes recommends that 
SCHIP be allowed to provide supplemental funds for private 
insurance and this concept of premium support sounds like an 
excellent way to help families help themselves and I am sure we 
all agree that having health insurance is a good thing. And I 
agree with ranking member Deal that if there were more ways to 
allow insurance companies to provide an affordable package to 
more people that that indeed would help with coverage.
    With the capped entitlement nature of SCHIP, States must 
prioritize coverage of the neediest children that Medicaid does 
not cover. Unfortunately, some States have extended coverage to 
adults under SCHIP taking limited dollars away from the needs 
of children to meet----
    Mr. Pallone. Mr. Burgess, I do not know what is going on 
with the clock.
    Mr. Burgess. You are in charge, sir.
    Mr. Pallone. But I think you have gone over 3 minutes so if 
you could wrap it up, I would appreciate it.
    Mr. Burgess. I will be happy to wrap it up. I would only 
say the inequitable development needs to be stopped even one 
dollar spent on an adult is a dollar not spent on a child. And 
in my initial remarks, we know that those dollars can go 
farther. To this end, I have introduced H.R. 1013, the SCHIP 
Equity Act. This bill would ensure that every SCHIP dollar is 
spent on needy children and pregnant women. It is only a 
starting point for these discussions but I believe a necessary 
one.
    Thank you for your indulgence, Mr. Chairman, I will yield 
back.
    Mr. Pallone. All right, thank you.
    I want to apologize. We are trying to work this clock here 
and hopefully we will do a better job.
    So our next member for an opening statement is Mr. Green of 
Texas. And we are going to start the clock at 3 minutes so 
hopefully it works.

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green. Thank you, Mr. Chairman.
    Before I start, I want to say all of us regret the loss of 
our friend who served on our Health Subcommittee for many 
years, Charlie Norwood. And of course, our ranking member, 
Nathan Deal's best friend in Georgia and I had the opportunity 
to get to know Charlie not only on the Education Committee but 
here on the Energy and Commerce Committee for a number of 
years. We may have disagreed on some things philosophically but 
we worked together on so many other issues dealing with 
healthcare.
    Mr. Chairman, it is fitting our Health Subcommittee begin 
this Congress with analysis of children's healthcare issue. 
This is one of the first items on our agenda and the 
reauthorization of the CHIP Program is set to expire. The SCHIP 
is critical of our health safety network providing 
comprehensive health insurance for more than 4 million low 
income children who do not qualify for Medicaid. As a part of 
the reauthorization process, it is clear that we need to 
provide more funding for SCHIP. In fact, the estimates show 
that States need between $12 and $15 billion in additional 
funding over the next 5 years to make sure that children 
currently enrolled receiving coverage from SCHIP will remain on 
those rolls. That figure does not include or count the children 
who are currently eligible for the program but not enrolled. 
And unfortunately, the administration's budget proposes a 
virtual freeze in SCHIP funding which the administration 
estimates will need to enrollment decline of 500,000 children.
     Mr. Chairman, I have a full statement I would like to put 
into the record. But during the debate, we need to take a hard 
look at the actions of States. And SCHIP is important in my own 
home State of Texas but I would be remiss if not noting that 
SCHIP enrollment fell by more than 500,000 in 2003 to 300,000 
in 2006, while uninsured rates continue to creep up. Too many 
children are falling through the cracks with two-thirds of 
Texas children currently in families earning less than 200 
percent of the Federal poverty level. There is no excuse for 
this dramatic decline in enrollment. We should be adding not 
cutting kids in the SCHIP roles. At the same time, Texas and 
other State cut CHIP from SCHIP. We unfortunately let SCHIP 
funds sit in the bank until they are redistributed to other 
States and reverted back to the Treasury. Texas alone is 
allowed more than $850 billion in SCHIP funds be diverted to 
other States over the last 7 years. I am all for State 
flexibility but when States use that flexibility to erect 
burdensome barriers to enrollment at the same time we leave 
Federal dollars on the table, something has to be done. Since 
this hearing is a broad overview of the children's health 
insurance, we should recognize the access problems faced by 
newborn children. Thanks to CMS's interpretation of the deficit 
reduction, citizenship documentation requirements. We all know 
the intent was to ensure that U.S. citizens only receive 
Medicaid. But the 14th amendment to the Constitution is a right 
of citizenship, it is a right for children who are born and 
there is no question and I will repeat, there is no question a 
child who is born in a hospital in the United States is a 
citizen of our country. To force families of newborns to 
produce a birth certificate before they can receive Medicaid 
coverage only serves to deny those babies the care they need in 
the early stages of their life. If their births are paid for by 
Medicaid in a U.S. hospital the Medicaid statute guarantees 
them automatic Medicaid coverage for the first year of life and 
Congress should not stand idly by and let CMS administratively 
dismantle the statutory benefit.
    And again, my son had a child, our second grandchild in 
south Texas in Brownsville, right after Thanksgiving and I can 
tell you it took 2 weeks to get his certified birth certificate 
for our grandson. And at the same time in that hospital there 
were children who were born who maybe their parents were not 
citizens but those children are citizens because they were born 
in Brownsville, TX in the United States and I hope our 
committee will take a hard look at CMS's interpretation of that 
and I yield back my time.
    Mr. Pallone. Thank you.
    And next is Mrs. Capps of California for an opening 
statement.

   OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mrs. Capps. Thank you.
    I also will dearly miss our colleague, Charlie Norwood. He 
and I introduced legislation on children's general health not 
unrelated to the topic before us so this hearing in my mind is 
in memory of our colleague.
    I am so proud that this is our first hearing of this 
subcommittee in this Congress. I know it is the first step in 
what is sure to be a challenging process to figure out how we 
can ensure access to healthcare for every child in this country 
which after all should be our goal and it is the goal as I know 
of the legendary Marian Wright Edelman, founder of the 
Children's Defense Fund. I was also encouraged that during the 
first days of this new Congress, Speaker Pelosi emphasized that 
the agenda of the 110th will have as its primary focus 
legislation which has a positive affect on children. Covering 
all children is not partisan but too often it is not on the 
forefront of political debate. After all children do not vote, 
it is a harder for them to have a voice in Congress, and that 
is why it is so important that we have this hearing today to 
set the tone for the work of this subcommittee and affirming 
our commitment to reauthorizing SCHIP and ensuring that it is 
fully funded.
    I am please to represent the county of Santa Barbara often 
noted for the soap opera of the same name and wealthy families 
therein portrayed but the reality is that this county has the 
highest percentage of uninsured children in California. 
California offers SCHIP health coverage to working families and 
their children through the Innovative Healthy Families Program. 
While Healthy Families has made great strides, the fact remains 
that 14 percent of all the children in California still are 
uninsured which is over a million, almost a 1.5 million 
children. One million of those children live in families with 
incomes below the 200 percent of poverty level. As a former 
school nurse, I can tell you that translates into a million 
children not receiving proper primary care, not receiving 
dental care, being sent to school sick, suffering from 
preventable illnesses, unable to learn. Unfortunately, the 
President's recently released budget proposal will not address 
this huge challenge. Rather than expand coverage for these 
vulnerable children, the majority of whom are in working 
families working hard every day, the President's Budget would 
result in approximately 285,000 children in California alone 
losing access to SCHIP at a time when we ought to be expanding 
it. Curtailing coverage for the adults in those families will 
only serve to further reduce the number of children who receive 
proper healthcare coverage and ultimately proper healthcare 
because if the parents do not have coverage, it is less likely 
that the children will actually get the care that they may be 
eligible for.
    I am confident that today's witnesses will well explain the 
need for expanding SCHIP. I am counting on you to do that. I 
hope you will. And ensuring its viability rather than taking 
the President's cues and breaking the program apart. And I 
thank each of the witnesses for your testimony here today.
    And I yield back 13 seconds, Mr. Chairman.
    Mr. Pallone. Thank you.
    I now recognize the gentlewoman from New Mexico, Mrs. 
Wilson.
    Ms. Wilson. Thank you, Mr. Chairman.
    I ask unanimous consent to participate in this hearing.
    Mr. Pallone. So moved, so ordered.

 OPENING STATEMENT OF HON. HEATHER WILSON, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF NEW MEXICO

    Mrs. Wilson. Thank you, Mr. Chairman.
    Like my colleagues, I wanted to recognize Charlie Norwood 
and not only for his work on healthcare but he was such a good 
humored guy. Charlie was also a very passionate guy and would 
speak very strongly on things that he felt strongly about. And 
more than once I would lean over to him after one of his 
passionate speeches and say, Charlie, just do not sugarcoat 
everything. You cannot tell where you are coming from. You 
could always tell where Charlie was coming from and he will be 
very much missed on this committee and in this Congress.
    I would like to thank you, Mr. Chairman for having this 
hearing today. SCHIP has been very important for the children 
of New Mexico. And I was actually the cabinet secretary for 
Children Youth and Families in New Mexico when the program was 
put in place by the Congress. And in New Mexico about 20,000 
more low income children have healthcare now and health 
coverage that they did not have before because of SCHIP. I 
recently joined a colleague of mine, Marion Barry from Arkansas 
in organizing a bipartisan letter to the House Budget Committee 
asking for full funding for SCHIP in this year's budget and 
also urging the reauthorization of the program. It was a joint 
effort, one of the first joint efforts in this Congress between 
a Republican mainstream partnership and the so called Blue Dog 
Democrats. Those were kind of the unofficial groups of moderate 
Democrats and Republicans and I think it reflects the broad 
consensus that exists about this program. There were 76 House 
Members that signed that letter and many members of this 
committee signed that letter as well and I wanted to thank my 
colleagues for their support.
    These health insurance issues particularly for children 
should be a bipartisan issue and I think it will be as we move 
forward here. When we are talking about insurance and 
particularly preventive care, children should come first. One 
of the problems with SCHIP from a New Mexican's point of view 
is that because New Mexico had a very high percentage of 
children, we had just expanded our Medicaid Program and 
eligibility for Medicaid just before the law was passed and as 
a result, we have large numbers of children who are uninsured 
who were not eligible for SCHIP because of the way the program 
was written. And we have carried over a large amount of funds 
from one year to the other in spite of the fact that we have a 
large percentage of children who are uninsured in New Mexico.
    Today I have introduced legislation that parallels 
legislation introduced by Senator Domenici and Senator Bingaman 
to allow permanently to carryover these funds so that they can 
be used. This legislation will also help States of Kentucky, 
Hawaii, Maryland, and Minnesota, New Hampshire, Rhode Island, 
Tennessee, Vermont, Washington, and Wisconsin. I believe we 
also in SCHIP need to find methods to reach out and get 
eligible children enrolled because reaching children early, 
particularly with preventative care makes such a tremendous 
difference.
    And finally, we need to better integrate SCHIP with private 
health insurance and employer coverage so that there is a 
seamless transition for children and their families.
    I look forward to hearing the testimony here today and Mr. 
Chairman, thank you again for allowing me to participate.
    Mr. Pallone. Thank you.
    Next I would recognize the gentleman from Maine, Mr. Allen.

   OPENING STATEMENT OF HON. TOM ALLEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF MAINE

    Mr. Allen. Thank you, Mr. Chairman.
    I will give an abbreviated opening statement and submit the 
balance for the record. Like others, I too, will miss Charlie 
Norwood and all that he contributed to this committee. I want 
to welcome the witnesses including of course Jeanne Lambrew who 
is Maine's contribution to sensible rational healthcare policy 
making in this city.
    I just wanted to say a few things about the status in 
Maine. Thirty-four percent of children in Maine are covered by 
Medicaid or SCHIP. That is about 15,000 children. Together 
those programs ensure that otherwise uninsured children have 
access to regular health exams, preventative screenings, and 
other essential healthcare services. SCHIP and Medicaid provide 
a vital lifeline to hired working Maine families who do not 
have employer provided coverage or are unable to afford the 
skyrocketing cost of private insurance. Maine is one of the 
States with the lowest percentage of uninsured children, just 7 
percent of children in Maine are uninsured, half the national 
rate of 15 percent. But that is 19,000 children without health 
insurance in our State.
    As we go forward, we have to find ways to build on the 
success of this program and ensure that all children have 
access to health insurance. I think that is going to be 
impossible if we do not deal directly and quickly with the 
looming funding shortfalls in SCHIP that will affect 14 States 
this year, including Maine. We face a Federal shortfall in 
SCHIP funding of $6.5 million and that could mean 3,200 
children losing coverage this year. Our goal, of course, has to 
be to move in the opposite direction to cover everyone. And as 
we think about this issue in the context of all the challenges 
we face in Congress, it seems to me we have to set our 
priorities right. And for me, providing America's children with 
health insurance, healthcare coverage should be at the top of 
our agenda.
    I thank you and I thank the panel for being here.
    Mr. Pallone. I thank the gentleman.
    And I now recognize the gentlewoman from Wisconsin, Ms. 
Baldwin.

 OPENING STATEMENT OF HON. TAMMY BALDWIN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF WISCONSIN

    Ms. Baldwin. Thank you, Mr. Chairman.
    I really appreciate the fact that you are holding your 
first hearing on this very important topic.
    As we discuss and debate healthcare issues, we all too 
often focus on the problems with healthcare and certainly there 
are many. But today we are here to talk about a healthcare 
success story, SCHIP. Simply put, SCHIP is working. It has been 
effective in providing healthcare for millions of children and 
families and I am delighted that we are beginning a 
conversation on how to make this a stronger and even more 
effective program.
    I would like to take a moment to focus on the Wisconsin 
Program. When creating our SCHIP Program, which we call Badger 
Care, Wisconsin strongly believed that family based coverage 
would be more effective than child only coverage in providing 
health insurance to uninsured children. Recognizing that 
children are parts of families and recognizing that making the 
family unit stronger and healthier is a good thing, we chose to 
include parents in Badger Care from its inception and this 
approach has worked. Studies show that children are more likely 
to become enrolled in programs that ensure their parents also. 
And that has been Wisconsin's experience.
    One of the many benefits of SCHIP is the comparative 
affordability to the Federal Government of covering this 
population. And I believe that we will hear from one of our 
witnesses, Dr. Lambrew that it costs the Federal Government 
about $1,000 a year to provide healthcare for the average 
child. Therefore, in reauthorizing this program, I believe we 
should look for opportunities to expand and improve SCHIP. The 
status quo is not good enough. It is great that SCHIP is 
providing healthcare to 6 million children but there are 
another 9 million who are uninsured. And of course there are 
another 38 million adults who are uninsured.
    I believe that we should also have a thorough discussion 
about covering young adults. Those groups, that group has one 
of the highest uninsured rates among all age cohorts. Thirty 
percent of Americans between 18 and 24 are uninsured. And these 
young Americans just graduating from high school, leaving home 
for entry level jobs that often do not provide healthcare or 
starting up their college careers too often go without 
healthcare coverage, yet they share many of the characteristics 
of their younger counterparts and we should consider and 
thoroughly debate their inclusion in SCHIP.
    We have a unique opportunity to make real coverage, real 
progress in covering the uninsured starting with children and 
expanding to other populations and I believe we must cease this 
opportunity.
    Thank you again, Mr. Chairman.
    Mr. Pallone. Thank you.
    Mr. Murphy of Pennsylvania recognized for an opening 
statement.

   OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Murphy. Thank you, Mr. Chairman.
    I appreciate that and thank you for holding this hearing.
    As a healthcare provider who has worked with children for 
25 plus years, these issues of making sure that we are here to 
help children are extremely important. Every child deserves to 
have affordable and accessible healthcare and we need to take 
all the steps necessary to enroll the children who are eligible 
but not enrolled in the State's Children's Health Insurance 
Plan or SCHIP.
    As the Congressional Research Service will testify, 
researchers estimate that 62 percent to 75 percent of uninsured 
children are eligible for public healthcare coverage. Almost 
half of low income parents believe that their children are 
eligible for affordable healthcare coverage and 80 percent 
stated that if they would, they would enroll if they were told 
so.
    SCHIP is a program that has a great deal of success and it 
can be even more successful. We need to take the steps 
necessary to cover all those children that are not yet enrolled 
in the program. For example, States could use information 
technology to link Medicaid and SCHIP eligibility enrollment 
data, the school lunch enrollment data, and other databases to 
increase enrollment, or we can simply be doing a lot more with 
providing public information to get kids signed up.
    With limited available Federal funds, the priority and 
congressional reauthorization, SCHIP should focus on America's 
children caught in between the eligibility for Medicaid 
coverage and those whose families cannot privately pay for 
health insurance or afford coverage through their employer. Our 
priority must be to identify the uninsured children by age and 
income so we can target healthcare coverage programs to lower 
the number of children without health insurance.
    Thank you, Mr. Chairman for holding this important hearing 
and I look forward to hearing from the various people 
testifying today and here about the potential for helping our 
Nation's children.
    Mr. Pallone. Thank you.
    Now is Mr. Matheson of Utah.

  OPENING STATEMENT OF HON. JIM MATHESON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF UTAH

    Mr. Matheson. Well thank you, Mr. Chairman for holding this 
hearing.
    My wife is a pediatrician. She has had patients who are 
covered by CHIP and so when I am at the family dinner table, I 
have had many conversations that have talked about the value of 
this program. And it is easy to focus on numbers and numbers 
are important and we have talked about a lot of numbers during 
these opening statements. But I do not think we should lose 
sight of the fact of what it means to every individual child 
who has access to healthcare and what it means to them in terms 
of their quality of life and their opportunity to succeed in so 
many ways in life. The title of this hearing is through the 
eyes of a child and I think that is appropriate that the 
chairman chose that.
    I also think it is appropriate for us after this program 
has been around for a few years, this is a good time for us to 
take a look at it and to really scrub it and look through and 
see what works because it has been a success in so many ways 
and ways we can all try to make it work better. I think we all 
share that even in a bipartisan way.
    I am glad we have kicked off the first hearing of this 
Congress for this subcommittee on this issue and I look forward 
to being actively engaged in it today and look forward to 
hearing the testimony today.
    I yield back the balance of my time.
    Mr. Pallone. I thank the gentleman.
    I now recognize Ms. Solis of California for an opening 
statement.

 OPENING STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Solis. Thank you, Mr. Chairman and congratulations on 
holding this first hearing on the uninsured through the eyes of 
the child.
    And today on Valentine's Day, I think we should remember 
our children and ensuring that they lead happy and healthy 
lives. And we can start by the discussion on SCHIP by the 
reauthorization.
    One of the issues that I care most about is the healthcare 
and wellbeing of children in my own district. About a third of 
that population in my district is uninsured. Many of them for 
the first time benefit or have benefited from SCHIP. Many, 
however, do not. I would say one-third of the population there 
in my district have no form of healthcare insurance; a large 
proportion are from families of low income working class and 
speak predominately one language, Spanish. Many of them have 
barriers before them in terms of accessing healthcare.
    I hope that the discussion on SCHIP will help advance 
opportunities for expansion of the program making it available 
to people in culturally and linguistically competent manner and 
by using non-traditional methods such as programs known as 
Aformatoras which is existent now. These are I do not want to 
say social workers but advocates in our community that are not 
paid very much and many do this on a volunteer basis but 
provide information, preventative information, education, and 
assistance in enrollment in SCHIP and in other programs so 
vitally needed and necessary for these at risk populations. I 
hope that that discussion will take place as we look at 
reauthorizing SCHIP.
    Within the State of California, we have seen many successes 
where this program has really helped to go very far for a 
working family of maybe four where the average costs on a 
monthly basis to cover four children is $27. That is a bargain. 
We need to continue to expand the program and we need to 
encourage our Governors from our various States to look at this 
program in a different way and to draw down this money and to 
be forward looking and thinking about how we can cover and 
expand the program not just for the children but also as my 
colleague, Congresswoman Tammy Baldwin spoke about those 
individuals that are working as well 18 to 24 years of age. 
Many of them in my district are emancipated minors in the 
foster care program. Many are low income, underrepresented 
students and children that are also looking for a way, not a 
handout but assistance. And I think that SCHIP can do that.
    Los Angeles County has had its problems with administering 
healthcare and access to many. It is a community and count that 
continues to grow. We are somewhat viewed as a magnet because 
so many people come there and it is hard to turn away folks but 
we know that there is an obligation there on the part of our 
leaders there to provide assistance. And SCHIP is one of those 
solutions. So I hope again that the discussion will continue 
and that we could see expansive and new opportunities, 
innovative opportunities to bring in more services for those 
that are currently not enrolled in the program through non-
traditional methods.
    So I yield back the balance of my time.
    Mr. Pallone. Thank you.
    Ms. Schakowsky from Illinois.

 OPENING STATEMENT OF HON. JAN SCHAKOWSKY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Ms. Schakowsky. Thank you, Mr. Chairman.
    This is my first hearing on the Healthcare Subcommittee. I 
am happy to be here and I congratulate you on your role.
    I wanted to extend my welcome to Ms. Paz Mingledorff and 
Ms. Molina for their willingness to come before us today to 
talk about their personal experiences, the problems that they 
have had with their children. Putting a face on these issues is 
always very, very effective and most important.
    We are going to hear from some who argue today for limits 
for drawing lines between children and families as we authorize 
SCHIP. Some will say that we should cut off eligibility at the 
200 percent of poverty level but I think that would set an 
arbitrary line. Families with income on one side of that line 
would get assistance but those with incomes even one dollar 
above it would not. Families above 200 percent of poverty would 
be on their own even if a basic insurance policy would take 
about 30 percent of their income or more if one of their family 
members happens to have an ongoing health need. And there are 
some who will argue that we cannot afford to cover adults, 
despite the ample evidence we have that not covering parents 
results in reduced coverage of children and lowers their use of 
healthcare services. They would draw their line down the middle 
of a family.
    And there are some who argue that we should distinguish 
between children, immigrant children on one side of the line 
and citizen children on the other. Even immigrant children born 
in U.S. hospitals who are automatically citizens under our 
Constitution as Mr. Green pointed out are now being subjected 
to documentation requirements and yet all of these children 
will grow up in America and represent our future.
    Many of those who argue that we cannot afford to expand 
SCHIP point to the budget constraints. And I agree that we have 
to restore fiscal responsibility to the Federal Government. And 
I ask how is it responsible to pass tax cuts, to provide the 
wealthiest 1 percent of Americans with an average annual tax 
cut of $146,000 while denying SCHIP to a family with $34,500 in 
income. Our country has the resources to provide healthcare to 
our children. It is only question of priorities.
    And Mr. Chairman, I look forward to this, to our witnesses 
today. Thank you.
    Mr. Pallone. Thank you.
    Ms. Hooley of Oregon recognized for an opening statement. 
Thank you.

 OPENING STATEMENT OF HON. DARLENE HOOLEY, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Ms. Hooley. Thank you, Mr. Chairman for holding this 
hearing.
    The SCHIP reauthorization is one of the most important 
pieces of business Congress will take up this year. I am very 
excited to work on this because the creation of SCHIP was one 
of my first big bills I worked on as a Member of Congress 10 
years ago.
    By any measure, SCHIP has been a success. Since its 
inception in 1997, it has provided health insurance coverage to 
millions of children. In addition, it has lead to improvements 
and increased participation in Medicaid. These two programs 
together have reduced the uninsured rate of low income children 
by one-third. If a program can produce those results in just 10 
years, imagine what it can accomplish in the next 10 years.
    I think we can credit the success of SCHIP to strong 
relationships between the Federal Government and States 
generous matching rates, flexibility for State programs, and 
strong support by Congress to provide health insurance to our 
children.
    On Friday and yet today I met with a group of healthcare 
providers and we talked about SCHIP and they all agreed on four 
points. One was to reauthorize the program, it had been 
successful. Two, that we would save money if we simplified 
enrollment. Three, that we continue to give States the 
flexibility, and four, that we fully funded or funded as high a 
level as possible.
    But when I talk about an issue, I like to talk about a face 
because that is what I see in any policy is a face. So I want 
to talk to you about the face I see and that is Caitlyn. She is 
a 6-year-old from Corvallis. If you visit her home on any of 
her bad days and listen to her try to breathe, you will 
understand that Caitlyn suffers from a chronic respiratory 
ailment. She is one of State's 1,117 children without 
healthcare coverage. Her hardworking parents make a little too 
much to qualify the family for our State's Oregon Health Plan 
which is funded by Medicaid dollars. But far too little to 
enable her dad to afford the $520 a month it would cost for the 
insurance his employer offers. Caitlyn has been ill for several 
days with asthma-like symptoms that have plagued her since 
birth. Finally after a night of trying to help her stop 
coughing, Nicole and Alan, her parents considered their 
choices. Without insurance, the couple had no doctor, no advice 
nurse they could call, no emergency room they could afford but 
they knew that every Monday the Benton County Health Department 
offers pediatric services for low income families and for the 
family the fee would be $30. So that became the plan. They 
would take Caitlyn to the county clinic Monday, 3 days away, by 
Sunday though Caitlyn was worse. Through tears she complained 
her sides hurt. Her parents went through some rough worrisome 
hours trying everything they could to think of to relieve her 
misery. When Monday finally arrived, it did not take the 
pediatrician long to diagnose Caitlyn's illness pneumonia. She 
had probably had it for a week or longer the doctor said and 
urgently needed antibiotics. The diagnosis rocked her mother 
and dad. They felt guilt over their limited access to 
healthcare for their children and they felt bitterness over the 
fact that if they had been able to afford insurance, Caitlyn 
would have been spared hours of suffering and needless risk to 
her health.
    This story answered my question about how important 
expanding access to SCHIPS is. The CHIP Program is currently 
the most efficient way to provide critical healthcare to our 
children who do not qualify for Medicaid.
    And again, Mr. Chairman, I am thankful that we had this 
hearing today and that this was my first one about SCHIP. Thank 
you.
    Mr. Pallone. Thank you.
    I want to recognize next the gentleman from California but 
if I could just mention that he was the last Democratic 
chairman of the subcommittee and I just want to recognize that 
fact if you will. The gentleman from California, Mr. Waxman.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you very much, Mr. Chairman, I appreciate 
that acknowledgement of my historic role and I must say how 
pleased I am to see you as Chair of this committee. And also to 
acknowledge the fact that our very first hearing of this 
subcommittee is on children's health. It reflects the kind of 
priorities that I think are important for this committee.
    And as I listen to colleagues on both sides of the aisle, I 
hear a sense of bipartisan support for a program that has done 
a lot of wonderful things for children in this country. There 
can be no doubt that we made important strides in providing 
healthcare coverage through Medicaid for the children below the 
poverty line and under SCHIP for those who have modest means. 
And between these two programs, we have provided coverage for 
more than 30 million children. Well that is good for the 
children. It is good for this country. They are all going to be 
benefiting from this expenditure throughout their lives and it 
is just the right thing to do.
    But the sad fact is that we really are not doing enough and 
I hope that we can keep that in mind when we start passing 
legislation. We have over 9 million uninsured children in 
America. And the fact is that two-thirds of them are eligible 
for either Medicaid or SCHIP but we are not providing 
sufficient funds for the States to find and cover all the 
eligible children.
    Well making sure that we have a strong SCHIP and Medicaid 
Program is a no brainer. And I am just stunned when the 
President proposes a budget provides significantly less than 
half the funds that would be necessary to keep the kids we 
already have covered in the program. Secretary Leavitt tried to 
defend this with the incredible statement that program coverage 
would only drop about 400,000 people or so. Well I think that 
is unacceptable when we know we can be covering more children, 
we ought not to be talking about covering less.
    I also find it amazing to hear people talking about a 
ceiling of 200 percent of poverty on the income level for 
eligibility for SCHIP. And it is also amazing to hear people 
say it is terrible that some of these SCHIP Programs run at the 
State level decided to devote some of their funds to covering 
the parents. How do you think we are going to ever reach these 
kids if we do not also cover the parents? And those parents are 
part of the 47 million uninsured in this country. They are not 
going to fix what is wrong with SCHIP by dropping income 
eligibility levels, cutting off coverage of parents, or any 
other uninsured people.
    We need to devote the money for this effort. It is one I 
hope we can do together on a bipartisan basis and I am so 
pleased that this is your very first hearing and I solute you 
in selecting this issue for reflecting the priorities that I 
hope are to come out of this Congress.
    Mr. Pallone. Thank you, Mr. Waxman.
    And last but not least we have Mr. Engel of New York 
recognized for an opening statement.

 OPENING STATEMENT OF HON. ELIOT L. ENGEL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEW YORK

    Mr. Engel. Thank you, Mr. Chairman.
    When it gets down to me, I think of the old adage where 
that everything that has needed to be said has already been 
said but not everyone has said it but I will try to say a few 
things that are important to me.
    I want to first of all start by as my colleagues did by 
saying how much we will miss Charlie Norwood and what a good 
member of this subcommittee and committee he was. And he 
certainly has a legacy that we will remember him for the 
Patient's Bill of Rights and other things that he passionately 
fought for. And I am privileged to have been his colleague.
    Mr. Chairman, thank you for convening this important 
hearing on expanding children's health coverage. The 
reauthorization for the State Children's Health Insurance 
Program is unquestionably in my opinion one of the most 
important bills we will pass this year.
    I am proud that my home State of New York has been one of 
the true success stories in getting more children covered 
through the State Children's Health Insurance Program. New York 
operates a separate stand alone program under SCHIP called 
Child Health Plus and as of December 2006, nearly 400,000 
children were enrolled and receiving comprehensive healthcare 
coverage in the program. As the third largest SCHIP Program in 
the Nation, New York reduced the number of uninsured children 
in the State by 40 percent and we are only one of seven States 
to achieve a decline of that magnitude. Our SCHIP Program has 
increased enrollment by over a quarter of a million children 
since the start of SCHIP which is 150 percent increase. And New 
York State's aggressive SCHIP outreach has contributed to a 
nearly 30 percent increase in children enrolled in Medicaid.
    Nationwide, Medicaid covers over 28.3 million children and 
SCHIP covers an additional 6.1 million kids. Despite this 
coverage, 9 million children, 60 percent of whom live in a 
household with at least one adult working full-time remain 
uninsured. It simply makes economic sense to cover the 
uninsured. When we fail to provide our children with primary 
and preventative care, routine health problems compound into 
emergency conditions. Improving coverage reduces racial 
disparities, unmet needs, and the continuity of care gained is 
particularly important for managing chronic conditions. The 
need to appropriate monitor and treat chronic conditions is 
something I am all too familiar with. Pediatric asthma is the 
most common chronic illness and unfortunately children living 
in the Bronx where I am from, have an extremely high prevalence 
of asthma. Ensuring asthmatic children have comprehensive 
healthcare makes an unimaginable difference in the number of 
emergency, hospital visits, missed school days, and basic 
quality of life. It is money re-spent, well spent.
    Reauthorizing the State Children's Health Insurance Program 
provides us with a great opportunity to strengthen and reform 
it to cover even more children. As has been mentioned by many 
of my colleagues, sadly the President's budget released this 
month prevents this goal from becoming a reality. The proposals 
within the budget strike at the foundation of patient care, 
assaulting it in my opinion from every possible angle. The 
Children's Health Insurance Program will see its funding cut 
from last year and worse the amount allocated for its 
reauthorization is less than one half of the amount required to 
maintain coverage for current beneficiaries.
    Let me conclude by saying that I look forward to the 
testimony today.
    And I commend you, Mr. Chairman for focusing on this 
important program.
    Mr. Pallone. Thank you, Mr. Engel.
    Now that concludes the opening statements by members of the 
subcommittee. I would ask the panel to come forward and take 
your seats there at the table.
    On the first panel we have Dr. Jeanne Lambrew who is 
associate professor at George Washington University; Ms. Kathy 
Paz Mingledorff who is a mission volunteer with the March of 
Dimes; Mr. Chris Peterson who is a specialist in social 
legislation with the CRS; Ms. Susan Molina, community leader 
with PICO of Colorado; Ms. Nina Owcharenko, senior policy 
analyst with the Center for Health Policy Studies at the 
Heritage Foundation; and finally Jay Berkelhamer who is the 
President of the American Academy of Pediatrics.
    We have 5-minute opening statements from the witnesses. 
Those statements will be made part of the hearing record. Each 
of you may in the discretion of the committee submit additional 
briefs and pertinent statements in writing for inclusion in the 
record. And I am going to start with Ms. Molina from PICO of 
Colorado for an opening statement.

 STATEMENT OF SUSAN MOLINA, COMMUNITY LEADER, PICO, DENVER, CO

    Ms. Molina. As you heard, my name is Susan Molina. I am the 
Board Chair for the Metro Organizations for People in Denver, 
Colorado. MOP is also a part of the PICO National Network. We 
are a faith driven I like to say community organization. We 
work to empower people on real issues that affect our families, 
our communities every day.
    Oddly enough I am not nervous about this because I am here 
today not to speak to you as a Board Chair, but really as a 
mother. And I want to just give you a face to my pain. I 
married very young, at 17, to a very abusive man. He walked out 
on us when my children were 5 and 3. And I was working in a 
dead end job cleaning. No one ever grows up saying I want to be 
a cleaning lady but that was the reality of my life. I was 
stuck. And when I met MOP and began to work with PICO, my life 
started to change. I learned that it was OK to face the reality 
of where I was but knew that I had to better myself and could 
do that. I got my GED. I have also taken classes at the 
university and I am now taking a new job. I went from cleaning 
the building to managing it and I think that is important to 
say because I feel like somehow I feel like my family is now 
punished because I have worked hard and I have done better for 
the family and now my children are not eligible for SCHIP. We 
are between the 200 and 300 percent of poverty level.
    And I want to say that when I was preparing to come here, 
this became all too real when my children got sick last week 
and they had the flu and I had wait to see if they needed to go 
the doctor or not because they do not have insurance. I cannot 
just take them to the doctor and waive a card and say my kids 
need to been seen, I have to wait and see if they were going to 
get worse. And I want to say that we work. We are working 
families, the ones that are on SCHIP and that is important to 
say because we want to be able to pay our premiums. We want to 
be able to take our children to the doctor.
    When we talk about 9 million uninsured children, these are 
real children that have accidents, that get sick, whose parents 
cannot afford to take them to the hospital. It is hard. I am 
asking you as a parent to please reauthorize SCHIP and also 
fully fund it because we are going to lose so many children if 
we do not fully fund this program.
    Through MOP and the work at PICO I have realized that my 
experience is not unusual. Throughout our network we have 
surveyed thousands of families and have heard such sad real 
pain around this issue. In my State, there are 176,000 children 
that are uninsured. Our State has one of the highest uninsured 
rates in the country. But for the first time, things are 
starting to change in Colorado. In 2005, Colorado spent their 
full allocation of SCHIP money. And MOP in PICO Colorado we are 
working hard with other healthcare organizations to change 
State policy to enroll eligible children and expand coverage. 
And I am happy to say that God has given me the boldness to be 
here today and the courage because again this is a very hard 
issue.
    PICO is advocating a roadmap to cover all children by 2012. 
This roadmap has five steps to cover all children. One is to 
fill the existing SCHIP shortfalls that face our States; two, 
fund proof an outreach program to provide States with financial 
incentives to cover all eligible children; three, to provide 
financial support and incentives for States to expand the 
eligibility; four, to allow States the option to cover legal 
immigrant children and pregnant women; and five, to provide 
approximately $50 to $60 billion in SCHIP and Medicaid 
financing to support the costs of covering newly enrolled 
children.
    I really just want to point out and again thank my own 
Congresswoman DeGette for her leadership in working hard to 
cover all children. On March 7, we will be back on Capitol Hill 
with 400 other parents and clergy members for a PICO Faith and 
Family Summit. We would love to have all of you there and that 
will be at 8:00 to 9:00 a.m. And we will definitely have some 
information. I come here with my children on my mind. It breaks 
my heart to know that so many other families need to make hard 
decisions every day on whether to put food on the table or buy 
healthcare coverage. It would take me $200 to $300 to insure my 
children with private insurance. I do not have that. That would 
take away from other things. That is 2 weeks worth of 
groceries. How can we not work hard to cover our children? We 
work hard. We are hard working parents. I am a single mother 
and I am proud of that. And because I am so proud that is why 
it makes it so difficult but we must, we must work together to 
reauthorize SCHIP and we must find those funds to be able to 
expand this program because there are going to be so many other 
families that have to make hard decisions.
    [The prepared statement of Ms. Molina appears at the 
conclusion of the record.]
    Mr. Pallone. Thank you so much. Thank you really for being 
here and for sharing all of your concerns. I appreciate it.
    Dr. Lambrew.

  STATEMENT OF JEANNE M. LAMBREW, PH.D., ASSOCIATE PROFESSOR, 
 DEPARTMENT OF HEALTH POLICY, THE GEORGE WASHINGTON UNIVERSITY 
      SCHOOL OF PUBLIC HEALTH AND SERVICES, WASHINGTON, DC

    Ms. Lambrew. Thank you very much for having me here today.
    My role at this hearing is going to be to try to summarize 
what we know about the value of public investments in 
children's health. I am sorry, and to that end, I would like to 
make three points. First, health coverage for children does 
improve access of care, health outcomes, and the prospects for 
children and their families; second, the short run budget costs 
of covering more children is worth it in the long run for our 
Nation; and third, the design of the Federal investment in 
children's health coverage matters. Specifically, some of the 
block grant features of SCHIP have limited the program's 
success and should be modified in reauthorization.
    But to begin, health coverage is the portal to our 
healthcare system. It removes financial barriers, the seeking, 
obtaining, and adhering to healthcare. It prevents the cost of 
essential healthcare from bankrupting individuals and families. 
And it ensures that access to the finest healthcare in the 
world irrespective of income. As such, children who do not have 
health coverage are at risk. They are five times as likely to 
have unmet health needs compared to children in Medicaid and 
with SCHIP. Uninsured children are 40 percent less likely to 
receive medical attention for serious injuries. And children 
without coverage are less likely to receive immunizations 
against preventable childhood diseases.
    Access to healthcare matters because it contributes to the 
health of children. Sadly, the wealthiest Nation in the world 
is not the healthiest especially when it comes to its children. 
In 2004, the United States ranked 35th for mortality behind 
Korea and Cuba. Our immunization rates while high are below 
those of Thailand and Poland among others. But programs like 
Medicaid and CHIP can improve children's health. Increases in 
Medicaid eligibility have contributed to reductions in child 
mortality after the first year of life. Insured children with 
congenital heart problems are one-tenth as likely to die in 
their first year of life as children who are uninsured. 
Uninsured children with asthma have about half as many attacks 
that are severe as children in Medicaid and CHIP.
    The benefits for families go beyond though this health 
impact. It improves the peace of mind and financial security of 
families. One hospital stay for a child with pneumonia can cost 
$8,000. The total healthcare cost of childhood asthma in the 
U.S. is about $6 billion. It also improves children's ability 
to learn. Unaddressed health problems result in lower school 
attendance. In 2004, asthma alone accounted for an estimated 14 
million lost school days among children. Failure to address 
recurrent ear infections among children reduces their ability 
to communicate, their school readiness, and their performance. 
And the unmet mental health needs among adolescents can have 
lifelong consequences.
    In summary, health coverage is as essential to nutrition 
and education in the development of children. So given these 
benefits, the next question is how much does it cost? Well, 
based on Government projections, the estimated average spending 
per child next year will be about $2,900. That is about 40 
percent below what we pay for our young adults, about one-
seventh of what we pay for seniors. Of this, about 35 percent 
is publicly financed. This is nearly half the proportion of the 
health spending for seniors that is publicly financed. There is 
also the lower than the share of education as publicly 
financed. In dollar terms this translates into about $1,000 per 
child for healthcare costs less for the Federal Government 
because States kick in some money, too.
    So is this public investment worth it? No cost benefit 
analysis exists to put the value of children's coverage into 
dollar terms. However, some comparisons can help put this into 
perspective. This $1,000 per child is less than the cost of a 
day in the hospital or less than the cost of year's worth of 
medication for chronic illness. It is a fraction of what we 
spend per person in the last year of life. And the long-term 
benefit could far exceed the short-term costs of investing in 
children's health. One of the most distressing studies in 
recent years found that for the first time in over a century 
our children's life expectancy may be less than our own. This 
is primarily because our children are not as healthy, the 
obesity epidemic is taking its toll, and not surprisingly poor 
child health now could drive major Medicare costs later. This 
suggest that not only is the current investment in children's 
health coverage worth, but it may not be enough for our long 
run needs.
    As we look at the proposals in front of this Congress, some 
would suggest a real reduction in the public investment in 
children's health coverage. As some of the members have 
mentioned, the President's budget proposes to spend only about 
a billion dollars more per year for coverage of children. This 
amount according to some experts is not enough to maintain 
coverage. In other words, the programs may have to be scaled 
back, the uninsured could increase. Now this clearly will 
reduce the Federal costs for children but doing so is not 
necessarily free. It would mean increased costs to States that 
cannot morally scale back on their coverage for children. It 
would increase private health insurance costs as costs are 
shifted from uninsured kids to privately insured families. 
Families themselves would pay the cost of the care for their 
uninsured children and that cost may be higher because delayed 
care often is more expensive care and ultimately the children 
themselves would bear the greatest cost in the form of 
preventable suffering and limitations of their lifelong 
prospects.
    So I will close by saying that I urge you to think broadly 
about the value of coverage when you are looking at these 
budget numbers not just the dollars and cents and the CRS 
score.
    Thank you.
    [The prepared statement of Ms. Lambrew appears at the 
conclusion of the hearing.]
    Mr. Pallone. Thank you, Dr. Lambrew.
    Mr. Peterson.

STATEMENT OF CHRIS L. PETERSON, SPECIALIST, SOCIAL LEGISLATION, 
                 CONGRESSIONAL RESEARCH SERVICE

    Mr. Peterson. Chairman Pallone, Mr. Deal, and members of 
the subcommittee, thank you for the opportunity to testify 
about characteristics of uninsured children.
    I will begin with current estimates some of which has been 
cited already of children's health insurance and how they have 
changed over time. Despite the potential benefits of coverage, 
millions of uninsured children are eligible for public and 
private coverage. I will conclude with some reasons why this 
might be the case and what options might be available. The 
latest estimates from 2005 indicate that there are 47 million 
uninsured people in the U.S., 9 million of who are children. 
More than half uninsured children are in a two parent family 
and most had a parent who worked full-time all year. Between 
1996 and 2005, the percentage of children who were uninsured 
has fallen by 30 percent, in spite of declining enrollment in 
private coverage. Children's uninsurance has fallen because the 
drop in private coverage was more than offset by increases in 
public coverage. However, some of the detail gets lost in these 
national numbers. As presented in my written testimony for some 
of the largest groups of children, private coverage did not 
decline significantly between 1996 and 2005, but among each of 
these groups public coverage increased and uninsurance dropped.
    The overall simultaneous decline in private coverage and 
increase in public coverage raises questions about the extent 
to which these changes are linked, particularly as eligibility 
was extended up the income scale through SCHIP. Researchers' 
estimates of this effect vary widely. Moreover, even for 
children enrolled in public coverage with access to private, it 
is unclear whether in the absence of public coverage these 
children will be insured or not. Among currently uninsured 
children, 42 percent have access to coverage through their 
parents' employer. Researchers also estimate that 62 percent to 
75 percent of uninsured children are eligible for public 
coverage. Since employer sponsored and public coverage both 
tend to be heavily subsidized, why would so many children 
eligible for coverage not be getting it? Some suggest there may 
be a lack of awareness, particularly for public coverage or 
that parents have perceptions of public coverage and the 
enrollment process that prevent them from seeking it. Among 
parents of low income uninsured children half believe their 
children are eligible for public coverage yet their kids remain 
uninsured.
    There is still the cost of coverage in private as well as, 
public coverage. Public coverage is not always free in terms of 
enrollees' obligations. About 30 States have premiums or 
enrollment fees in their CHIP Programs for example. And in 
private health insurance, the cost of family coverage can be 
quite large. The latest estimates are that the total premium 
for family coverage through one's job is $11,500 with workers 
paying $3,000 of that. This employee contribution is nearly 
five times the amount required for single coverage.
    Research by the California Healthcare Foundation looked 
into why higher income uninsured individuals were uninsured. 
Only 16 percent were considered ``cost constrained''. That is 
the individuals belief health insurance is very important but 
say they would not buy existing products at their current 
prices. For most of the higher income uninsured, this research 
found that ``health insurance did not rank high as a spending 
priority''. But in terms of children's health insurance, 
research as Dr. Lambrew has noted has found that health 
insurance is important. Not only as a bill paying mechanism for 
when the kids get sick but also because it helps establish a 
regular source of healthcare such as a physician who knows the 
child's healthcare needs.
    Children with health insurance are more likely to have a 
regular source of care and therefore have better health 
outcomes than those without health insurance. This might 
suggest a need for outreach that goes beyond informing parents 
of the availability of coverage but also educates them about 
the benefits of coverage.
    In light of the number of uninsured who are eligible for 
coverage besides the multitude of existing carrots to entice 
people to enroll, States are beginning to seriously consider 
sticks as well. For example, Massachusetts residents who are 
not enrolled in coverage may be subject to financial penalties 
from the State. But some of these efforts raise questions about 
the role of States versus the Federal Government in terms of 
the regulation and financing of public and private health 
insurance. In addition, the estimates of the uninsured will 
also depend on the length of uninsurance one is talking about 
Although 9 million children are estimated to be uninsured at a 
given point in time, a smaller number 6 million are estimated 
to be insured for the entire year. And if you look at the 
numbers who were ever uninsured during the year even for a day, 
the estimate is much larger 15 million. The options that emerge 
will then depend on how policymakers decide how to reconcile 
these competing issues and interests.
    [The prepared statement of Mr. Peterson appears at the 
conclusion of the hearing.]
    Mr. Pallone. Thank you, Mr. Peterson.
    Dr. Berkelhamer.

  STATEMENT OF JAY E. BERKELHAMER, M.D., PRESIDENT, AMERICAN 
                     ACADEMY OF PEDIATRICS

    Dr. Berkelhamer. Yes, thank you Chairman Pallone for the 
opportunity and Mr. Deal and other members of the committee.
    I am a pediatrician from Georgia, Mr. Deal and I know there 
have been many comments made already but the citizens of 
Georgia have lost a great child advocate and we just would join 
you in your remembering and being very fond of his 
contributions and thank you.
    I am the president of the American Academy of Pediatrics. I 
am a general pediatrician and I have devoted the last 40 years 
of my career to the practice of caring for children. And I am 
pleased to comment on behalf of the American Academy of 
Pediatrics about the future for the Children's Health Insurance 
Program. It is a program that has been a resounding success. It 
has been a spillover as well in terms of identifying additional 
children who are qualified for the Medicaid Program and they 
have also been enrolled. The eligibility determination 
processes have been simplified and coordinated between SCHIP 
and Medicaid and it has become increasingly infective as a two 
part program. Despite the program's widely acknowledged success 
and popularity, several outstanding challenges have been 
identified by participating pediatricians and these challenges 
pertain to funding, ease of enrollment and benefits related 
under the program. And I want to just make a couple comments 
about each of those.
    In terms of the funding, SCHIP is a block grant which 
creates some inherent problems. Because the funding is capped, 
children have been denied services, waiting lists have 
developed, and predictability of care is compromised. My own 
State of Georgia is struggling with that issue right now. 
Congress should strengthen its commitment to the Federal State 
partnership that has lead SCHIP and Medicaid success over the 
last decade. There should be a minimum of $12 billion a year 
more over the next 5 years in the new SCHIP reauthorization 
providing SCHIP and Medicaid funding to be able to assure that 
the children who are eligible for this program can be included. 
And as was mentioned in some of the opening statements, we have 
the potential with existing eligibility to cover 6 million of 
the 9 million children who are currently uninsured. We are 
almost there. All children have to have health insurance. We 
have got to get there as a Nation but this would be an 
extraordinary positive step to include 6 million of the 9 
million children who are not insured.
    In terms of payment, one of the things that is an important 
problem with both the Medicaid and SCHIP is the low rate of 
payment. The low rates of payment seriously impede access to 
quality care for many children. Pediatricians are forced in 
many parts of the country to limit the number of patients they 
see and some cannot even pay their office overhead when the 
number of children coming to their office are in SCHIP and in 
the Medicaid Program. On average across the Nation, Medicaid 
reimburses at only 69 percent, roughly two-thirds of what 
Medicare reimburses at. And only 56 percent of what the rates 
are for commercial insurance. The Academy requests that payment 
rates for pediatric services be at least at the same level as 
Medicare giving children the access to the program on an equal 
footing that they deserve with all other children.
    In terms of extending eligibility and enrollment, beyond 
the payment rates, it is also important to raise the issue of 
enrollment barriers. And the implementation of SCHIP has had 
the added benefit as I mentioned of encouraging Medicaid 
enrollment and I just want to make comment though about the 
unintended consequences of the Deficit Reduction Act. And I am 
sorry, Mr. Green left because when he made his statement I 
wanted to say yes, we have seen that problem. And in my own 
State of Georgia, it has been documented now that over 100,000 
eligible children have been dropped from the roles since these 
regulations were put in place. And there is similar situations 
I understand in Kansas, Wisconsin, and Virginia. And these 
children are not illegal, but they are citizens in poor 
families who are simply finding it too difficult to meet these 
requirements in a timely manner. And this state of affairs 
needs to be corrected and it is really unacceptable.
    In terms of benefits, the need for vision, dental, mental 
health services do not disappear with economic changes and 
economic circumstances. Children in States with stand alone 
SCHIP Programs are not guaranteed these services and they 
should be. Every child needs comprehensive health insurance, 
age appropriate benefits. The benefits for children really need 
to be programmed to children. Only one out of every hundred 
children throughout their entire childhood ever requires 
catastrophic care. They all create preventative care. They all 
require preventative care.
    So in conclusion, there is a proud history over the past 10 
years. We can build on it. We can cover 6 million of the 9 
remaining million children and that the AAP stands ready to 
work with you and supports fully this program.
    Thank you.
    [The prepared statement of Dr. Berkelhamer appears at the 
conclusion of the hearing.]
    Mr. Pallone. Thank you, Doctor.
    Now we have Ms. Owcharenko.

  STATEMENT OF NINA OWCHARENKO, SENIOR POLICY ANALYST, HEALTH 
            POLICY SYSTEMS, THE HERITAGE FOUNDATION

    Ms. Owcharenko. Good afternoon, Chairman Pallone, Ranking 
Member Deal, and members of the subcommittee. I am senior 
policy analyst at the Heritage Foundation and I appreciate the 
opportunity to testify before you today on the subject of 
uninsured children.
    Healthcare coverage for children is critical. Without it, 
children suffer and society pays. Children without coverage 
often seek care in an inefficient and costly manner. Today's 
healthcare system has it shortfalls and policymakers should 
consider ways to improve coverage options for children and 
their families.
    Like adults, the vast majority over 60 percent of children 
obtain coverage through the employer based system. Twenty-seven 
percent receive care through the Medicaid and SCHIP Programs 
and an estimated 11 percent of children are considered 
uninsured. However, it is important to note as was already 
discussed there are a variety of ways of counting the 
uninsured. The most common figure used is based on a specific 
point in time however, other calculations include measuring 
uninsurance for the entire year and unisurance at any point 
during the year. In considering duration of uninsurance, 
children typically have shorter periods of uninsurance than 
adults. Interestingly, by age group and was also noted in 
opening statements, children have the lowest rate of 
uninsurance than most all other age groups except those 65 and 
older. And adults between the ages of 18 and 24 have the 
highest with about 31 percent.
    By family income, the majority of uninsured children are 
among lower income families. But the largest growing segment of 
the uninsured is among middle and upper income families. By 
family work status, the majority about 68 percent of uninsured 
children are in families with a full-time full year worker. 
Only 17 percent of the uninsured children have no family member 
working.
    There are obstacles to existing coverage. The current 
patchwork system of public and private coverage does not work 
for everyone including children. In the private sector, not all 
workers or their dependents have employer based coverage. Some 
are not offered coverage. Some may not qualify for employer 
coverage and others simply choose not to participate. Moreover, 
coverage outside the place of work can be expensive depending 
on the State. Some well intentioned but costly State 
regulations can make coverage unaffordable to many families, 
especially lower income families.
    In the public sector, while there are significant numbers 
of children who qualify for public programs, a good number 
still do not participate. First access to quality care is a 
concern. Fewer pediatricians are accepting new Medicaid 
patients. Second, these programs are fiscally draining State 
and Federal budgets. The entitlement financing structure of 
Medicaid for example is the largest State budget item consuming 
more than education, transportation, and other State 
priorities. Finally, public program expansions crowd out 
private coverage for families. Recent analysis estimates that 
the crowded affect of these public program expansions to be 
about 60 percent.
    Strategies for addressing the shortfalls of the current 
system should consider children but should also improve the 
system as a whole. For the private sector; one, fix the tax 
treatment of health insurance to ensure everyone gets a tax 
break for purchasing health insurance; two, promote private 
sector alternatives for those without employer based coverage. 
For the public sector; first add greater choice for enrollees 
including enabling them to use public funds as a way to 
mainstream them into private family insurance. This is 
especially important in SCHIP; second, adopting more patients 
that are model that expands personal control in the healthcare 
decisions for those enrolled in the public programs.
    Finally, a solid case can be made to encourage States with 
Federal guidance and assistance to tackle these issues on their 
own. There is great diversity among the States. A federalism 
approach may be the best way suited, best suited way to address 
these variations.
    Thank you for your time and I look forward to the 
discussion.
    [The prepared statement of Ms. Owcharenko appears at the 
conclusion of the hearing.]
    Mr. Pallone. Thank you.
    Next we have Ms. Mingledorff. Now I understand those are 
your children over there?
    Ms. Mingledorff. Yes, they are.
    Mr. Pallone. They have been so well behaved. I was thinking 
about when mine were that age they would never sit there. In 
fact, I think there was one time when I brought them to a Whip 
meeting and I served them a muffin and my son threw the muffin 
at Congressman Bonior who was conducting the Whip meeting.
    Ms. Mingledorff. I have had great help with the March of 
Dimes staff there.
    Mr. Pallone. Well thank you.

 STATEMENT OF KATHY PAZ MINGLEDORFF, MARCH OF DIMES FOUNDATION

    Ms. Mingledorff. And good afternoon, Mr. Pallone, 
Congressmen and Congresswomen.
    My name is Kathy Mingledorff and I am pleased to be here to 
testify as a mother and volunteer of the March of Dimes 
Foundation. I understand in a very person way the importance of 
health insurance for women and children and thank the members 
of the committee for making access to coverage the focus of the 
hearing. A longer and more complex statement will be submitted 
for the formal record.
    Let me begin today by telling you my family story and 
specifically why Medicaid and FAMIS, Virginia's State 
Children's Health Insurance Program SCHIP, have been so 
important to us. In 2001, I became pregnant while in college 
and was covered by my parents' private health insurance. But 
after my son was born, I was no longer a student and I lost my 
coverage because I was no longer a dependent. My son, Alex who 
is here with us today was born prematurely at 25 weeks and 
suffered many complications due to his early delivery. 
Fortunately, Medicaid was there to provide health insurance for 
the first 3 years of Alex's life. We had help through Medicaid 
with Alex's enormous medical bills over $800,000 in the first 2 
years alone. And I have attached to my testimony a handout 
listing some of my son's medical expenses.
    Had it not been for the support, I am not sure how we would 
have survived. By the time Alex was 2, complications associated 
with his pre-term birth required a feeding tube, special 
formulas, and multiple medications. We took Alex to the 
emergency room many times and he was hospitalized on over three 
occasions. In January 2005, Alex had surgery to stabilize his 
reflux condition. I cannot imagine what life would have been 
without Medicaid.
    In 2005, I married and found an employer who was eager to 
hire me. Unfortunately, the employer did not offer health 
insurance. I attempted to enroll Alex in FAMIS but our income 
was too high for him to qualify with my husband's income of 
only $32,000 for our family. At that time, eligibility for the 
program in Virginia was limited to children whose family 
incomes were below 133 percent of the poverty level, less than 
$22,000 a year for a family of three so my only option was to 
turn down a position I really wanted in order to keep my son 
insured through Medicaid. I want to emphasize how difficult 
that was for me.
    In July 2006, the State of Virginia changed its eligibility 
rules for FAMIS allowing families with incomes up to 200 
percent of the poverty guidelines, a little over $34,000 for a 
family of three to qualify making it possible for me to enroll 
my son. Once Alex had health insurance through FAMIS, I was 
able to accept a full-time position at SCIC, a Government 
contractor in Virginia. Today, Alex and I have health insurance 
through my employer and I work full-time as a design consultant 
at Thomasville Furniture and am taking graduate courses at 
Marymount University for interior design.
    The help that my family received at a time when we needed 
it most because I was able to work, it was great to have a 
program like FAMIS. I know from my experience that other 
families with premature babies, that my story is not unique. In 
fact, it is not uncommon for a family just getting started to 
face a problem of not having enough health coverage to meet the 
needs of a fragile infant.
    Given my family's experience, I am sure you can understand 
why I am so committed to the March of Dimes' goal of using this 
year's bill as an opportunity to strengthen FAMIS and other 
State children's health insurance programs. Let me summarize 
for you the Foundation's recommendations.
    Using the information provided by the U.S. Census Bureau, 
researchers have estimated that nearly half of the 9 million 
uninsured children in the U.S. are eligible for Medicaid and 
almost 20 percent are eligible for SCHIP. In other words, with 
adequate funding and more attention to enrollment of those who 
are already eligible, more than 6 million uninsured children 
would have health insurance through these two programs. So for 
our first recommendation, the March of Dimes urges members of 
this committee to give States the resources they need. The 
Foundation is also calling for changes in law to help State's 
make modest but important improvements in their SCHIP Programs.
    First, States would be allowed to cover pregnant women age 
19 and older who meet SCHIP income guidelines. As many as 24 
States have used Federal waivers or special regulatory means to 
prove such coverage through SCHIP but waivers are 
administratively burdensome for States and the regulatory 
approach does not allow for payment of the full scope of 
maternity benefits recommended by the American College of 
Obstetrics and Gynecologists and the American Academy of 
Pediatrics. Both the National Governor's Association and the 
National Conference of State Legislature support this proposal. 
Providing access to maternity coverage will help reduce the 
number of infants like Alex who are born with significant 
medical needs.
    The March of Dimes also recommends that members of the 
committee allow SCHIP to supplement limited private health 
insurance for children with special healthcare needs allowing 
for a combination of public and private coverage would help 
families like mine, parents who want to work, are willing to 
purchase private insurance, but need a little help to be sure 
that they policy covers their child's serious medical 
conditions.
    Finally, the Foundation urges members to strengthen 
performance measures that will improve State accountability and 
quality of care for individuals who rely on SCHIP for their 
health insurance.
    Thank you again, Mr. Chairman for holding this important 
hearing and for allowing me to testify on behalf of the March 
of Dimes. Children and their families across the Nation are 
looking for you and members of this committee to maintain and 
strengthen SCHIP, a program central to the health of the 
Nation's pregnant women, infant, and children.
    Thank you.
    [The prepared statement of Ms. Mingledorff appears at the 
conclusion of the hearing.]
    Mr. Pallone. Thank you.
    And thank all the witnesses for your insight into SCHIP and 
the whole problem of covering the uninsured for kids in 
particular.
    We are done with the statements but now we will start with 
questions and I will just recognize myself initially for 5 
minutes.
    I wanted to ask Ms. Mingledorff both you and Ms. Molina. 
You have obviously talked about your personal situation of 
being in the position of having to force to choose between a 
chance to improve your financial situation or keeping your 
children's health coverage. And I know, well I should not say I 
know, I really cannot imagine what a tough decision that has to 
be but your stories illustrate why it is so important that 
Congress provide access to affordable health insurance for 
children and not restrict in my opinion the available funding 
for kids above 200 percent of poverty. The 200 percent is about 
$34,000 a year for a family of three. It may seem if you are 
making $34,000 a year you should be able to pay for health 
insurance but both of you have indicated that is not the case. 
I just wanted you to comment again maybe dispel the notion that 
might be out there that somehow if you are making $34,000 a 
year you are going to be able to afford health insurance, if 
you would comment on that?
    Ms. Molina. Well yes, $34,000 may sound like it is a good 
amount of money but when you have to pay for like myself I just 
finished paying $5,500 for braces for my first child and now 
Joseph also needs them and so that is going to cost me another 
$5,500. School lunches, I pay $70 a month for school lunches. 
And I will tell you what, there is so much more that we are 
paying out. Not to mention our every day costs, bills. And then 
too, I want to say something that I did not say is that SCHIP 
works. It is a great program. We cannot afford private health 
insurance. This program works.
    Mr. Pallone. Mrs. Mingledorff?
    Ms. Mingledorff. I have thought about it on several 
occasions as to my difficulty in applying for Medicaid, SCHIP, 
and everything throughout our time period getting State support 
health insurance. There are so many things that are involved in 
calculating what your poverty level is and why you do or do not 
qualify. For instance in my family, we have a car. We pay $250 
a month as our car payment. That is $250 that is coming out of 
my family's income but it is not taken into account as to my 
family's income. All sorts of things like that, rent, 
everything else that goes into what you pay every month just to 
survive is not taken into account. They look at your income. 
And if your income is $34,000, then it does not matter if every 
month you are paying $7,000 of bills, you still do not qualify.
    Mr. Pallone. All right, thank you, I appreciate your 
comments.
    Now one of the things I am also concerned about is the 
adequacy of the health insurance coverage that children 
receive. For example, a family's employer sponsored coverage 
might not be the best place for a child if it does not cover 
the benefits the child needs or imposes unaffordable cost 
sharing or deductibles. We know that is often the case. So I 
was going to ask Dr. Lambrew if you could please comment on 
Medicaid and SCHIP and the adequacy and affordability of 
benefits in those programs.
    Ms. Lambrew. Sure. And I think I need to start with 
Medicaid because Medicaid is the older program and the program 
that frankly covers most of the children that we have. And I 
think that the statistics are about four times as many children 
are enrolled, insured by Medicaid.
    Mr. Pallone. Good point.
    Ms. Lambrew. And since the program began there was 
basically a provision that said that for children who get 
screened and diagnosed with a disease they get the care that 
they need, that is medically necessary. This has been proven 
over time through evaluation after evaluation as effective and 
insuring that low income children have the types of benefits 
they need.
    With SCHIP which is for higher income population, there are 
benefit standards and these standards are linked to things like 
the Federal Employees Health Benefit Package, the State 
Employees Health Benefit Package which are relatively generous 
in employer's scheme of things. Studies have shown that special 
needs children do not really work well or, excuse me, do not 
necessarily get what they need through SCHIP, through these 
benefit packages. There is a secretarial approved package which 
has been used by some States for fairly high cost sharing plans 
and with the Deficit Reduction Act a few years ago there are 
question marks about exactly what the strength is in terms of 
our Medicaid benefit package as well.
    So the short answer is that the programs do well, they 
strive to do well but in recent years we have seen erosion in 
the types of benefits that these children have. And we do know 
that for any low income families, you have heard these ladies 
talk about the cost sharing associated with illness could be a 
barrier even if they are covered by these programs.
    Mr. Pallone. OK. Just quickly, a comment on the fact that 
children are more likely to have coverage when their parents 
also have coverage because I know this is a big issue.
    Ms. Lambrew. The statistics are interesting because what we 
know is that if a child, the parent is insured, the child is 
more likely to be insured and vice versa. We know that families 
come together so there is a real pattern to that. We also know 
that children whose parents are insured are more likely to get 
access to care. The parents are more in tune with the 
healthcare system. But I think some of the statistics that have 
come out recently are pretty shocking. I think that we know 
that of the children who are insured through the CHIP, 
Children's Health Insurance Program, the vast majority of them 
do not have parents who themselves are insured. It is not like 
we are seeing lots of families who have the parents in employer 
based coverage and their children SCHIP. In fact, a study that 
came out from the Urban Institute just last week found that of 
the children in SCHIP, two-thirds of their parents, two-thirds 
of those children's parents do not have employer based 
coverage. So only one-third of the parents of these SCHIP 
children have employer based coverage. And when you look at 
Medicaid, it is basically only 10 percent. So we really do not 
see kind of the splitting of families which means the best way 
to get these children may be getting their parents because then 
you really can get the full family deal.
    Mr. Pallone. Thank you.
    I yield to the gentleman from Georgia, the ranking member.
    Mr. Deal. Thank you, Mr. Chairman.
    Let me follow up on that because I think we just heard two 
conflicting statistical statements about the uninsured children 
and their availability of insurance through the private sector 
because I wrote down that Mr. Peterson said that 42 percent of 
uninsured children have access to private insurance. Was that 
what you said? Does that conflict with what Dr. Lambrew just 
said?
    Mr. Peterson. I think she was talking about something 
different. She was talking about SCHIP enrollees and their 
parents and I was talking about uninsured children all 
together.
    Mr. Deal. I see the total picture?
    Mr. Peterson. Yes. But it is still the case. Really it 
depends on one's perspective is this one-third of SCHIP kids 
who have a parent who is enrolled in coverage she said it is 
not a lot. I bet Nina would say it is so, it is just kind of a 
definitional issue at that point.
    Mr. Deal. And back to the point that you made early in your 
testimony, Mr. Peterson is that as we have seen the number of 
uninsured children drop, we have likewise seen the number of 
insured children under private plans likewise drop. Is that 
right?
    Mr. Peterson. That is correct.
    Mr. Deal. What do you make of that correlation?
    Mr. Peterson. Again, it is very hard to say because you do 
not know what would occur in the absence of that public 
coverage and so the most recent estimates I think Nina talked 
about said that for every 10 percent increase in public 
coverage there is a 60 percent decline in private coverage. But 
that assumes that those are linked all the way and it is just 
not clear from our perspective that you can make that link. The 
estimates vary widely as I say. Some say there is no link. As 
the private coverages drop and public has expanded, there is no 
link from that and that those kids would likely have lost 
coverage anyway.
    Mr. Deal. Ms. Owcharenko that is what you were talking 
about when you said the 60 percent crowd out factor. Elaborate 
on what you mean by the crowd out factor just a little more.
    Ms. Owcharenko. Well as was discussed, the idea that as 
public programs have expanded, eligibility up the income scale, 
the private, the number of individuals, families actually not 
just individuals, it is actually the families is what the study 
looked at, not the individual but the impact it had on the 
family had seen a decline of about 60 percent. So I think that 
one of the issues is looking at the number between when we are 
looking at individuals between 200 percent of poverty, 300 
where this becomes far more critical. I think that we need to 
look at alternatives instead of either or is there some way of 
kind of blending the two together. So you do not have the cliff 
effects that I think was described earlier where it is one 
dollar more and you are no longer part of the program, to find 
ways of somehow blending this, to try to create a more seamless 
system between the public and private sector.
    Mr. Deal. And one of your suggestions I believe was that we 
allow some of the say SCHIP funding to be used to buy into a 
privately available employer plan. Is that right?
    Ms. Owcharenko. Yes. And I would like to elaborate on that 
because many times the term premium assistance is used. I would 
actually take it further because as was noted, a premium does 
not take into consideration cost sharing requirements. And so 
having a simple stipend given for the child for dependent 
coverage could I think also cover things besides the premium. 
If you have an employer with a higher deductible, then the 
additional dollars that they are not spending on the premium 
could be used to help with cost sharing requirements with 
meeting the deductible, et cetera.
    Mr. Deal. One of the problems I think we have with the way 
State's regulate insurance at the State level is that some 
States have huge mandates of what an insurance policy must 
cover and it drives the cost of that insurance up in that 
State. Many have proposed and we have in fact voted on during 
the last Congress a proposal in this committee that dealt with 
the ability of a person or an employer to buy a policy from 
another State if it provided a benefit that was acceptable but 
at a cheaper price and it was affordable to them.
    Now we have great inequity in your comment about the tax 
issues relating to health insurance is certainly an appropriate 
one. Many of the proposals are that if employers, large 
employers are going to be able to deduct their cost of health 
insurance in a group plan, then the same benefits should be 
extended to the private family et cetera because in effect we 
are squeezing the balloon and it is coming out in the pricing 
for the small policy units. Another proposal of course is the 
ability that we pass in this House a couple of times I think 
and that is of small businesses to be able to pool together so 
that they could buy more affordable private insurance plans.
    Very quickly, Ms. Owcharenko, would you comment briefly 
about those kinds of proposals?
    Ms. Owcharenko. Sure. I do think that tax equity is very 
important. I think that it was noted there are people that do 
not have employer based coverage and do not qualify for the 
public programs who get no tax benefit, no assistance 
whatsoever. So fixing the Tax Code to allow individuals to 
receive a benefit, a tax benefit for purchasing private 
insurance I think is critical. However, it is not exclusive. I 
think ideas as you mentioned allowing individuals themselves to 
decide the type of policy and where they want to buy their 
health insurance from, I think teams up very nicely with 
changing the Tax Code. So that if you are in a State where you 
find it unaffordable but you can find coverage in a State, a 
neighboring State would make a lot of sense to say well gosh 
there is a policy there that I could afford at least to have 
catastrophic coverage. It is critical to make sure that we are 
trying to provide more options that are more affordable for in 
some cases with these families to simply protect them from a 
catastrophic illness when they are hit with cancer, or some 
sort of an illness that costs them a lot of money. At least 
then there is some sort of a catastrophic backdrop. And it 
gives the individual the choice. It is not a mandate on the 
individual one way or the other. If they are happy in the State 
that they have the coverage, they can keep it.
    Mr. Deal. Thank you.
    Mr. Pallone. Thank you.
    Mr. Green for questions.
    Mr. Green. Thank you, Mr. Chairman.
    It is not on my line of questions but I would love to have 
the debate on mandated benefits. I have served in the 
legislative body for many years in the State legislature. In 
1973, the first mandated benefit we voted on was newborn infant 
coverage. The insurance policy did not cover newborn infants 
for the first seven to 21 days depending on the State. Now we 
can list all sorts of crazy things on mandated benefits but 
there is also a reason for having State regulations. And that 
is why going from if I am at Houston, Texas and want to buy a 
policy in Louisiana the State Insurance Commission that 
regulates health insurance in Texas has no authority over that 
insurance policy. So it is great to talk about it in Washington 
but until we, if we want to take over health insurance even 
what the State does and I do not think either Republicans or 
Democrats want to do that yet, but to overrule State mandates, 
let us fight that battle at the State because that is where 
they are the ones that are responsible for it.
    Mr. Peterson, in your testimony you talked about on page 3 
for example the private coverage has not changed significantly 
between predominately white children or black children because 
of SCHIPS but it did change among Hispanics, decline in private 
coverage was large in 1996 and 2006. Did you find any reason 
for that in your work?
    Mr. Peterson. Yes, I have to talk to the folks at the 
Agency for Healthcare Research and Quality who had put all that 
information together to see because there are other--I do not 
want to use a statistical term, there are other factors that 
are going on such as the jobs that are available that those 
folks may have access to so there are a number of things that 
could be at play here and I can ask them to follow up with you.
    Mr. Green. I know in person experience in our district 
because we have a 65 percent Hispanic population and of course 
the children's population is probably 80 percent is that often 
times employer based coverage, they may cover the employee but 
they do not cover the family. And they do not make enough to 
pay for the family even though have an option to do that. At 
least SCHIPS they can afford it.
    You said in your statement and I want to reiterate it on 
page 6, importance that you have the children's healthcare 
coverage but it is also the relationship with a physician that 
is so important and that is what SCHIPS brings to the table. 
And I will give you an example. I have a somewhat suburban 
district but it is actually urban. And in the late 1990's we 
were so happy getting a public health clinic in our area 
because my school superintendent said in a study in their 
schools that 80 percent of the children their predominate 
healthcare provider was the school nurse, so that relationship 
has to be there somehow and the public health system through 
Medicaid or but also through the SCHIPS Program.
    And I also like your statement about the need for outreach. 
I know often times individual States do not do the outreach and 
I think the testimony from a lot of the panel today was that 
the reason we need the coverage, we can cover more children and 
we have to do that outreach to parents so they know this is 
available to them.
    But now let me get to my other questions. I am concerned 
about the increasing barriers to enrollment in CHIPS and I will 
give an example. In Texas, you heard my statement about we lost 
a number of children after 2003 because of enrollment barriers 
and I know the sixth month coverage period is overly burdensome 
and I think contributed like 200,000 loss of children under 
CHIPS in Texas. And I understand Texas was one of nine States 
that have the sixth month renewal requirement whereas other 
States have 12 months. Doctor Lambrew, can you speak to the 
benefit of the 12 months coverage for continued enrollment in 
general?
    Ms. Lambrew. Sure. There is lots of good evidence that 
there are two reasons why it helps. Number 1 is that it is a 
reduced burden both on families and States to have the child 
come in, only every once every year rather than every 6 months 
to do this. It is clearly easier. We also know from----
    Mr. Green. And excuse me for interrupting but that also 
means they do not have to stand in line but once a year in the 
huge lines at some of these agencies.
    Ms. Lambrew. Exactly, if there is a required in-person 
interview. Some States have moved to a mail in application 
which is a little bit harder with some of the citizenship 
documentation rules that have come into effect but that is 
another way to simplify things. But that is right we did do a 
Federal evaluation of SCHIP and what we found was that when 
children leave the program they are not generally going to 
private health insurance. Only about 14 percent gain private 
coverage, about 34 percent return to Medicaid, and then 48 
percent become uninsured. So we know if we can keep these 
children on for a longer period of time, then we are keeping 
these children insured for a longer period of time.
    Mr. Green. OK. Mr. Chairman, one last question in my 10 
seconds I have.
    Dr. Berkelhamer, the Deficit Reduction Act and I had 
mentioned this in my opening statement, the number of changes 
in Medicaid and I am concerned about the citizenship 
documentation and my example a child born in our country in a 
hospital in the United States is considered a citizen and for 
them not to be immediately established for Medicaid coverage 
when they are born here, to wait for their documentation for 
their certified copy of their birth certificate, does the 
American Pediatric Society have----
    Dr. Berkelhamer. Penny wise and dollar foolish and you are 
setting up a situation where children will end up not getting 
enrolled in a timely manner. It will show up when a disease is 
further along. It will end up in an emergency room or a 
hospital. Before the Deficit Reduction Act, mothers who went 
into labor who were the economic eligibility level were 
entitled to emergency Medicaid. When their babies were born, 
they were automatically as you pointed out in your statement 
enrolled for the first year of their life. That does not happen 
anymore. The way it is being implemented now, the family has to 
provide documentation and go through an enrollment process. And 
it really is putting an impediment in front of people in terms 
of getting them enrolled in a timely fashion. It is really a 
problem in the Deficit Reduction Act that needs to be addressed 
and needs to be corrected. And I would urge all of you to do 
it.
    And if I have just a moment, there has been some discussion 
here about private versus public but I also think it is 
extraordinarily important when you think about the interface 
between the two that every child as I mentioned needs a 
comprehensive benefit package. The benefits the children need 
are different than the benefits that adults need. And being 
protected against catastrophic loss is extraordinarily 
important but it is not as important in the long run as an 
isolated thing without looking at immunizations, preventative 
care, well-child care, and all of the things it is going to 
take for us to assure that we have a group of children that are 
growing up and are healthy. And it is a good investment. You 
may think this program is expensive, it is cheap in the long 
run, it really is. And every dollar you spend on this program 
is going to come back in multiples by having a healthy 
workforce 15, 20 years from now.
    Mr. Green. Mr. Chairman, I know that is something I found 
from our community based clinics. They get those children on 
those immunization schedules and thank you.
    Mr. Pallone. Thank you.
    Mr. Sullivan?
    Mr. Sullivan. Thank you, Mr. Chairman.
    I have got a couple of questions I wrote down by listening. 
I guess my first one would be to Ms. Owcharenko. You were 
talking earlier about the segment, this large segment of 
uninsured children are from the middle and upper class and what 
do you think the best way, what is the best way to get them 
insurance? What would change their behavior or whatever.
    Ms. Owcharenko. Well it is the largest growing portion of 
the uninsured. Meaning it is not necessarily the largest 
portion, it is still the largest portion our lower income 
families but the largest growing is in the middle income. And 
to those I think that the concepts that I have talked about 
such as reforming the tax treatment of health insurance to give 
families, middle and upper income families who may not have 
employer based coverage maybe they are self-employed and they 
just cover themselves or they just decide that they would 
rather deal with that. And I think that there is an importance 
of stressing to families that coverage is important to have. 
And I think that is something the entire panel agrees that 
going without healthcare coverage is really rolling the dice 
and so providing incentives and tax incentives work very well 
in a lot of these income groups to encourage them to purchase 
coverage for themselves, as well as, for their children.
    Mr. Sullivan. And you also hear people talk about these 
catastrophic policies and I talked to some people that tried to 
get some of those and they are pretty expensive really. They 
are not as cheap as one might think. Why do you think that is?
    Ms. Owcharenko. Well catastrophic, I would like to point 
that catastrophic policies, the high deductible options are 
just one type of health insurance options that are out there. 
They are certainly seen as kind of the extreme of coverage 
options. In some faces it is not as comprehensive and up front 
first dollar coverage as others. And what we see and that is a 
common factor that we have seen in some individuals facing just 
as equally as high of cost for a high deductible as they would 
for a traditional PPO, et cetera.
    Mr. Sullivan. Right.
    Ms. Owcharenko. And that tends to relate to State 
regulation as was earlier discussed. State regulation really 
does, is an interesting piece that plays a role in the 
affordability of coverage for individuals.
    Mr. Sullivan. Well also that made me think of something 
else on the mandates. Now Congressman Green mentioned some 
mandates and I agree. Well he mentioned I think it should be 
mandated but what do you see as mandates that should not be in 
place? Maybe New Jersey for example, I guess that is the reason 
why it is high there.
    Ms. Owcharenko. Well mandates themselves alone are not the 
biggest problem.
    Mr. Sullivan. What mandate would you say you have seen in a 
policy at a State that is not, you do not think should be 
there?
    Ms. Owcharenko. Off the benefit mandate, probably the 
largest cost driver would be the combination of guarantee issue 
and community rating. Pure community rating which means if you 
are 18 and you are 64, you pay the same price for health 
insurance. That really crowds out a lot of the market for 
younger and healthier individuals. So I think the combination 
of that guarantee issue with community rating is probably the 
largest State regulation cost factor for the cost of health 
insurance.
    Mr. Sullivan. What do you think of mental health parity?
    Ms. Owcharenko. I think some States have added it. It 
certainly is one of the largest cost drivers in the mandate 
benefit analysis that has been done. It is larger than other 
additional benefits one on top of the other. It is one of the 
larger ones.
    Mr. Sullivan. Do you think mental health benefit is a very 
expensive benefit?
    Ms. Owcharenko. It does add to the cost of the premium 
compared to other benefits that are added.
    Mr. Sullivan. Because I have actually seen studies where it 
saved money because----
    Ms. Owcharenko. Well yes, if you looked at a more dynamic 
system I guess you could look at all benefits. In the larger 
term does it help people keep them from going to the hospitals, 
et cetera. So in the long----
    Mr. Sullivan. I am also the coauthor of it so I am 
supportive of mental health parity.
    Ms. Owcharenko. Yes.
    Mr. Sullivan. Mr. Peterson you might be able to answer this 
the best. What is the differential between insuring a child and 
an adult and can you explain that, the costs? You were 
mentioning a little bit of that at the wellness, all that, the 
cost----
    Mr. Peterson. Well I will just say first that we have done 
analyses of--for some of our CHIP projections and on average 
adults are 60 percent more expensive than children so I will 
just say that. If you would not mind, I could comment on the 
mandated benefits.
    Mr. Sullivan. OK.
    Mr. Peterson. Maryland is recognized as having the most 
mandated benefits and they themselves have estimated that that 
adds 15 percent to the premium.
    Mr. Sullivan. But what benefits would that be? What 
mandated benefits----
    Mr. Peterson. Well there is mental health parity. They have 
others as well that----
    Mr. Sullivan. Why do you say mental parity? Why does that 
cost so much? If you look at a dynamic effect of it.
    Mr. Peterson. Well that is true. And that is actually one 
of the points that the Maryland Healthcare Commissioners made 
regarding their own mandated benefits. They said look, the 
total cost of these benefits including maternal care all of 
that, if you look at that portion it is 15 percent. But most of 
these plans just looking at the issue in a slightly different 
light, most of these plans would cover these benefits anyway. 
So if you actually look at the additional impact it is 2 
percent. So again, it is one of these issues of you can take 
into account different things and come up with different 
numbers in terms of the real impact of these mandated benefits.
    Mr. Sullivan. Do these have drug and alcohol in them?
    Mr. Peterson. That is part of the mental health parity 
often.
    Mr. Sullivan. OK, Doctor?
    Dr. Berkelhamer. I would want to comment that in the 
Medicaid Program were half of the enrollees in the Medicaid 
Program nationally are children. They represent 25 percent of 
the cost of the total program. They are inexpensive. Even with 
comprehensive benefit plans like the Medicaid Program, they are 
very inexpensive to cover. I would also point out to you that 
mental health is a major problem that needs to be addressed and 
approximately a third of all the visits to a doctor's office, a 
pediatrician's office is related to a problem relating to 
mental health.
    Mr. Sullivan. That is good, I agree.
    Well thank you very much.
    Mr. Pallone. Thank you.
    Ms. DeGette?
    Ms. DeGette. Thank you, Mr. Chairman.
    Ms. Mingledorff, I wanted to ask you, Ms. Owcharenko talked 
about these catastrophic healthcare policies that could be low 
cost. This was a legislative proposal in the last Congress so 
people could go to other States and buy these low cost 
catastrophic policies and they would be low cost because they 
would not have a lot of mandatory coverages and a lot of other 
reasons. My question to you is once if you took that job and 
you had lost your SCHIP eligibility for your kid, would one of 
those type of policies have helped you with coverage for your 
son's myriad of disabilities?
    Ms. Mingledorff. I do not necessarily know all that is 
involved in catastrophic coverage but I can just speak from 
everything that we have experience with him. It has gone from 
the range of just basic visits and for him a routine, our 
routine visits do not just include immunizations, well-child 
visits, they include occupational therapy, speech therapy, 
follows up with neurology and----
    Ms. DeGette. Did you investigate how much it would have 
cost you to purchase a health insurance policy that would have 
covered all of those things for him?
    Ms. Mingledorff. On a few different occasions we did and--
--
    Ms. DeGette. And what was the range?
    Ms. Mingledorff. The range privately I think was between 
$500 and $700 a month.
    Ms. DeGette. And what would your income have been if you 
would have taken that job?
    Ms. Mingledorff. It was a part-time position at the time I 
think it would have been maybe $1,500 a month.
    Ms. DeGette. So at least a third of your income. Ms. 
Molina, if you had been able to purchase a catastrophic 
insurance policy, do you have any idea whether that would have 
covered your kids well-child visits or like last week when they 
had the flu if they had to go to the doctor?
    Ms. Molina. I do not know.
    Ms. DeGette. OK. Did you investigate purchasing a health 
insurance policy?
    Ms. Molina. Yes.
    Ms. DeGette. And how much would that have cost you?
    Ms. Molina. It would cost between $100 and $150 per child 
per month.
    Ms. DeGette. So that would be roughly $200 to $300 a month.
    Ms. Molina. Yes, $200 to $300.
    Ms. DeGette. If you do not mind if I ask, what was your 
income at that time per month?
    Ms. Molina. It was slightly above the 200 percent.
    Ms. DeGette. So that still would have been what percentage 
of your income then?
    Ms. Molina. I would say probably--you are making me do 
math.
    Ms. DeGette. It would have been too much for you to afford, 
I guess.
    Ms. Molina. Absolutely.
    Ms. DeGette. OK. Dr. Lambrew, I wanted to ask you a couple 
of questions. One of them is that we heard some testimony 
earlier about middle and upper income families who do not 
purchase health insurance for their children. Is that the 
largest reason why children are not insured in this country is 
because higher income folks are not purchasing insurance for 
their kids or is the problem of the lower middle class and the 
working poor not being able to afford insurance?
    Ms. Lambrew. Nina did say this in her testimony. It is 
clearly a low and middle income problem. Two-thirds of the 
uninsured have income below this 200 percent of poverty 
threshold and it really is that concentration. But I do want to 
go back to this larger point which is the reason why we have a 
fast growing group among middle and high income people is 
because we are talking about this program in the context of an 
eroding employer based coverage systems.
    Ms. DeGette. Right.
    Ms. Lambrew. The percentage of firms offering coverage has 
dropped from 69 percent to 61 percent last year. We have 
uninsured adults growing very rapidly. So I think that we have 
to really be thinking of the big picture here because at the 
same time as CHIP has stabilized and reduced coverage for 
children and Medicaid but we also have this kind of larger 
problem going on.
    Ms. DeGette. Do you have any ideas of how we could address 
that larger problem as it respects children?
    Ms. Lambrew. It is actually quite hard to think through. We 
could certainly do what the State of Illinois has discussed 
which is try to open up the program. I guess CHIP to have 
higher income families buy into it. You could consider a larger 
health reform proposal because as we said earlier children come 
in families and typically their parents are also uninsured when 
they are uninsured. The truth of the matter is I think we need 
to be talking about covering all Americans at some point 
because trying to solve the problem through kind of programs 
like SCHIP presents a challenge. There is a bigger problem 
going on out there.
    Ms. DeGette. Right. Well in fact, I just said to Mr. Green 
listening to the testimony one thing that Mr. Chairman this 
committee might think about is the idea of establishing the 
SCHIP guidelines but then also allowing parents with incomes 
higher than that level to purchase, to buy into SCHIP. It has 
been so successful so that is something I think we should 
consider as we look at reauthorizing this.
    Mr. Pallone. If I could just comment. I did not want to use 
up your time. We are, we will have additional hearings. As I 
said, we are going to have another one most likely March 1, the 
second half of this SCHIP hearing. But we also will have other 
hearings on the issue of the uninsured not just for kids but 
the larger population as well as the employer based system and 
what needs to be done there.
    I yield to the gentlewoman from California, Mrs. Capps.
    Mrs. Capps. Thank you, Mr. Chairman.
    And I want to use my short time to focus on our two star 
witnesses, our moms. But I first want to say thank you to Dr. 
Berkelhamer because we could give you the whole time, this is 
your subject and I thought you were so concise in your response 
to my colleague, Mr. Green on talking about how we get paid 
back as a society in spades by healthy employers if we cover 
them as kids. This is just so important that we learn this 
lesson and also your comments to the minority ranking member on 
comprehensive coverage including mental health. Pediatricians 
are psychiatrists most of the time, I believe in my practice as 
a school nurse. And also I wanted to refute or not refute but 
add to Mr. Green's saying that too many kids get their primary 
care from school nurses. Having been one, I know that it is an 
endangered species in a lot of school districts and woe to 
those who think they are going to get really professional help 
in the school health office and I wish it were not so.
    I did want to before I get to the moms, Dr. Lambrew, our 
chairman asked you about the importance of covering adults and 
you said and there is a growing amount of material of having 
family members covered in order to ensure that the kids get 
good coverage. And without going on there because I do want to 
get to the moms, would you just mention briefly the importance 
of waivers and should we be dealing with this and letting 
States waive into that kind of coverage.
    Ms. Lambrew. Sure. In Medicaid already even without SCHIP 
there was an option to cover low income parents and the sad 
truth is that right now I think the percentage of poverty that 
we cover parents at nationwide is about 63, 65 percent of the 
poverty level. So we have options today that some States have 
not used. What SCHIP has gone and proven is that if the Federal 
Government comes in with a higher matching rate, States will 
follow. And the truth is I think waivers help States get access 
to that higher enhanced matching rate in SCHIP but we do not 
have to have SCHIP waivers to basically change the law and 
allow States the kind of financial incentives to cover parents. 
The truth is it is just a matter of priorities.
    Mrs. Capps. OK, thank you.
    Now I really am impressed that both of you moms would take 
the time to come here. It is not easy because you have day 
jobs, you have big responsibilities we can see with the little 
ones but your teenagers are every bit as challenging as the two 
little ones all of us who have had teenagers in our families 
know that. And just in the remaining time, and my question was 
you did not choose the private sector, maybe you could not but 
you did not have time to examine all the policies out there. 
Maybe just each of you take a minute and tell us again what we 
have not heard yet. Why you think it was so important for you 
to come and tell us about the importance of SCHIP or what the 
program meant for you. I will start with you, Ms Molina.
    Ms. Molina. Well again, I want to say that when my children 
were on this program, my son and I actually before I came out, 
we sat on the bed and we made a list of all the times that I 
took them to the emergency room. Both of my kids really 
sprained their ankles, they both had to be on crutches. My son 
broke his arm by falling off the slide at school.
    Mrs. Capps. Very common childhood things.
    Ms. Molina. And my daughter had a huge third degree burn on 
her leg and every time that we would go to the hospital they 
got excellent care being on SCHIP.
    Mrs. Capps. Yes.
    Ms. Molina. And, yes, it is heartbreaking for me to know 
that my kids are not enrolled now but I am here because I think 
I represent the tens of thousands of parents whose children are 
either not insured or are insured with the new SCHIP and it is 
just so important for me to come and say this program works. We 
need to reauthorize it. We need to fully fund it so we know 
that all the children are covered and we are not going to lose 
children as the years go by.
    Mrs. Capps. That was beautiful. And Ms. Mingledorff to you 
as well if you want to add anything?
    Ms. Mingledorff. Yes, absolutely. For me and my family it 
has been just imperative to be able to have Medicaid and SCHIP 
to support my family's health needs. As a volunteer and 
Ambassador Family for the March of Dimes, they know well of our 
situations that we have gone though in the last 4 and 5 years. 
And they have not been the common ailments of a 5-year-old 
child. He was admitted to the hospital when he was 9 months old 
after spending 76 days in the NICU after he was born. After 
that when he was 2-years-old he stopped eating and had to be 
admitted to the pediatric unit at our hospital for over a month 
and went home on a feeding tube. After that he had every type 
of equipment that we needed to just support his living. And 
probably seven different medications, occupational therapy, 
speech therapy, every specialist under the sun to just follow 
him and make sure he was doing OK. My whole life was consumed 
by his every day need and every day his medication and 
therapies were required to keep him living. And the only way 
that we were able to do that and provide him with the optimal 
care was through Medicaid and SCHIP. And if we did not have 
that, I am positive that he would not be here today.
    Mrs. Capps. Thank you. You have both, all of you have 
helped us as we begin to reauthorize.
    Thank you.
    Mr. Pallone. Thank you, Mrs. Capps.
    Ms. Schakowsky.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    Let me just talk a minute since it came up about the 
dynamic budgeting, thinking about the kind of long-term savings 
that we will have that when we talk about insuring our children 
we should be thinking not so much about consuming but 
investing. And if there were only a way to figure out how we 
could calculate those costs in a much more realistic and 
sensible way about how it would actually save money down the 
road. I think we might take another look at our priorities and 
make some different decisions about what we do.
    We have heard about the issue of crowd out and the perhaps 
causal relationship and perhaps coincidence of the relationship 
of public and private health insurance coverage. But what I am 
wondering is if there is any evidence base, I want to ask Dr. 
Lambrew over the past 10 years of SCHIP and Medicaid have we 
found a crowd out problem? For example, employer sponsored 
insurance coverage has it disappeared in New Jersey where up to 
350 percent of poverty children are covered? What has been the 
actual history?
    Ms. Lambrew. Well the good news is that you all in your 
wisdom funded an evaluation of SCHIP that was completed a 
couple of years ago. And in that evaluation they certainly 
looked at this question because it is a critical question as 
you think about public program expansions. And what they found 
was that of the recently enrolled children in the program, 43 
percent had been previously uninsured, 29 percent had been 
coming into the program from Medicaid, a family who again the 
mother went back to work or for some other reason had too much 
income for Medicaid, and about 28 percent had previously had 
private coverage. Of that 28 percent, a quarter of those 
parents said they could not afford that coverage, it was 
straining their family income so this is an important move for 
their economic security. So only a small fraction of the 
children in the program are coming from some insured situation 
and as the Federal evaluators say in their own words, the 
program did not lead to widespread substitution of SCHIP for 
employer coverage, even though almost all families enrolling 
their children had at least one working parent. So I think that 
we have to separate out the larger context of the eroding 
employer based system from what is actually happening with 
SCHIP and for low income families they are also experiencing 
the erosion in private coverage but the evaluators are not 
finding that a significant percentage of those kids coming into 
the program are coming in from private coverage.
    Ms. Schakowsky. And you wanted to say something, Mr. 
Peterson?
    Mr. Peterson. You just mentioned New Jersey and I happen to 
be looking at their numbers when I was sitting back there and I 
was thinking about that same issue well what is there rate of 
public coverage among children. And actually the rate of public 
children, public coverage in New Jersey is the lowest in the 
country for children and they have one of the highest employer 
sponsored coverage in the country so again there are other 
factors at play. New Jersey has a very high income as a State 
so one needs to control for all of that and take all that into 
consideration but just in specific answer to your question that 
is what the numbers were.
    Ms. Schakowsky. And I wanted to ask Nina if I could so I do 
not even try it. When you talk about employer based coverage, I 
wonder what that means anymore because so many of the costs 
have actually shifted to the--maybe the employer offers it but 
the employee has to pay the bulk of that. And in fact, Dr. 
Lambrew you had in your testimony in 2006 the average premium 
for an employer based family insurance policy $11,480 was more 
than the full-time full year earnings of a minimum wage worker. 
So when we talk about employer based coverages did you take 
into consideration that it is not realistic for people who make 
relatively low incomes to actually purchase those employer 
based, employer offered insurance. Did you consider that when 
you talked about crowd out and all those----
    Ms. Owcharenko. Well the study was not mine on crowd out. I 
will be happy to share it with the committee. It was, I was 
just using it as an illustration. But when looking at employer 
based coverage, there are a variety of ways as I mentioned of 
leveraging those SCHIP dollars to help with the dependent 
coverage share of the employer premiums and cost sharing 
requirements. So the concept is how do we pull the existing 
resources together and allow the family to decide whether they 
would rather have their child in SCHIP and they remain 
uninsured or they remain on the employer based policy or say 
well I would rather take my SCHIP funds and enroll the child in 
my family policy through the place of work. At least then we 
are giving the families some greater choices and flexibility. 
We talk about State flexibility and that is great but there 
needs to be some I think attention to also giving families some 
greater flexibility in making the choices of where they get 
their coverage and just leveraging the existing sources of 
funding better there to help them, help those families who find 
coverage unaffordable.
    Ms. Schakowsky. Let me just ask another question. Dr. 
Lambrew, you noted that an estimated 18,000 adults die each 
year because they lack health insurance. Is there any estimated 
rate for children?
    Ms. Lambrew. The Institute of Medicine who did that review 
a few years ago just focused on adults. We do not have that for 
children. But I think it is partly what are friend the doctor 
here has said which it is not necessarily mortality is lifelong 
disability that often is the consequence of children not having 
health insurance. It is the sick child having some sort of 
disability at school, learning problem, growing into a less 
productive adult. That is kind of the long-term chronic 
problem. And especially in this century where chronic illnesses 
are new, a new problem in health system. It is especially 
important that we get to children early with wellness and 
preventative care.
    Ms. Schakowsky. Mr. Chairman, could I ask one short 
question?
    Mr. Pallone. If you do not mind, we are going to do a 
second round so we will get back to you.
    Mr. Burgess.
    Mr. Burgess. Thank you, Mr. Chairman. I apologize for 
having been out of the room for so much of the hearing and bear 
with me if I cover ground that has been covered before but I am 
sure that the country will benefit from hearing it again.
    Mr. Peterson, if I could ask you is there a difference in 
the cost of insuring a child versus insuring an adult?
    Mr. Peterson. Yes. As I said just among SCHIP, out analysis 
was 60 percent, adults are 60 percent more expensive than 
children on average. There is huge variation by State as well 
so, that is just the average overall but other States might 
differ. But, the other thing to take into account which we 
could provide you with numbers is how that varies for adults 
and children overall. As the doctor had said children are much 
less expensive to cover.
    Mr. Burgess. What, if you do not mind and I do not mean to 
ask you to name names, but can you give us an example of a 
State that is higher in cost and a State that is, what would be 
an example of lower in cost?
    Mr. Peterson. In terms of the SCHIP?
    Mr. Burgess. Yes.
    Mr. Peterson. That has not been broken down.
    Mr. Burgess. But in general for insurance coverage is does 
it cost more to insure someone who lives in the Northeast than 
it does in the Midwest?
    Mr. Peterson. In SCHIP or overall?
    Mr. Burgess. Overall.
    Mr. Peterson. Yes, that is the case.
    Mr. Burgess. And what is the reason for that discrepancy?
    Mr. Peterson. There is the underlying cost of care and 
there are different patterns of utilization in terms of how 
much care people use. And there was an analysis done by the 
Agency for Healthcare Research and Quality that they found 
lower holding insurance constant in all these other things 
utilization was lower in a State like Texas than in the New 
England area. And so that is controlling for insurance and the 
different characteristics so fundamentally there are just 
different uses of healthcare across the country. So utilization 
and price are both of those factors that then feed into the 
premiums.
    Mr. Burgess. Does that concept pose any barriers for if 
someone wanted to discuss a single payer national system, would 
that in itself be problematic, the different patterns of 
utilization across the country?
    Mr. Peterson. Well I do not know about that in particular 
but essentially and I had raised this in my written testimony 
this does provide tensions even with SCHIP and Medicaid in 
terms of the different ways that States are doing things with 
private health insurance as well.
    Mr. Burgess. And would those tensions be magnified if there 
were say a payroll tax that provided coverage for a single 
payer system throughout the country? Would my constituents in 
Texas be covering Mr. Pallone's constituents up in New Jersey?
    Mr. Peterson. Yes, I do not know.
    Mr. Burgess. I do not know either. I have a suspicion. What 
about we always hear about mandates? We had a hearing in this 
committee last year or 2 years ago that went on into the wee 
hours of the morning discussing mandates. What, to what extent 
do mandates play a role in the cost of insurance?
    Mr. Peterson. I think Nina had mentioned before that 
mandates are a relatively small portion of some of the State 
level variation and a lot of it may be more attributable to 
other practices such as rating requirements whereas New Jersey 
has people of all ages pay the same rate and those are in 
response to different priorities. It could be the case that in 
New Jersey their focus is on people who are regular users of 
healthcare and so the priority is to try to make sure that they 
can get access to health insurance but that necessarily means 
that premiums are going to be higher in a case like that. And 
so these are State level decisions that have been made 
depending on the priorities.
    Mr. Burgess. Anyone feel free to offer an opinion on this. 
I think the statement was made when Ms. Schakowsky was asking 
the question about the average cost of insurance premiums would 
be over $11,000 a year. When you look at products that are 
available on the Internet such as HSA products, high deductible 
products, the last time I looked which albeit has been a couple 
of weeks ago but I think the price is probably still fairly in 
the ballpark of being current for a male 25 years of age, State 
of Texas, non-smoker a $2,000 deductible, PPO policy with Blue 
Cross, Blue Shield would be between the ranges of $55 to $66 a 
month, significantly less than an $11,000 a year outlay. What 
is the reason there? Is it all the high deductible or are there 
other factors that come into play? Does the competition from 
being up on the Internet does that help drive the price down?
    Mr. Peterson. Well the $11,000 number was for family 
coverage. You are referring to single coverage so that is 
apples and oranges there.
    Mr. Burgess. Give me a figure if anyone has it of what is a 
single coverage for that same male 25, non-smoker?
    Mr. Peterson. That is what I would say is $4,000.
    Ms. Lambrew. If I could just jump in for a second. I think 
that we have to have, we need to think about three different 
types of insurance, group employer insurance in which case this 
whole issue of community rating and guarantee issue is not 
there because every worker has access to the same plan for the 
same premium and basically those plans are fairly generous and 
the benefit mandates normally apply to most self insured firms. 
There are small businesses that are competing in the small 
group market in which case some of these rules do play out. And 
then there is the non-group individual market which is probably 
what you were looking at. And I think that what we know is in 
the vast majority of the States there is underwriting in that 
market. So that rate is probably good if you have a medical 
screen and a good health history. It probably is not good if 
you have any sort of family history or health issue. And so I 
think that we have to make sure that we are comparing apples to 
apples so that same person might be paying a higher premium in 
an employer base coverage but they are also getting different 
benefits. They are just different systems.
    Mr. Peterson. And the other thing regarding catastrophic 
coverage and the gentleman from Oklahoma who is here was noting 
that he found that catastrophic coverage was not as inexpensive 
as he expected it would be. And the reason for that generally 
that has been found among analysts is that most of the 
healthcare costs that are in the premium are for catastrophic 
coverage naturally and it is for ladies like her that drive up 
the overall premium. Now when you have people in a group and 
you have that spread out that is fine. The issue is when you 
start doing in the non-group market and if one then targets 
where a premium reflects ones own health those become 
different. And so all of this begins to break down and it is 
tough issues different States do it differently and it is just 
really hard. But those are some of the issues at play.
    Mr. Pallone. We better----
    Mr. Burgess. Yes, Mr. Chairman, you have been indulging.
    Mr. Pallone. I was going to let you go on if you wanted to 
talk about that single payroll tax proposal but----
    Mr. Burgess. I am merely giving you an opening.
    Mr. Pallone. Oh, I see, OK. Dr. Berkelhamer if you would 
like to----
    Dr. Berkelhamer. I just have to respond to the line of 
questioning by saying there is I think a futility in going down 
the path of a catastrophic insurance program for children and 
that the thing that I have seen in my career and every 
pediatrician has seen in their career is delay in treatment 
resulting in catastrophic lifelong disability to a child. A 
child who has simple diarrhea that can be managed in the 
doctor's office that waits too many days and comes to the 
emergency room profoundly dehydrated has brain damage, never 
recovers again. The child whose had an earache whose mother has 
waited to take him to have the ears examined to get antibiotics 
who shows up with meningitis on the fifth or the sixth day of 
illness because she has been fretting about spending the $100 
for the doctor's office visit.
    I think that when you look at this program, you have got to 
look at what is the benefit package that is going to promote 
good child health. And a catastrophic only approach in SCHIP or 
for children is just not right. It is not going to get us where 
we need to go in terms of assuring that kids get the services 
they need.
    Mr. Burgess. If I may, Mr. Chairman?
    I think we have an obligation on this subcommittee to ask 
these questions. And certainly in countries that have done, had 
a movement more toward the medical savings account, 
catastrophic coverage like South Africa, the experience has 
been just the opposite of what you would suggest that there has 
not been that delay in coverage so we are charged with yes, 
trying to extend a very valuable healthcare system to children 
but we are also required to be good stewards of the taxpayer 
dollar and it simply in that spirit that the line of 
questioning occurred.
    Mr. Pallone. Thank you, thank you both.
    Mr. Engel.
    Mr. Engel. Thank you, Mr. Chairman.
    Before I ask my questions, I want to just say to Dr. 
Lambrew that in my opening statement I mentioned asthma and 
talked about my area, my district in Bronx, NY has one of the 
highest prevalent rates of pediatric asthma nationwide and I 
just want to say that I was very pleased in you testimony that 
you focused on the importance of comprehensive care to children 
with chronic illnesses. So I want to just say that if I had 
more time I would ask you a specific question on it.
    And I want to thank Ms. Molina for illustrating how 
frightening the lack of healthcare coverage can be. Parents 
obviously want to care for their children as best as possible 
and should not have to worry that a small raise might make 
their kids ineligible for coverage or that if their kids are 
unlucky enough to get sick their family's scarce finances may 
be turned upside down. Ironically, we find that with children's 
healthcare and we find that with senior citizens as well when 
they qualify for a program they get a very small cost of living 
increase following January and that cost of living increase 
knocks them out a program and they wind up paying much more 
than their little increase was so I want to thank you for 
pointing that out.
    But Dr. Lambrew, I want to ask you, could you please 
comment on the earlier discussion on premium assistance. Would 
this be helpful for children on Medicaid and SCHIP?
    Ms. Lambrew. Sure. I am actually glad to have an 
opportunity to answer this because we actually do have this 
option in SCHIP today. It was built into the program a decade 
ago because I think there was a lot of reflection on we want to 
make sure that this is an option for families as Nina mentioned 
earlier. And if it is cost effective for a State to purchase 
the premium and wrap around the coverage in an employer based 
plan States can do so. We have had a few very small number of 
States that have called this a success, Rhode Island for 
example because this is a fairly small State has been able to 
develop relationships with firms to make this happen. But it is 
the exception rather than the rule. The States that have tried 
to do this have found it very challenging to coordinate with 
employers whose workers are coming in and out of the workforce 
by definition because this is a low, more a transient workforce 
at this income bracket trying to coordinate the benefits when 
those benefits change every year has been quite of a challenge. 
So some States like say Maine have actually tried to say can we 
figure out how to have those small business buy into a group 
product in the same way that the Medicaid people buy into 
Medicaid managed care. So rather than trying to coordinate with 
hundreds of different plans, try to figure out some pulling 
mechanism to allow the small business to buy in and the State 
to supplement.
    Mr. Engel. Thank you.
    Let me ask you another question. I believe that tax credits 
will not be very useful in reaching the uninsured children 
because most of these children are in families of very modest 
means. So let me ask you this. Medicaid and SCHIP have done a 
great job in reaching uninsured children. The statistics I have 
is more than one in every four children in the U.S. is covered 
through one of these programs. But some organizations have put 
forward tax credit proposal as a way to reach uninsured 
children rather than I believe on building up programs that we 
already know work. So I want to hear your opinion about that. 
Do you think such proposals are an effective way to reach this 
population? I happen to think not but I would like to hear what 
you have to say.
    Ms. Lambrew. I like to say my colleagues agree with me. I 
think most experts would agree that for a poor population, for 
a very low income families tax credits are not an effective way 
to get people covered. These are people who have little to no 
tax liability. They cannot put up the premium and wait for a 
tax refund the next year. We have some experience now with 
advanceable tax credits but it does not work very smoothly. So 
I think for the low income people who are the majority of our 
uninsured, a tax credit approach will likely not be as 
effective as a Medicaid or an SCHIP expansion.
    Mr. Engel. Thank you.
    Following that, the President in his State of the Union 
suggested a radical proposal which is eliminating the current 
tax deduction for employer sponsored health coverage and 
replacing it with a standard deduction for all families. Now 
obviously this is a bold proposal but my concern is that its 
net effect will be to cause families who today have decent 
coverage through their employers to lose that coverage and 
potentially not be able to replace it with coverage in the 
individual insurance market which we have problem with. It is 
obviously a terribly flawed market. I would like you to comment 
on that, too, Dr. Lambrew.
    Ms. Lambrew. Sure. I will do this briefly. For the first 
reason that I just said, low income people are uninsured, have 
little tax liability. They are not going to benefit that much 
from this proposal. Even the administration has admitted that. 
Second, the idea of moving people to a non-group market without 
the types of regulation that ensure that they have access to an 
affordable product means that there may be some or older 
workers or sicker people who do not have the option even though 
they may have that tax voucher. And third, I think there is 
this whole question mark about what happens to the employer 
based system. It is eroding now. Will this accelerate the 
reduction in employer coverage? I think a fair amount of 
experts will say yes, that there is no longer a tax break 
associated with the employer contributing to coverage, why 
would employers do it? In which case, we are taking apart the 
main source of health insurance for most Americans today. And 
then there are economists like John Gruber of MIT who thinks 
that this actually could cause an increase in the number of 
uninsured Americans rather than a decrease which is what the 
administration projects.
    Mr. Engel. Well thank you very much, Mr. Chairman.
    Mr. Pallone. Thank you, Mr. Engel.
    And Mr. Waxman is next.
    Mr. Waxman. Thank you, Mr. Chairman.
    Dr. Berkelhamer, I was interested in your views about the 
impact of Medicaid on low income children because of the EPSDT 
Program. If these children receive all medically necessary 
services as prescribed by their doctor, the EPSDT is very 
important to be able to identify what their needs may be 
whether it is birth defects, chronic illness, well-child care. 
Could you talk about what EPSTD guarantees for low income 
children?
    Dr. Berkelhamer. Early Periodic Screening Diagnosis and 
Treatment. The T is extraordinarily important. It does not do 
any good to recognize something unless you are going to do 
something about it. Congressman, thank you for asking that 
question. One of the big concerns in the Deficit Reduction Act 
was the language that said that EPSTD would be wrapped around 
in the Medicaid Program and now we have created great 
confusion. That is a bedrock component that every child needs. 
Every child needs to be looked at periodically, the diagnosed 
diseases early, and to do what we can about them before they 
become more problems. I would remind all of you that the EPSTD 
Program was created in the late 1960's, I think it was 1967. 
Karen is that right, 1967. Did you invent it? No, OK. That it 
was created in 1967 and it was after the bad experiences we 
were having during the Vietnam Era where so many young men 
could not pass their physical and they had chronic lifelong 
disabilities that would have been identified and corrected if 
there was a program like EPSDT. And that was the major 
breakthrough idea that came up with this whole concept for 
EPSDT. And I would say that quite frankly ever child deserves 
EPSDT whether it be in the private sector or in the public 
sector that this is when I keep talking about the benefit 
package designed for children, EPSDT is at the core of that 
benefit package.
    Mr. Waxman. And what would we expect in that regard in the 
private insurance plans?
    Dr. Berkelhamer. I think that there needs to be just like I 
heard Congressman Green talk about mandating newborn coverage, 
I think that we should not allow children to be in a situation 
where the parents have an economic disincentive to find out 
what is wrong with their kid early and that they make the 
corrected measures that are necessary to care for them. 
Children need comprehensive care.
    Mr. Waxman. SCHIP does not have that requirement. Would you 
think that we ought to be requiring it under the----
    Dr. Berkelhamer. Well certainly those SCHIP Programs that 
are leaning on the Medicaid Program and there should not be any 
problem moving from Medicaid to SCHIP as you move up the 
economic ladder and you should not lose EPSDT as you move up in 
those programs. I would also say I think it would be very 
reasonable quite frankly from my perspective if you would 
require of all insurance programs for children that they have 
EPSDT benefits.
    Mr. Waxman. But we are dealing now with the SCHIP and would 
you recommend Congress consider adding EPSDT to SCHIP for 
children to ensure that all their benefits packages are 
appropriately----
    Dr. Berkelhamer. I think that would be a very good idea, 
thank you for asking me that.
    Mr. Waxman. One of the aspects of the welfare reform 
legislation passed in the 1990's was to delay Medicaid coverage 
for legal immigrant children. I think few people realized we 
have got policies in place that keep them from coverage for 5 
years. Frequently because of burdensome requirements it is 
extended even longer. There is no logic for delaying health 
benefits to legal immigrant kids for 5 years except to punish 
them for their immigrant status. I wonder if some of the 
panelists might like to comment, Dr. Berkelhamer, would you 
comment on the effect on a child's health of banning coverage? 
Does this many any sense?
    Dr. Berkelhamer. It just seems Draconian to me to do that 
to a child. And I cannot understand why if a child is not 
physically within our borders that we do not recognize the 
value in giving that child medical care. And we have to wait 5 
years and they have a disability that could have been treated 
earlier and could have mitigated some of the lifelong problems, 
I am absolutely certain we are saving money by doing the right 
thing from the get go. And I just think that we are much too 
hung up on holding children responsible for whatever the 
problems are that their parents have. We have to recognize that 
these children are all of our responsibility and we have to do 
the right thing for them.
    Mr. Waxman. Dr. Lambrew, do you have any comment on that?
    Ms. Lambrew. I would just add two things from a cold 
heartless researcher's perspective which is you know there is a 
public health argument to be made here which is to the extent 
that we have children lacking immunizations, lacking health, 
basic health care and a society where we are more worried about 
Avian flu and other infectious diseases. It is a public health 
threat. We have evidence that areas we have high undocumented 
people have problems with public health and lack of healthcare. 
And it is an economic issue. These children may get care in the 
emergency rooms but we are paying more for them there and they 
are sicker as we talked about earlier and creating a bigger 
burden on society.
    Mr. Waxman. OK, thank you.
    Thank you, Mr. Chairman.
    Mr. Pallone. Thank you. I just wanted to thank all of you 
for being here today. I thought this was very worthwhile and 
answering our questions really in a very concise and effective 
way.
    As I mentioned, we are going to have the second panel which 
was supposed to be tomorrow but for the unfortunate death of 
Congressman Norwood and we will most likely have that second 
panel on March 1. I would also remind the members that you may 
submit additional questions for the record to be answered by 
the relevant witnesses so you may get some written questions. 
And the questions should be submitted to the committee clerk 
within the next 10 days and then the clerk will notify Members' 
offices about the procedures. And without objection, the 
meeting of the subcommittee is adjourned.
    Thank you all.
    [Whereupon, at 5:00 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                       Testimony of Susan Molina

    Good afternoon. My name is Susan Molina and I am a working 
mother whose two children understand exactly how important 
reliable health coverage is.
    I am also committed to improving my community and serve as 
the Board Chair for Metro Organization for People in Denver, 
Colorado. MOP is a grassroots, faith-driven organization that 
works to empower people around real issues that affect our 
families and communities. MOP is part of the PICO National 
Network, which spans 1,000 religious congregations in 150 
cities in 17 states.
    I am here as a mother to speak on behalf of my two children 
Bernadette (age 14) and Joseph (age 10). I am also speaking for 
the tens of thousands of parents in the PICO network who lack 
coverage for their children.
    Almost all uninsured children (83 percent) live in families 
where at least one parent works. I am a single mom who works. I 
am uninsured. In September my children lost their SCHIP 
coverage because my new job paid slightly more than 200 percent 
of poverty and that made my children ineligible.
    It is an honor to be here and not something I would have 
ever expected. I was married at the age of 17 and I had two 
children. My husband was a very abusive man who walked out on 
us when my oldest was five. I worked very hard so that I would 
not become a burden to my parents. Sometimes I worked two jobs.
    When I became involved with the MOP organization, my life 
began to change. I began to see that it's OK to realize where 
you are and what you've been through as long as you want to 
change where you're going. MOP and PICO helped me to earn my 
GED and I even took an accounting class at the university. Now 
I help mentor others who are in similar situations I was in.
    I say all that to say this: as a single mother who has 
worked to be where I am now it's hard to know that my kids 
don't have health care. Somehow we are punished for bettering 
our lives.
    When my daughter was 4 she needed a lot of dental work. I 
was working two part-time jobs that paid $8-9 an hour and none 
of us had health coverage. I remember going to the welfare 
department and asking to enroll in Medicaid. I told them I did 
not need welfare or food stamps or anything else, just help 
with the dental work that my daughter needed. After I did the 
paper work the caseworker told me I didn't qualify unless I 
quit one of my jobs or had another baby.
    When SCHIP became available, I was able to enroll my 
children in the Colorado Child Health Plus Plan and get my 
children health coverage. And like most kids, they needed it. 
While they were on SCHIP both my children sprained their 
ankles, my son broke his arm and my daughter had a bad burn. 
Both received good care that kept them from any permanent harm 
and allowed them to go back to school and allowed me to go back 
to work.
    I was not worried about how much these accidents were going 
to put us in debt. I just knew they were going to get the care 
they needed.
    All that changed when we lost our coverage in September, 
because my new job paid slightly above the 200 percent cut off 
to qualify for SCHIP in Colorado.
    We talk about 9 million uninsured children. Behind these 
numbers are real children who go to school, have accidents and 
get sick. And real parents like me, who work hard to meet their 
families' needs.
    When insurance prices are outrageously high, as a parent I 
have to decide whether to put food on the table or buy health 
insurance. I cannot afford to pay the hundreds of dollars each 
month that it would cost me to buy health insurance for my 
children.
    I worry that when my children, God forbid, have an accident 
or get sick I will not have the means to pay for the medical 
attention they need.
    I too am in danger of having a very serious eye disease. 
Four years ago when I was being tested for Glaucoma I was told 
that I had to be tested every year to track the condition. I 
have not been tested for the last 3 years, since I lost my 
health coverage. It scares me to think that I could eventually 
have serious problems as a result of not being treated.
    Thank God that neither of my children has had a major 
injury since September. But they have been sick, and not having 
insurance changes the care you can give them.
    Both of my kids were home sick last week for a number of 
days. The first night I felt very sad that I couldn't just take 
my son to the doctor because we don't have health insurance 
anymore. He was running a fever, and as I drove to the store to 
buy him some medicine, I began to cry. I felt like a failure. 
My kids needed something I couldn't provide. As a parent you 
work to make sure they have what they need. I went into the 
store and picked up the generic brand of chest rub and some 
Motrin for the fever. As I got back into the car I felt the 
need to tell someone that of course I would take my children to 
the doctor if I felt it was an emergency. I wouldn't care if I 
had to pay hundreds of dollars later.
    I called my friend and told her. She just heard me cry for 
a while, and she said that it was important that I tell this in 
my story so that you would know that parents go through this 
helpless feeling everyday. She was right, and I hope you do.
    Through MOP and PICO I've learned that my experience is not 
unusual. In MOP and throughout the PICO network we have 
surveyed thousands of people in our churches and schools around 
healthcare. We have heard many sad stories like mine. We have 
also learned that this is hard for people to talk about because 
it's so private.
    My state, Colorado, has a long way to go in covering all 
children, but it cannot get there without help from Congress.
      In Colorado there are 176,000 uninsured children.
      Our state has one of the highest uninsured rates 
in the country: 29 percent of low-income children are 
uninsured.
    But things are changing.
      For the first time in 2005 Colorado spent its 
full allocation of SCHIP funds.
      Now MOP and PICO Colorado are working with health 
care organizations to change state policy to enroll eligible 
children and expand coverage.
      I'm happy to say that legislation is about to be 
introduced to expand coverage.
    But Colorado cannot move forward to help working families 
like mine without more Federal funding for children's health.
    That's why Metro Organizations for People in Denver, PICO 
Colorado and the PICO National Network, are working with child 
health organizations to see that Congress fully funds the SCHIP 
program.
    PICO is advocating a Road Map to Covering all Children by 
2012. This Road Map has five steps to cover all children:
    (1) Fill the existing SCHIP shortfalls facing states, so 
that no one risks losing coverage
    (2) Fund proven outreach programs and provide states with 
the financial incentives to cover all eligible but uninsured 
children
    (3) Provide financial support and incentives for states to 
expand eligibility
    (4) Allow states the option to cover legal immigrant 
children and pregnant women
    (5) Provide the approximately $60 billion in SCHIP and 
Medicaid financing to support the cost of covering newly 
enrolled children
    [Attached to my testimony is a letter from more than 200 
prominent clergy supporting the PICO Road Map.]
    This road map is realistic, responsible, and for millions 
of children in working American families like mine, it is the 
highest possible priority.
    Working parents need to know that if our jobs don't offer 
affordable family coverage we have another option for our 
children.
    PICO is working closely with many other state and national 
organization to win health coverage for all children. This week 
we joined 55 other national organizations in adopting a 
consensus plan for SCHIP reauthorization.
    I want to thank my own representative, Congresswoman Diana 
DeGette for her leadership on children's health in Colorado and 
nationally.
    On March 7 I will be back on Capitol Hill with 400 other 
parents and clergy for PICO's Faith and Families Summit on 
Children's Health.
    We invite all members of the House Energy and Commerce 
Committee to join us for a Summit kick-off event from 8-9:00am 
and a 1:00pm Rally. As part of PICO thousands of parents like 
me are finding our voices.
    Chairman Pallone, Congressman Deal, I know you are both 
parents--and many other members of this subcommittee are too.
    I don't need to tell you about how hard we parents will 
fight for what our children need. And my faith tells me I have 
a responsibility to join with other parents to make sure that 
all children have the blessing of good health.
    Thank you for the opportunity to tell you one parent's 
story, on behalf of millions of parents throughout our country.

                          PICO National Network

           All children deserve the blessing of good health.

    This year Congress is reauthorizing the successful State 
Children's Health Insurance Program (SCHIP) which provides 
affordable coverage to six million children. Despite progress 
in expanding health coverage there are still 9 million 
uninsured children in the United States. This is the right 
moment for Congress to expand financing for children's health, 
so that no child goes without treatment or relies on an 
emergency room for their health care.

                  A road map for covering all children

    PICO is advocating a five-step road map to help States 
cover all children by 2012
    (1) Fill the existing SCHIP shortfalls facing States, so 
that no one risks losing coverage
    (2) Fund proven outreach initiatives and provide States 
with the financial incentives and support to reach all eligible 
but uninsured children
    (3) Provide financial support and incentives for State 
efforts to expand high-quality preventative care and increase 
eligibility
    (4) Allow States the option to cover legal immigrant 
children and pregnant women
    (5) Provide financing in SCHIP and Medicaid to support the 
cost of covering newly enrolled children
      Estimated cost is $60 billion over 5 years

             Why we can't afford not to cover all children

     Leaving children without coverage imperils their 
development and costs society more than the $100-$120 per month 
needed to provide health coverage to a child
     Covering all children as part of SCHIP 
reauthorization is the best chance our country has to move the 
ball forward on health care this year
     States across the country are moving ahead to 
cover all children, but they cannot succeed without Federal 
support to expand financing for children's health.
     SCHIP is a highly successful program that has 
bipartisan support

               Organizing families and faith communities

    PICO is a national network of 53 faith-based federations 
and 1,000 congregations. PICO led a county-based cover-all-kids 
initiative that has been replicated in more than half of 
California's counties. In 17 States and 100 Congressional 
Districts, PICO is partnering with health and children's 
advocacy groups at the local, State and national level to 
expand health coverage for children and families.
    Join us for a Faith and Families Summit for Children's 
Health on Capitol Hill on March 7
    For more information visit www.piconetwork.org/schip.html

                         PICO National Network

                           December 20, 2006

    The Honorable Harry Reid
    United States Senate
    Washington, DC 20510

    The Honorable Kent Conrad
    United States Senate
    Washington, DC 20510

    The Honorable Max Baucus
    United States Senate
    Washington, DC 20510

    The Honorable Nancy Pelosi
    U.S. House of Representatives
    Washington, DC 20515

    The Honorable John M. Spratt, Jr.
    U.S. House of Representatives
    Washington, DC 20515

    Honorable John D.Dingell
    U.S. House of Representatives
    Washington, DC 20515

    Dear Majority Leader Reid, Speaker-elect Pelosi, Senator 
Conrad, Representative Spratt, Senator Baucus and 
Representative Dingell:

    As you prepare to lead the 110th Congress, we urge you to 
include adequate funding in the Federal budget to sustain and 
expand the highly successful State Children's Health Insurance 
Program, so that our Nation approaches the day when every child 
in the United States has access to affordable health coverage.
    As congregations from more than 50 religious traditions, 
representing over 1 million families, PICO sees children's 
health as a core moral issue. We take as our example the 
prophet Jeremiah who lamented for his people of Judah. Grieving 
over their condition, he cried out: ``Is there no balm in 
Gilead? Is there no physician there? Why then has the health of 
my poor people not been restored?'' We ask these same questions 
of our elected leaders. Is there no balm in Washington, DC? Is 
there no solution there? Why has the health of our children not 
been restored?
    In November, Americans voted for change. Many Democrats ran 
on a health care agenda. Providing access to affordable health 
insurance for every child is the right place to start. There 
are 9 million uninsured children in this country; more than 6 
million are already eligible for public coverage. If we do what 
is right as a nation, we can take care of all our children and 
raise the healthiest generation in American history.
    Reauthorization of the State Children's Health Insurance 
Program (SCHIP) next year provides a golden opportunity to take 
concrete steps toward covering all children. But progress is 
only possible if the budget includes adequate funding to 
sustain and expand the SCHIP program. We urge you to support 
funding for the following steps:

      Provide adequate Federal funding to cover the 
2007 shortfalls in SCHIP funding which put over 600,000 
children at risk of losing their health coverage.
     Fill the estimated $12-14 billion shortfall in 
funding over 5 years so that no one loses coverage in SCHIP.
      Include substantial additional funding to support 
States that are moving toward covering all uninsured children, 
including those expanding coverage to 300 percent of poverty.
      Create financial incentives and support for 
States to reach out to and retain coverage for the majority of 
uninsured children--those who are already eligible for SCHIP 
and Medicaid.
      Give States more ability to simplify the 
enrollment and renewal process, including using express lane 
eligibility programs.
      Give States the option and funding to cover legal 
immigrant children and pregnant women.

    In the effort to expand health coverage for children we 
urge that Congress do no harm to the broader Medicaid program, 
which provides essential health care services to the poorest 
children in the Nation. The fate of our children and families 
is interconnected; we must not pit children from low-income 
families against those with even lower incomes.
    Many local communities and State governments have already 
taken action toward covering all uninsured children and 
expanding coverage for low-income families. These initiatives 
reflect strong grassroots public support for efforts to improve 
children's health. But without leadership and additional 
Federal financing, our counties and States run the risk of 
losing rather than gaining ground on covering all children.
    Over the coming months our faith communities will be 
organizing to make our voices heard in our State capitals and 
in Washington, DC. We will continue to educate and agitate so 
that Congress adopts a budget that is faithful to the needs of 
working families. We urge you to take a first step in restoring 
American domestic priorities by budgeting sufficient funds to 
strengthen the State Children's Health Insurance Program.
    With more than 1,000 religious congregations representing 
50 denominations and 1 million families in 150 cities and 18 
States, PICO National Network is one of the largest community-
improvement efforts in the United States.
    We look forward to an opportunity to meet with you at your 
earliest convenience to discuss funding for children's health 
in next year's Federal budget.

    Sincerely,

    Fr. John Baumann
    Executive Director,
    PICO National Network, et al.
                              ----------                              


                   Testimony of Kathy Paz Mingeldorff

     My name is Kathy Paz Mingeldorff and I am pleased to 
submit this statement on behalf of the March of Dimes 
Foundation. As a mother, I understand in a very personal way 
the importance of health insurance for women and children, and 
I thank Members of the Committee for making access to coverage 
the focus of this hearing.
    Let me begin by telling you my family's story, and 
specifically why Medicaid and FAMIS--Virginia's State 
Children's Health Insurance Program (SCHIP) have been so 
important to us. In 2001, I became pregnant while in college 
and was covered by my parents' private health insurance policy. 
But after my son Alex was born, I lost my health insurance 
because I could no longer be considered a dependent. My son 
Alex was born prematurely at 25 weeks and suffered many 
complications due to his early delivery. Fortunately Medicaid 
was there to provide health insurance for the first 3 years of 
Alex's life. Without help from Medicaid with Alex's enormous 
medical bills--more than $800,000 in the first two years 
alone--I am not sure how we would have survived.
     By the time Alex was 2, complications associated with his 
premature birth required a feeding tube, special formulas and 
multiple medications. We took Alex to the emergency room many 
times, and he was hospitalized on 3 separate occasions. In 
January of 2004, Alex had surgery to stabilize his severe 
reflux condition. I cannot imagine what life would have been 
like for us without health insurance through Medicaid.

    In 2005, I married and found an employer who was eager to 
hire me. Unfortunately, the employer did not offer health 
insurance. I attempted to enroll Alex in FAMIS but our income 
was too high for him to qualify. At that time, eligibility for 
the program in Virginia was limited to children with family 
incomes below 133 percent of the Federal poverty level--less 
than $22,000 a year for a family of 3. So, my only option was 
to turn down a position I really wanted in order to keep my son 
insured through Medicaid. I want to emphasize how hard that was 
for me.
    In July of last year, the State of Virginia changed its 
eligibility rules for FAMIS, allowing families with incomes up 
to 200 percent of the Federal poverty level (a little over 
$34,000 for a family of 3) to qualify, and making it possible 
for me to enroll my son.
     Once Alex had health insurance through FAMIS, I was able 
to accept full time employment at SAIC, a government contractor 
in northern Virginia. Today, Alex and I have health insurance 
through my husband Adam's employer, and I work part time as an 
administrative assistant for a national furniture corporation 
and am taking graduate courses at Marymount University.
     The help that my family received came at a time when we 
needed it most. Because I wanted and was able to work, it was 
great to have a program like FAMIS. I know from my experience 
and that of other families with premature babies that my story 
is not unique, in fact it's not uncommon for a family just 
getting started to face the problem of not having enough health 
coverage to meet the needs of a fragile infant.
     Given my family's experience, I am sure you can understand 
why I am so committed to the March of Dimes' goal of using this 
year's SCHIP reauthorization as an opportunity to strengthen 
the program to improve the health of pregnant women, infants 
and children. To achieve this goal, the March of Dimes 
recommends that the Committee authorize a substantial amount of 
new funding for SCHIP reauthorization. The Foundation's 
immediate priority is funding sufficient to protect states' 
2007 SCHIP enrollment levels. As Members of the Committee are 
aware, the National Institutes of Health (NIH) Reform Act, P.L. 
109-482, enacted at the end of the 109th Congress, included a 
redistribution of unspent FY2004 funds to states experiencing 
FY2007 shortfalls, and a January 30, 2007 Congressional 
Research Service (CRS) report projects that this measure will 
ensure that no state runs out of SCHIP funding before May 1, 
2007. However, officials in at least one state report that its 
program may experience a funding shortfall prior to May 1. 
Unless Congress acts soon, additional states may be forced to 
narrow or eliminate benefits, lower eligibility thresholds, 
and/or reduce provider payment levels. Any of these actions 
would weaken a well regarded program and could undermine the 
availability of affordable health coverage for pregnant women 
and children.
     As members of this committee are aware, the concern about 
adequate funding extends well beyond 2007. In addition to the 
funding level assumed in the CBO baseline, new resources will 
be needed to maintain current levels of eligibility. And, if 
the Committee wishes to see states reach out to eligible but 
unenrolled children or expand eligibility, a significant 
investment of new funding will be necessary.
     Using information provided by the U.S. Census Bureau, 
researchers have estimated that nearly half of the 9 million 
uninsured children in the U.S. are eligible for Medicaid and 
almost 20 percent are eligible for S-CHIP. In other words, with 
adequate funding and more attention to enrollment of those who 
are already eligible, more than 6 million uninsured children 
could have health insurance through these two programs. The 
March of Dimes recommends that the committee provide states 
with the tools and resources necessary to enroll these 
children.
     The March of Dimes also encourages the members of the 
committee to use this reauthorization as an opportunity to 
amend the law so that states can make modest but important 
improvements to their SCHIP programs. The priorities the 
Foundation hopes the Committee will consider during its 
deliberations include giving states the authority to: (1) cover 
income eligible pregnant women age 19 and older without being 
required to obtain a Federal waiver; (2) provide wraparound 
coverage for children with special healthcare needs whose 
private health insurance benefits are limited; (3) cover legal 
immigrant children and pregnant women. Finally the Committee 
should strengthen the law's current requirements to monitor and 
report on the quality of care provided. Consumers, health 
professionals and policy makers need to know how well SCHIP is 
doing on measures such as immunization rates, delivery of 
services in neonatal intensive care units, well-child visits 
and other inpatient and outpatient services.

                Coverage for Pregnant Women Over Age 19

     Under current law, maternity coverage for pregnant women 
over age 19 who meet the SCHIP income eligibility requirements 
is permissible only through a Federal waiver--a slow and 
cumbersome process which most states have chosen to avoid. This 
policy creates an unfortunate separation between pregnant women 
and infants, which runs contrary to long-standing Guidelines 
for Perinatal Care promulgated jointly by the American College 
of Obstetricians and Gynecologists (ACOG) and American Academy 
of Pediatrics (AAP). The March of Dimes view is that 
reimbursement policies should be aligned with--and not 
undermine--established clinical practice guidelines.
     While SCHIP regulations permit states to amend their plans 
to cover ``unborn children,'' thus making reimbursement 
available for prenatal, labor and delivery services, postpartum 
care for the mother--a benefit prescribed in the ACOG/AAP 
Guidelines for Perinatal Care--is not reimbursable with Federal 
funds. Women who do not receive postpartum care are at greater 
risk for a variety of health complications that make it 
difficult for a mother to properly care for her infant. 
Further, women who do not receive postpartum care are more 
likely to quickly become pregnant again, and a pregnancy spaced 
too closely to a previous pregnancy presents a medical risk 
factor for premature birth.
     The Centers for Medicare and Medicaid Services reports 
that five states (CO, NJ, NV, RI, and VA) use waivers to cover 
income eligible pregnant women and nine states have amended 
their plans to cover unborn children (AR, CA, IL, MA, MI, MN, 
RI, TX, WA). However, a survey conducted by the National 
Governors Association found an additional eight states where 
program officials indicate maternity care is being provided to 
income eligible women age 19 and older through SCHIP. A simple 
Federal mechanism is needed so that states can, at their 
option, provide the full spectrum of clinically indicated 
services to pregnant women who meet the SCHIP income 
guidelines. As Members know, early and continuous maternity 
care is crucial to the health of the mother as well as to that 
of her infant.
     According to the 1999 Institute of Medicine Report 
entitled ``Health Insurance is a Family Matter,'' uninsured 
pregnant women have fewer prenatal care services and more 
difficulty obtaining the care they need. To maintain the health 
of a pregnant woman and her unborn child, continuous access to 
prenatal care is essential. The ACOG/AAP Guidelines for 
Perinatal Care state:
    Women who have early and regular prenatal care have 
healthier babies.
    Generally, a woman with an uncomplicated pregnancy should 
be examined approximately every 4 weeks for the first 28 weeks 
of pregnancy, every 2-3 weeks until 36 weeks of gestation, and 
weekly thereafter. Women with medical or obstetric problems may 
require closer surveillance.
     Lack of adequate, regular prenatal care is associated with 
poor birth outcomes, including prematurity (born before 37 
completed weeks of gestation.) or low birthweight (less than 
5\1/2\ pounds). Prematurity is the leading cause of neonatal 
death. Low birth weight is a factor in 65 percent of infant 
deaths. Premature and low birth weight babies may face serious 
health problems as newborns, and are at increased risk of long-
term disabilities. Infants born to mothers who did not receive 
regular prenatal care in 2002 were about twice as likely to be 
low birth weight as infants born to mothers who received early 
and adequate prenatal care.
     Conversely, women who do receive appropriate levels of 
prenatal care are more likely to have access to screening and 
diagnostic tests that can help identify problems early; 
services to manage developing and existing problems; and 
education, counseling and referral to reduce risky behaviors 
like substance abuse and poor nutrition. Such care may thus 
help improve the health of both mothers and infants, reducing 
their future healthcare costs.
     Neither the cumbersome and time consuming waiver process 
nor use of the ``unborn child'' regulatory option gives states 
the flexibility they need to provide pregnant women with the 
full spectrum of recommended maternity care through SCHIP. 
Therefore, the March of Dimes recommends that the Committee 
approve a statutory change granting states the authority to 
extend SCHIP coverage to income eligible pregnant women age 19 
and older. Both the NGA and the National Conference of State 
Legislatures (NCSL) recommend that this option be made 
available to states.

      Private-Public Partnerships to Stretch SCHIP Dollars Further

     Under current law, children must be uninsured to qualify 
for SCHIP. Some children with significant health problems have 
limited private insurance that does not meet their medical 
needs. Other children whose parents have access to employer 
based coverage, may go without because the parent's employer 
does not provide coverage for dependents or the family cannot 
afford the premiums. In each of these cases, families face a 
difficult choice, purchase employer based coverage that does 
not meet the child's medical needs or forego private health 
insurance altogether in order to be eligible for SCHIP. By 
allowing SCHIP and private plans to work together, SCHIP 
dollars could be stretched further because private plans would 
cover a portion of healthcare costs. Such public-private 
partnerships could be structured in several different ways. For 
example:
     Wraparound coverage: For pregnant women, infants and 
children with limited private coverage, SCHIP could cover 
benefits--such as vision, dental, physical/occupational/speech 
therapy, et cetera--not offered by the private plan. Allowing 
states to use SCHIP as a secondary payer for children when 
private insurance is limited would parallel an approach already 
permitted in the Medicaid program.
     Single benefit coverage: For pregnant women, infants and 
children with limited private coverage, SCHIP could cover a 
specific benefit--such as vision, dental or home care--not 
offered by the private plan.
     Premium support: For families satisfied with their private 
coverage, but unable to afford the full cost of the premium, 
SCHIP could provide a subsidy to lower the premium cost so that 
dependents could be covered.
     Pregnant women and children receiving this type of 
assistance should be allowed to switch to traditional SCHIP if 
they lose their private coverage or the private plan no longer 
meets their healthcare needs.
     The March of Dimes urges the Committee to give states the 
opportunity to develop alternative types of public-private 
partnerships to better serve the complex healthcare needs of 
pregnant women and children.

                       Quality and Accountability

     The March of Dimes strongly recommends that the SCHIP 
reauthorization bill include provisions designed to strengthen 
the quality of healthcare that enrollees receive through 
measuring, monitoring and reporting on quality of care. Such 
initiatives help ensure that children receive the care they 
need. Since children are growing and developing, they have 
different kinds of healthcare needs than adults. To date, 
however, most national initiatives aimed at improving the 
quality of care in the U.S. have focused on adults. While title 
XXI has included a quality reporting requirement since the 
program was created, the field of performance measurement has 
advanced significantly in the past 10 years. Therefore, the 
March of Dimes urges the Committee to revisit this section of 
the law and to provide states the tools they need to update and 
expand the scope of reporting on the quality of care provided 
enrollees.
     More specifically, the Foundation recommends that the 
Department of Health and Human Services (HHS) collaborate with 
health professionals and consumer groups to develop and 
disseminate a core set of pediatric quality measures. This 
effort should be conducted in partnership with the Agency for 
Healthcare Research and Quality (AHRQ) and other appropriate 
entities, including the National Quality Forum and health 
professional certification boards. In addition, HHS should also 
gather and publicly report state level data on pediatric 
quality performance measures.
     The March of Dimes urges members of the committee to 
ensure that states have the resources necessary to gather and 
report data as well as to develop interoperable clinical 
health-information systems.

                     Coverage for Legal Immigrants

     In 2003, the Senate approved a provision to allow states 
to cover legal immigrant children through their SCHIP programs, 
which was ultimately excluded from the larger Medicare 
Modernization Act negotiated by the House and Senate Conference 
Committee and signed into law. At that time, the Congressional 
Budget Office (CBO) estimated that about 155,000 children and 
60,000 pregnant women would have been eligible for coverage if 
the provision had been enacted. The provision had broad 
bipartisan support in the Senate as well as the support of the 
NGA and NCSL. CBO estimated that this coverage would cost the 
Federal treasury $500 million over three years.
     In 2004, there were an estimated 31 million non-elderly 
immigrants living in the United States, approximately 74 
percent of whom were here legally. It has also been estimated 
that nearly half of non-citizen immigrants are uninsured, 
largely because they are more likely to work in low wage jobs, 
service or agriculture industries or small businesses where 
employers often do not offer health coverage.
     The Foundation urges Members of this Committee to add to 
SCHIP an option for states to extend SCHIP coverage to income 
eligible legal immigrant pregnant women and children.
     The March of Dimes appreciates the opportunity to submit 
its comments for the record and looks forward to working with 
Chairmen Dingell and Pallone and Representatives Barton and 
Deal , as well as other members of the committee to reauthorize 
and strengthen SCHIP--a program central to the health of the 
nation's pregnant women, infants and children.
                              ----------                              


             Statement of America's Health Insurance Plans

    America's Health Insurance Plans (AHIP) strongly support 
the State Children's Health Insurance Program (SCHIP), and we 
applaud the House Energy and Commerce Committee for focusing on 
the reauthorization of this vitally important program.
    Over the past decade, SCHIP has proven to be highly 
successful in meeting the health care needs of millions of low-
income children. By providing the states with the resources and 
flexibility to design innovative programs, SCHIP has 
demonstrated its value as an effective model for extending 
health coverage to a vulnerable population. As Congress 
prepares for the coming debate on reauthorization of SCHIP, we 
see an opportunity to build upon the program's past success 
with improvements that would enable the states to maintain 
their existing programs, while also offering coverage to a 
larger number of uninsured children and making coverage more 
affordable for their parents.

             AHIP Access Proposal Calls for SCHIP Expansion

    In November 2006, AHIP's Board of Directors announced a 
proposal for expanding access to health insurance coverage for 
all Americans. Our proposal includes a comprehensive set of 
policy initiatives that would expand eligibility for SCHIP and 
Medicaid, enable all consumers to purchase health insurance 
with pre-tax dollars, provide financial assistance to help 
working families afford coverage, and encourage states to 
develop and implement access proposals.
    A major element of AHIP's access proposal calls for 
expanding SCHIP to ensure that all states can, at a minimum, 
fully cover all uninsured children in families with incomes 
under 200 percent of the Federal poverty level. To further 
address the health care needs of children, we also propose that 
a health tax credit of up to $500 be established for low-income 
families who secure health insurance for their children. These 
steps are designed to expand access to health insurance 
coverage to all children within three years. Other components 
of AHIP's access proposal seek to cover 95 percent of adults 
within 10 years.
    AHIP also is an active member of the Health Coverage 
Coalition for the Uninsured (HCCU), which released a proposal 
in January 2007 for expanding health coverage to the uninsured. 
The membership of this diverse coalition also includes Families 
USA, the Chamber of Commerce, AARP, the American Medical 
Association, and the American Hospital Association. Much like 
the AHIP proposal, the HCCU proposal builds on the strengths of 
the existing private-public system and includes key 
improvements to SCHIP and Medicaid, as well as a broader tax 
credit. The HCCU proposal shares AHIP's phased approach, 
beginning with a Kids First initiative followed by a longer-
term proposal for adults and families.
    As Congress considers SCHIP reauthorization legislation, 
AHIP urges the committee to consider three priorities discussed 
in the following sections: (1) increasing Federal funding to 
help states cover existing SCHIP caseloads and expand coverage 
to more uninsured children;
    (2) establishing performance standards, tied to funding 
bonuses, to promote quality throughout the program; and (3) 
authorizing demonstration programs to help states coordinate 
SCHIP eligibility with private health insurance.

       Increased Funding to Cover Shortfalls and Expand Coverage

    A top priority in the SCHIP reauthorization process is 
ensuring that the states receive adequate funding to provide 
coverage for eligible children. Currently, a number of states 
are facing funding shortfalls that are threatening their 
ability to provide quality coverage to children already 
enrolled in their programs. These shortfalls also may 
discourage the outreach efforts that are needed to identify 
eligible children who are not yet signed up for SCHIP.
    In addition to stabilizing existing SCHIP coverage, 
Congress should devote new funding to help states expand 
coverage to children who currently do not qualify for SCHIP 
assistance. An infusion of new funding would ensure that states 
could maintain existing enrollment, while also having greater 
flexibility to innovate and possibly expand enrollment in 
conjunction with broader innovations that leverage SCHIP 
dollars. By providing additional funding for this priority and 
promoting strategies that do not ``crowd out'' existing 
coverage, Congress could target assistance to a segment of the 
uninsured population--the ``near poor''--that have seen a 
gradual decline in their access to coverage over the past 
decade.

               Performance Incentives to Improve Quality

    Congress should establish performance standards to measure 
the extent to which states are achieving demonstrable 
improvements in child health. Such standards could focus on 
immunization rates for children, the percentage of infants 
receiving periodic screenings, the percentage of eligible 
children who remain continuously covered by SCHIP, and other 
measures for which data can be easily obtained and compared.
    Moreover, these standards would help to promote 
accountability throughout the program if Congress provided a 
financial bonus to states that demonstrate strong success, 
based on the performance standards, in improving the health of 
their SCHIP populations. These incentives should be supported 
with new funding--on top of existing allotments--to allow 
states with highly successful SCHIP programs to take additional 
steps in developing initiatives that can serve as models for 
the entire nation.

       Demonstration Programs to Coordinate With Private Coverage

    Recognizing the need for greater innovation throughout the 
health care system, we believe Congress should authorize new 
demonstration programs that allow states to use streamlined 
procedures in coordinating SCHIP eligibility with private 
health insurance. These demonstrations could build upon SCHIP's 
existing premium assistance program, allowing states to assist 
the parents of eligible children in purchasing family coverage 
through their employers or other sources. Addressing the 
coverage needs of the entire family is beneficial to children 
as well as parents, as indicated by the findings of a 2002 
Institute of Medicine (IOM) report which concluded that 
children are more likely to be taken to the doctor for regular 
checkups if their parents also have coverage.
    Significantly, Massachusetts is one of the few states that 
has used the current premium assistance option to maximize the 
value of its SCHIP and Medicaid funding. By pursuing this 
public-private partnership, Massachusetts was able to position 
itself for the broader reforms that its state legislature 
enacted last year. To open the door for more states to pursue 
innovative strategies that meet the unique needs and 
circumstances of their own populations, Congress should 
encourage greater coordination between SCHIP and private health 
insurance.
    AHIP members are strongly committed to the long-term 
success of SCHIP and we stand ready to work with the House 
Energy and Commerce Committee and other members of Congress to 
strengthen the program.
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           COVERING THE UNINSURED THROUGH THE EYES OF A CHILD

                              ----------                              


                        THURSDAY, MARCH 1, 2007

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:05 p.m., in 
room 2123 of the Rayburn House Office Building, Hon. Frank 
Pallone, Jr. (chairman of the subcommittee) presiding.
    Members present: Representatives Green, Capps, Baldwin, 
Engel, Schakowsky, Matheson, Deal, Hall, Buyer, Ferguson, 
Rogers, Burgess, Barton [ex officio], and Wilson.
    Staff present: Jonathan Brater, Robert Clark, Peter 
Goodloe, Christie Houlihan, Purvee Kempf, Bridgett Taylor, Brin 
Frazier, Ryan Long, Katherine Morton, Brenda Clark, and Chad 
Grant.

 OPENING STATEMENT OF HON. FRANK PALLONE, JR, A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. I am going to ask that we get started because 
we are expecting to have votes in about 15 or 20 minutes so I 
would like to at least try to get thorough all of not most of 
the witnesses. Today we have part 2 of our hearing on 
``Covering the Uninsured Through the Eyes of a Child.'' We had 
opening statements at the previous hearing so we will not have 
them today. We are simply going to turn to our witnesses, and I 
would ask them to come up and take a seat there with your 
names.
    Welcome and thank you for being here today and let me just 
introduce the panel before we begin. We have first Dr. Lolita 
McDavid, who is the medical director for the Child Advocacy and 
Protection Program in Cleveland, Ohio; and then we have my 
friend and colleague, Senator Joseph Vitale from New Jersey, 
from Woodbridge, New Jersey, who is the chairman of the New 
Jersey Senate Health, Human Services and Senior Citizens 
Committee, so glad to see him here today; and then we have Alan 
Weil, who is the executive director for the National Academy 
for State Health Policy; and Phyllis Sloyer, who is a nurse and 
Ph.D. and division director of the Children's Medical Services 
Department of Health, I guess that is for the State of Florida 
in Tallahassee; and last is Ms. Kathryn Allen, who is the 
director of health care for the U.S. Government Accountability 
Office, so welcome all of you.
    We are going to have each of you give us a 5-minute opening 
statement. I should say these statements will be made part of 
the hearing record. Each witness may in the discretion of the 
committee submit additional briefs and pertinent statements in 
writing for inclusion in the record. I am simply going to 
through the list here and I will start with Dr. Lolita McDavid 
for an opening statement.

STATEMENT OF LOLITA M. MCDAVID, M.D., M.P.H., MEDICAL DIRECTOR, 
 CHILD ADVOCACY AND PROTECTION, RAINBOW BABIES AND CHILDREN'S 
                            HOSPITAL

    Dr. McDavid. Mr. Chairman and members of the committee, 
thank you for the opportunity to testify for the National 
Association of Children's Hospitals. I am Dr. Lolita M. 
McDavid. As a pediatrician, I have devoted my medical career to 
children. Currently, I am medical director of child advocacy 
and protection at Rainbow Babies and Children's Hospital in 
Cleveland. I submit my written statement for the record.
    I have been asked on behalf of the National Association of 
Children's Hospitals to draw from my professional experience to 
describe the importance of health coverage for children. I 
would like to try to do that by giving you two stories.
    The first story is about the difference health coverage can 
make in the life of a child and the child's family. Eugene and 
Rhonesha are brother and sister who are both patients in my 
practice. They live with their mom and dad and their family 
income qualifies them for SCHIP. Gene is 10 years old, the same 
age as SCHIP. He is a great kid and a great student, and with 
the exception of needing glasses, he has only had routine 
health needs.
    But Rhonesha, who is 6 years old, has a diagnosis commonly 
seen in our patient population, asthma. I became Rhonesha's 
doctor when she was 2 months old. She had required well-child 
visits like all children but by the time she was 17 months old 
she was showing signs of reactive airway disease which often is 
a precursor of asthma. By the time Rhonesha was 22 months old, 
it was clear she was asthmatic with mild persistent asthma. In 
many cases like this, I could tell you about emergency room 
visits, hospitalizations and missed days of work but that has 
not happened with Rhonesha. Her asthma has been controlled by 
medications. When she has an occasional flare-up because she 
has a cold or there is a climate change, her mother manages her 
illness. Dr. John Carl, a pediatric pulmonologist at our 
hospital, sees her every 6 months for evaluation. We are now at 
the point where I only see her for annual routine visits. She 
is an outstanding first grade student whose favorite subject is 
math.
    Because Rhonesha has coverage through SCHIP, her mother has 
a relationship with Dr. Carl and me. She can access regular 
care and not use costly emergency care. Her asthma is 
controlled. She doesn't need to be hospitalized and she doesn't 
miss school and her mom doesn't miss work. That is the 
wonderful promise of health coverage. It not only directly 
promotes health, it also indirectly promotes learning and 
employment.
    My second story is about a child who is eligible for public 
coverage but who was not enrolled until after he was admitted 
to our hospital. Nick's parents brought him to our emergency 
room on New Year's Day. He was 5 weeks old with respiratory 
symptoms, vomiting and diarrhea. Although Nick's mother had 
insurance through her job, Nick was uninsured. He was admitted 
to our hospital with pneumonia, and while in the hospital we 
found out his family was qualified for SCHIP. Happily, Nick 
went home after 3 days. He was well and now had health 
insurance through SCHIP that will cover his immunizations and 
doctor's visits and hopefully keep him out of the emergency 
room.
    As these stories demonstrate, having health coverage makes 
a real difference, not only in a child's health but also in the 
cost of the child's health care and in their ability to be 
ready to learn and grow up healthy and productive.
    Building on the foundation of Medicaid, SCHIP has been a 
great success. Together they have reduced the number of 
uninsured children by a third. At the same time the overall 
number of uninsured Americans continues to grow. SCHIP enjoys 
broad support in State capitals, in Washington and in the 
private sector. Because of the success, Children's Hospital 
recommend that Congress commit to achieving the goal of health 
coverage for all children. The first step should be to build on 
the foundation of SCHIP and Medicaid. We offer four 
recommendations.
    First, Congress should reauthorize and fully fund SCHIP, at 
least to fill in all State shortfalls and to enable States to 
cover all eligible but unenrolled children. Second, the 
reauthorization of SCHIP should help States to improve outreach 
and enrollment of children who are eligible for Medicaid or 
SCHIP. This might include financial incentives, simply their 
unified application forms, extended continuous eligibility and 
other methods. Third, reauthorization of SCHIP should not come 
at the expense of Medicaid. Our ability to sustain the success 
of SCHIP as the Nation reaches out to cover all children 
depends greatly on both programs having the funds to meet their 
goals. To be sure, neither Medicaid nor SCHIP is perfect. SCHIP 
is capped. When funds run short, as 14 States are projected to 
experience this year, children are left waiting in line for 
coverage. Medicaid's historically low payment rates, 
particularly for doctors, too often leave children without a 
medical home. Nonetheless, together SCHIP and Medicaid have 
created an essential safety net of coverage for low-income 
children and children with disabilities. They are also the 
foundation for health care for all children. Finally, the 
reauthorization of SCHIP should include Federal leadership and 
investment in the measurement of quality and performance of 
children's health care. The Federal Government is investing in 
quality measurement for adults' health care through Medicare. 
It is not doing that for children. It is time to make the same 
investment in quality and performance measures for children 
that have been made for adults.
    We ask that you provide DHHS with the authority and 
resources needed to support the development and advancement of 
pediatric quality and performance measures. This will greatly 
enhance our ability for States, providers and consumers to have 
a portfolio of measures they can use for children.
    Ten years ago Congress faced and met an unprecedented 
bipartisan challenge: how to put the Federal Government on a 
solid path toward the elimination of the Federal deficit. That 
successful effort culminated in the Balanced Budget Act of 1997 
and precisely because it was setting priorities vital to the 
future of our Nation, Congress created SCHIP as part of the 
Balanced Budget Act to expand health coverage for children. In 
effect, Congress made children's coverage a priority within a 
balanced budget. Ten years later, Congress faces the same 
challenge: to achieve fiscal control while at the same time 
taking the next step to cover all children. They should 
reauthorize and expand SCHIP while keeping Medicaid coverage 
for children strong. Ten years of success, broad support 
through the private sector and bipartisan support in Congress 
and State capitals all argue for taking that next step.
    As a spokesman for Children's Hospital, I can tell you that 
Medicaid and SCHIP are fundamental to the financial 
infrastructure of health care for all children. Through the 
work of Children's Hospital--thank you. I was finished. The 
decisions Congress makes on SCHIP and Medicaid will affect the 
health care of every child in this country. Thank you.
    [The prepared statement of Dr. McDavid appears at the 
conclusion of the hearing.]
    Mr. Pallone. Thank you. I am trying to keep it to 5 
minutes, if I can, and not go over too much.
    Our next witness is Senator Vitale, and I should mention 
that not only is he from New Jersey but most of his State's 
Senate district is within my congressional district, and not 
only is he the chairman of the Senate Health Committee but he 
also has been an outstanding spokesman on the SCHIP program, so 
thank you for being with us here today.

  STATEMENT OF HON. JOSEPH F. VITALE, NEW JERSEY STATE SENATOR

    Mr. Vitale. Thank you again. I am blessed to have actually 
three Congressmen that represent my district: Congressman 
Ferguson and yourself and now Congressman Sires.
    I wanted to come here today, and I appreciate the 
opportunity to discuss the importance of the SCHIP program not 
just across the Nation but in particular to the many children 
and parents in New Jersey.
    New Jersey implemented the SCHIP program in March 1998 by 
covering children of families whose annual income up to 200 
percent of the Federal Poverty Level and called it New Jersey 
KidCare. An example of 200 percent of the poverty level is a 
family of three whose annual income does not exceed $33,200. 
The program was met with great anticipation and excitement over 
the prospect of providing health insurance to thousands of 
uninsured children.
    As enrollment grew steadily, we recognized how many more 
children needed help and health care coverage and in July 1999 
expanded eligibility to children whose family's income did not 
exceed 350 percent of the Federal Poverty Level. An example of 
that is a family of three with income that does not exceed 
$58,100.
    The KidCare program was successful and through it we 
learned more about the uninsured population in New Jersey and 
how great the need was to provide health care to children and 
their parents, and we learned that there an increased 
participation among eligible children when parents are made 
eligible for health care coverage.
    We also know that providing health care coverage to 
pregnant women leads to healthier babies and moms and so in 
September 2000 New Jersey made a decision to cover parents up 
to 200 percent of the Federal Poverty Level and the program was 
renamed New Jersey FamilyCare. Unfortunately, due to 
consecutive bridges crises, New Jersey had to close the program 
to parents in June 2002, leaving only those already enrolled to 
continue participating.
    In September 2005, I sponsored new FamilyCare legislation 
that in addition to streamlining the application process again 
made FamilyCare available to low-income parents and guardians 
up to 115 percent of poverty, $19,000 a year for a family of 
three, and in 2006 up to 133 percent of the Federal Poverty 
Level, next year for a family of three whose income would not 
exceed $22,000.
    We now provide health insurance coverage to 125,000 New 
Jersey children and over 79,000 adults through our SCHIP 
program. In addition, we cover 450,000 children and close to 
350,000 adults through our Medicaid program. As a result, in 
partnership with the Federal Government, New Jersey provides 
health insurance coverage to over 1 million parents and 
children.
    While New Jersey uses a higher percentage of the Federal 
Poverty Level for eligibility for its SCHIP program than all 
other States, we also have one of the highest costs of living 
in the Nation. Simply put, it costs far more to be poor in New 
Jersey than in almost all other States.
    We have no choice but to use a more generous eligibility 
income level in order to reach those truly needy families and 
children with low income levels. Through SCHIP and Medicaid, it 
is also a much more economically responsible way to spend 
health care dollars. In New Jersey, where we have 1.4 million 
uninsured, access to all levels of care for that population is 
typically provided by our State's hospitals. In fiscal year 
2007, the State has budgeted nearly $900 million to reimburse 
hospitals for percentage of the costs they absorb for treating 
the uninsured. In total, our State's hospitals provide nearly 
$2 billion of uncompensated care, a financial strain that has 
put many of our hospitals at risk.
    New Jersey greatly appreciates the opportunities that the 
SCHIP program provides States. Through our SCHIP program, we 
have been able to provide health insurance and needed health 
care to the most vulnerable population among us, and that is 
our children.
    New Jersey has made a strong commitment to the SCHIP 
program. This commitment is evident in the generous benefits 
package that we offer, our attention to simplifying the process 
for application and the intense outreach efforts we have 
undertaken. The prospect of limiting or, at worse, eliminating 
our SCHIP program to lower income level families would be 
devastating to our State's budget and to the families of our 
State.
    New Jersey has historically spent its entire annual Federal 
SCHIP allotment, and although we have been eligible for SCHIP 
funds not used by other States, these reallocated resources 
have been diminishing over the years. There is an urgent need 
for Congress to increase annual allocations to States to meet 
the ever-growing need for health care insurance for our 
children.
    I will conclude my remarks by asking the members of this 
very important committee to prevent shortfalls in funding for 
the SCHIP program and to advocate for increased support. Both 
Medicaid and SCHIP have been successful and efficient in 
expanding coverage to children. By promoting the continued 
success of these programs, we can ensure that children and 
their families get the health care that they need. This 
collaboration between the Federal Government and the States, 
and with premium sharing by consumers where it is possible, 
allows the kind of partnership in health care that is a model 
for success. Without this continuing alliance, millions of 
children and their families will simply be unable to access the 
kind of care that the rest of us have and some take for 
granted.
    Thank you for this opportunity.
    [The prepared statement of Mr. Vitale appears at the 
conclusion of the hearing.]
    Mr. Pallone. Thank you, Senator. I appreciate your being 
here.
    Our next witness is Alan Weil, who is executive director of 
the National Academy for State Health Policy. Thank you.

  STATEMENT OF ALAN WEIL, EXECUTIVE DIRECTOR OF THE NATIONAL 
                ACADEMY FOR STATE HEALTH POLICY

    Mr. Weil. Mr. Chairman, members of the subcommittee, thank 
you for the opportunity to appear here today. My name is Alan 
Weil and I am the executive director of the National Academy 
for State Health Policy, a nonprofit, nonpartisan organization 
dedicated to improving State health policy and practice. My 
organization has worked closely with the Nation's SCHIP 
directors and monitored and reported on the shape of the 
program since its inception. While we serve ad the informal 
home of the SCHIP directors, I do not purport to speak for 
them.
    The SCHIP has accomplished a great deal covering children, 
providing them with access to services and reducing unmet 
health care needs. Your decisions in reauthorization will 
determine whether we continue this impressive track record. The 
primary goal of my testimony is to provide a context to the 
reauthorization debate that is sometimes missing.
    States embraced the SCHIP program quickly yet as was 
expected, it took time for eligible families to learn of the 
program, come to trust it and ultimately enroll. In the early 
years of the program, States were subject to substantial 
criticism for underspending. In response, States and the 
Federal Government took four steps. First, States substantially 
increased their efforts to reach out and find the eligible 
children within their States and keep them on the program once 
they were made eligible. Second, States increased their 
eligibility standards. Between 1998 and 2005, the number of 
States with income limits for SCHIP below 200 percent of 
poverty went from 22 down to just eight. Third, some States 
that already had expansive coverage for children when SCHIP was 
enacted sought Federal permission to use their SCHIP funds to 
cover families or other adults, and finally the Bush 
administration announced its HIFA waiver initiative which 
explicitly encouraged States to apply unspent SCHIP funds to 
the needs of low-income adults. Now some are criticizing States 
that are experiencing shortfalls but the complex SCHIP funding 
mechanism makes planning almost impossible. Shortfalls and 
underspending are inevitable and do not reflect a lack of 
fiscal discipline on the part of States.
    The SCHIP program is good example of cooperative 
federalism. Working from a shared goal, the Federal Government 
developed a framework and provided substantial resources while 
States contributed their own resources and tailored the program 
to their own circumstances. State choices vary along many 
dimensions, not just on the eligibility levels and categories 
that have received so much attention but also on the benefit 
package, the delivery system, provider payment levels, health 
plan accountability mechanisms, family premiums and co-payments 
and integration with employer-sponsored insurance and Medicaid. 
States' varied choices reflect the economy, health care 
systems, values, politics and fiscal capacity that each State 
has.
    Federalism is not orderly but the tremendous success and 
bipartisan popularity of this program is directly tied to the 
flexible structure. By delegating key decisions to the States, 
the Federal Government has obtained a level of political, 
financial and administrative support at the State level that is 
unusual in the realm of social programs. Efforts to remake this 
program with a different vision run the risk of undermining the 
Federal-State partnership that has enabled it to thrive.
    Now, underlying the debate over the appropriate level of 
funding and reauthorization is the question of whether or not 
the target population for the program should be modified. Each 
of the six million Americans reached by this program last year 
needs health insurance. Program modifications that prohibit 
covering anyone currently on the program will add another 
person to the growing ranks of the uninsured. Funding levels 
inadequate to sustain coverage for those currently on the 
program or that fail to account for the costs of reaching those 
who are eligible but not yet enrolled will have the same 
negative effect.
    At a time when the number of uninsured Americans continues 
to rise, an ideological division impedes broader health reform 
efforts. SCHIP has been a tremendous achievement. States need 
prompt reauthorization so they can plan for the future. The 
expiration of the current authorization is only 7 months away, 
and States need an expanded Federal financial commitment of 
resources so they can continue making progress meeting the 
needs of their citizens who would otherwise go without health 
insurance. An effective Federal-State partnership brought us to 
this point. A continued partnership is the best framework for 
meeting the tremendous remaining needs of children and 
families.
    I appreciate the opportunity to offer this testimony.
    [The prepared statement of Mr. Weil appears at the 
conclusion of the hearing.]
    Mr. Pallone. Thank you, Mr. Weil.
    Dr. Sloyer.

            STATEMENT OF PHYLLIS SLOYER, R.N., PH.D.

    Ms. Sloyer. Thank you, Chairman Pallone, Ranking Member 
Deal, members of the health subcommittee. On behalf of Governor 
Charlie Crist and the State of Florida, thank you for the 
opportunity to appear before you today to address 
reauthorization of a very important program, the State 
Children's Health Insurance Program, better known as SCHIP.
    I am here today representing the Florida SCHIP program 
known as the Florida KidCare. We provide services to over 1.4 
million low-income children through four components: the 
Florida Medicaid program for children, the Healthy Kids 
Corporation, the MediKids program and the Children's Medical 
Services Network.
    At the State level, this month and in the upcoming months, 
Governor Crist and our legislature are looking at ways to 
simplify our program and ensure seamless coverage and we 
believe that there are several steps that we can take to 
improve efficiencies of our program and we are looking to make 
those changes. Today, however, I would like to outline several 
Federal challenges that will help us if they can be overcome in 
making our program even more efficient.
    Some of these challenges were highlighted in our 2007 
Florida KidCare Coordinating Council Annual Report, which was 
recently submitted to our Florida State leadership. This 
council was developed in State law in 1998 to deliberate and 
make recommendations to the Governor and legislature about the 
ways that we can improve our SCHIP program. It represents a 
diverse group of individuals including advocates, agencies and 
health care providers, and I ask that that report along with 
this testimony be submitted for the record this afternoon.
    We know in Florida that we currently have a discrepancy in 
our eligible versus enrolled ratio under our KidCare program. 
This discrepancy is a result in part of Federal statutory 
barriers and I would like to describe several of them.
    First, outreach efforts are extremely critical to reaching 
diverse populations of children and retaining them. Florida is 
unique. It is a microcosm of population trends happening 
nationwide and we have communities who face many cultural, 
social and language barriers. However, outreach currently is 
funding through the 10 percent administrative expenditure cap 
in the program and frankly, in order for us to cover 
administrative processing, premium processing, application 
processing, call center functions, there simply is not enough 
money left in that cap to support targeted and critical 
outreach functions for families. We ask that you consider 
funding outreach outside of that 10 percent cap.
    In addition, one of the hallmarks of our SCHIP program is 
the ability to simplify procedures so that eligible children 
can obtain health insurance without unnecessary roadblocks. The 
documentation requirements imposed on the Medicaid program 
under the Deficit Reduction Act of 2005, which require a State 
to prove a beneficiary is a United States citizen, impedes 
families from obtaining Medicaid coverage. However, it also has 
a spillover effect on the SCHIP program since families have to 
be screened and apply for Medicaid before they can go through 
the SCHIP application process. I am not here today to discuss 
the overall purpose or merit of the Deficit Reduction Act but 
rather to shed some light on some of those unintended 
consequences. We ask that Congress and the Federal Government 
consider changes to some of the procedural requirements so that 
we can promote uniformity and increase the number of eligible 
children enrolled in our SCHIP program and assist us in 
offering a more seamless benefit.
    Continuous coverage is also important to maintaining our 
children's health. In those States without expansion programs, 
and Florida is one of those, this coverage can be interrupted 
due to different cost requirements between the SCHIP program 
and Medicaid program. When a child transitions from having no 
premium under Medicaid to a premium-based SCHIP benefit, there 
can be a temporary gap in health care coverage and actually a 
temporary gap in continuity of care and in active treatment 
until that premium is paid. As a result, children temporarily 
lose coverage and may not re-enroll in SCHIP. We encourage 
Congress to provide direction to States without expansion 
waivers and with separate SCHIP benefits to implement policies 
that ensure children who lose Medicaid coverage are able to 
move to our SCHIP program without breaks in coverage.
    In addition, today Florida public employees' dependents can 
qualify for Medicaid benefits if they are deemed eligible. 
However, under current Federal statute, those same families' 
dependents cannot qualify for SCHIP if their income level meets 
the SCHIP threshold. These families, as an example who earn 200 
percent of the Federal Poverty Level, make about $40,000 a year 
for a family of four. They have to pay at least 6 percent of 
their income in monthly health care premiums which actually 
becomes quite prohibitive for them. We are asking you to 
consider removing that prohibition for dependents of public 
employees who may qualify for SCHIP benefits.
    Finally, we urge you to align coverage for pregnant women 
to ensure it is consistent with the coverage of infants 
provided under the SCHIP program. For example, if an infant is 
eligible at 200 percent of the Federal Poverty Level, the 
pregnant woman should be eligible at that same income level so 
that we can ensure adequate prenatal care and better birth 
outcomes.
    Mr. Pallone. Doctor, I am just going to ask you to 
summarize if you will.
    Ms. Sloyer. OK. We realize that States have expanded their 
SCHIP programs outside of the original intent of the 
legislation. As a result, we understand that several States are 
concerned about forecast deficits. While we recognize that 
expansions were done with the support of the Federal 
Government, we are concerned that a State like Florida who has 
remained true to the intent of the program will be penalized in 
reauthorization. While we may have some allocations sitting on 
the table, we are working to reach those children that remain 
uninsured and are committing to using our funding.
    While these recommendations come from our experiences, we 
believe that many States would agree increased flexibility is 
critical, these changes will help create a more fiscally 
responsible SCHIP program and help cover more children. Thank 
you.
    [The prepared statement of Ms. Sloyer appears at the 
conclusion of the hearing.]
    Mr. Pallone. Thank you.
    Ms. Allen.

  STATEMENT OF KATHRYN G. ALLEN, DIRECTOR, HEALTH CARE, U.S. 
                GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Allen. Mr. Chairman, Mr. Deal and members of the 
subcommittee, I am pleased to be here today as you address 
these very important issues about the State Children's Health 
Insurance Program and how it has helped to meet the needs of 
uninsured children since the program's inception 10 years ago 
and issues concerning the program's reauthorization. SCHIP 
indeed offers States considerable flexibility in how they 
provide health insurance coverage to children and families 
whose incomes exceed eligibility requirements for Medicaid.
    States have three options in designing their programs. They 
may offer a Medicaid expansion, which offers the same benefits 
and services that their State Medicaid program provides. They 
may offer a separate child health program which is distinct 
from Medicaid that uses specified public or private health 
insurance plans or they may offer a combination program which 
incorporates features of both. At the time of enactment, 
Congress appropriated a fixed amount of funds, about $40 
billion over 10 years, to be distributed amongst States with 
approved SCHIP plans. Unlike Medicaid, however, SCHIP is not an 
open-ended entitlement to services for beneficiaries but it is 
a capped grant--or allotment--to States. Each State's annual 
allotment is available as a Federal match based on State 
expenditures and is available for three year after which time 
any unspent funds may be redistributed to States that have 
already spent their allotments for that year.
    Now, my remarks today will focus primarily on two issues 
that will describe the experience across all States. What I 
will do is provide some numbers that describe the experience of 
all States, provides a little more detail beyond the context 
that has already been provided. I will describe some recent 
trends in SCHIP enrollment and the current design of all 
States' SCHIP programs, State spending experiences under SCHIP 
and then I will comment briefly on some issues for 
consideration under reauthorization.
    First, SCHIP enrollment increased rapidly during the 
program's early years but it has stabilized in recent years. 
Total annual enrollment has leveled off at about 6 million 
individuals including just over 600,000 adults with about 4 
million individuals enrolled at any point in time. Many States 
adopted innovative outreach strategies and simplified and 
streamlined their enrollment process in order to reach as many 
eligible children as possible. Nevertheless, 11.7 percent of 
children nationwide, about 9 million children, remain 
uninsured, many of whom are eligible for SCHIP. States' SCHIP 
programs reflect the flexibility for them in their overall 
program design. Currently, 18 States operate a separate child 
health program, 11 use a Medicaid expansion program and 21 use 
a combination of the two. As of fiscal year 2005, about 27 
States had opted to cover children and families with incomes up 
to 200 percent of the Federal Poverty level. Another 14 States 
had opted to exceed that threshold with seven States covering 
children and families up to 300 percent of poverty or higher. 
Thirty-nine States require families to contribute to the cost 
of their families' care through some form of cost-sharing such 
as premiums or co-payments. Few States, however, only nine, 
operate premium assistance programs using SCHIP funds to help 
pay premiums for available employer-sponsored coverage, in part 
because States find these programs difficult to administer. As 
of last month, February, we identified 14 States that have 
approved waivers to cover one or more of three categories of 
adults in the programs: parents of eligible Medicaid or SCHIP 
children, pregnant women or childless adults.
    Second, SCHIP spending was low initially but now threatens 
to exceed available funding. Some States have consistently 
spent more than their allotments while other consistently less. 
In the first years of the program, States that overspent their 
annual allotments over the 3-year period of availability could 
rely on other States' unspent funds which were redistributed to 
cover excess expenditures. Over time, however, spending has 
grown and the pool of funds available for redistribution has 
shrunk. As a result, 18 States were projected to have funding 
shortfalls in at least one of the final 3 years of the program, 
that is, they were expected to exhaust available funds 
including current and prior year allotments. To respond to 
these projected shortfalls, Congress has appropriated an 
additional $283 million for fiscal year 2006 and recently 
redistributed certain unspent allotments from fiscal years 2004 
and 2005. Even so, as has already been mentioned, 14 States are 
projected to exhaust their allotments in fiscal year 2007.
    Finally, Mr. Chairman, as Congress addresses SCHIP 
reauthorization, the single issue at the forefront may very 
well center on the financing of the program yet this decision 
involves many moving and interdependent parts. They include how 
to maintain States' flexibility within the program without 
compromising the overarching goal of covering uninsured 
children, how to help ensure stable yet fiscally sustainable 
public commitments at both the State and Federal levels, and 
finally, how to assess issues associated with equity including 
better targeting of SCHIP funds to achieve certain public 
policy goals more consistently nationwide.
    Mr. Chairman, this concludes my remarks.
    [The prepared statement of Ms. Allen appears at the 
conclusion of the hearing.]
    Mr. Pallone. Thank you, Ms. Allen. Let me just tell 
everybody, we have 12 minutes remaining for the first vote. 
There are five votes. These are the last votes for the day and 
there is also the debate for 10 minutes on a motion to recommit 
so we will be a while. I was just figuring since there is 12 
minutes, I will yield myself five and then we will break, so if 
anybody wants to go, they can leave now and then we will have 
the rest of the questions after.
    Mr. Hall. Mr. Chairman, will you yield?
    Mr. Pallone. Yes.
    Mr. Hall. Will you make available to us to submit questions 
and ask them to respond in a reasonable time.
    Mr. Pallone. Absolutely. So ordered.
    Mr. Hall. Thank you, sir.
    Mr. Pallone. But I will start and yield myself 5 minutes so 
we can at least get that 5 minutes in.
    I wanted to ask Mr. Weil, some groups who are opposed to 
shoring up the SCHIP program argue that when there is public 
coverage available, families will drop their employer coverage 
in order to get it or employers will stop offering coverage, 
and I have heard opponents of SCHIP argue that because we have 
seen a decline in employer-sponsored coverage over the last 10 
years and at the same we have seen an increase in SCHIP 
coverage, that SCHIP has in some way caused the drop in 
employer-sponsored coverage. This is the crowd-out issue, if 
you will. On the first day of the hearing, the last hearing 
that we had, Ms. Owcharenko cited a paper by Jonathan Gruver 
and Kazala Simon that supported this assertion. However, 
Jonathan Gruver has sent a letter to Chairman Dingell 
clarifying the information in his study and I would like to 
introduce those, both Mr. Dingell's letter and the response 
into the record, and he says in his response, ``In our most 
general specification, we find no evidence of crowd-out 
associated with SCHIP per se.'' In addition, he states that 
public expansions like SCHIP remain the most cost-effective 
means of expanding health insurance coverage. So I would like 
you to talk about this crowd-out issue, whether in your opinion 
SCHIP is causing crowd-out or the decline in employer-sponsored 
health insurance coverage and can you give us your thoughts on 
Dr. Gruver and Simon's report and letter which I assume that 
you have seen.
    Mr. Barton. Mr. Chairman, before he answers, can the 
minority have copies of these letters, please?
    Mr. Pallone. Yes, certainly. We will circulate them as I 
speak hopefully.
    Mr. Barton. Thank you.
    Mr. Pallone. Mr. Weil?
    Mr. Weil. Mr. Chairman, the issue of crowd-out is very 
complex. The methods that economists use to try to pull it 
apart are not quite to the task and so if you look at a variety 
of estimates that very smart people have made, you will see a 
range. This new study adds yet another data point but does not 
really change the overall conclusion, which is that there is 
not a lot but there is some. There is no way the Government can 
invest in an area where some people are spending their own 
money without a certain response but the estimates in the paper 
are consistent actually with the ones that have been given 
before, a quarter or so, and I think your prior witness's 
characterization of the conclusion of the paper is not really 
quite right. The paper does not reach the conclusion that there 
is a 60 percent crowd-out rate, and it tries to look at 
families in a way that, without getting bogged down in the 
methodological issues, I think is stretching and not quite 
looking at the question right, and I have spoken to some 
colleagues about that.
    A fair reading of the Gruver-Simon paper is another piece 
of evidence that there is a small amount but this is not a new 
bombshell telling you to stop running this program because you 
are wasting your money. I would just say though that any area, 
whether it is education, public safety, anywhere that the 
Government makes an appropriation and expenditure, there is 
some chance there will be some private citizens who reduce 
theirs. The issue is really the policy response to crowd-out, 
not whether or not it exists, and I think there is really no 
reason to think given the size of the estimates that the right 
policy response is either to reduce eligibility or to increase 
the hurdles to getting into the program. In fact, in this 
Gruver-Simon paper, he estimates that the provisions that 
States made to try to prevent people from dropping private 
coverage and moving into SCHIP actually caused more crowd-out 
than they prevented. So I just think we have to accept that if 
we are going to help people without health insurance, that that 
is the priority and that that the reason employers are dropping 
coverage has primarily to do with growing costs that are 
affecting everyone. You have an obligation to meet the needs of 
your citizens and I think it is fair to say that the SCHIP 
program based on the overall review of the evidence is a very 
effective investment in addressing that problem.
    Mr. Pallone. Thank you, and I am going to quickly get to 
Senator Vitale with only a few minutes left.
    Could you discuss, Senator, how the cap on Federal funding 
on SCHIP has affected New Jersey, and more specifically, since 
Federal SCHIP spending is capped at $5.4 billion a year into 
the future, what will this mean for New Jersey's ability to 
continue those they are already covering as well as any new 
children in the future?
    Mr. Vitale. We are currently experiencing a $195 million 
shortfall from SCHIP so that is that the State treasury is 
making up the difference for that shortfall. We are covering 
more children in New Jersey than most of the States by way of 
Federal poverty but it is that New Jersey has an ever-growing 
divide between the haves and have-nots, and the reallocation or 
the diminishing reallocation of funds on an annualized basis 
has a significant effect in terms of the way it is New Jersey 
can afford to underwrite the costs of what is left. We have 
64,000 children in New Jersey who are still eligible for SCHIP 
or Medicaid but not yet enrolled and we are aggressively 
pursuing them through a number of means but the failure to 
reallocate--and I would advocate that we increase funding for 
SCHIP because it has been so successful as a method to reach 
the rest of those children, particularly in States that have 
not expanded to the levels that New Jersey has.
    Mr. Pallone. Thank you. We are out of time and we are going 
to have to break now, and I estimate probably about 45 minutes 
or so before we come back, so thank you.
    [Recess.]
    Mr. Pallone. I would ask our panelists to come back up and 
we will begin and I yield to our ranking member, Mr. Deal.
    Mr. Deal. Thank you, Mr. Chairman, and thanks to the panel 
for being here. As we consider the issue of reauthorization of 
SCHIP, obviously there are many points of view and this panel 
has expressed some of them here today.
    Let me start, Dr. Sloyer, with the State of Florida since 
you have been one of the more responsible States in terms of 
living within your means and the allocations of the program. 
Does Florida have plans to spend all of its 2007 allocation 
prior to its expiration in 2009?
    Ms. Sloyer. We most certainly do. We in our last revenue 
estimating conference anticipate that we will spend every dime 
by the end of our roll forward period in 2009.
    Mr. Deal. So I assume that you would be a little reluctant 
for any proposal for either the shortfall or otherwise that 
would take away that money to help States who have not lived 
within their means?
    Ms. Sloyer. I would say a little reluctant is an 
understatement.
    Mr. Deal. One of the problems that we have in looking at 
reauthorization as I view it is the great discrepancy and 
variance among the States. Now, I know Mr. Weil says that that 
is federalism and it is, but there generally have to be general 
parameters, and Senator Vitale, we don't mean to pick on you 
but Frank invited you so you have become the poster child for 
maybe some of us viewing what is wrong, even though my State is 
in a shortfall and we didn't exceed it by insuring adults or 
singles or parents or anybody else. If we are criticized for 
anything, I guess it is we are 235 percent of poverty rather 
than 200 percent, which seems to be the standard. But as I 
understand it, in the State of New Jersey, with some of the 
provisions that allow you to have income disregards, that a 
family of four in New Jersey can have an income of maybe in 
excess of $72,000. Does that sound about right to you?
    Mr. Vitale. Yes, close enough.
    Mr. Deal. For a program that by the legislative 
authorization was designed to deal with children who are at a 
``near poverty level'', that becomes very difficult for some of 
us to understand how it fits into the mix, and I know you will 
understand that that is one of the criticisms that we all have 
to take into account.
    With regard to where do we go from here, I think one of the 
questions is, should we get to a more uniform-type standard as 
the basis for it, and one of the great criticisms of some 
States and yet the advocacy for it on the others who have 
advocated it is that parents should be included in the mix of 
children who are eligible. Senator Vitale, have you all look at 
the possibility of including the parents with the Medicaid FMAP 
as opposed to the SCHIP FMAP, and would you be as interested in 
doing it that way with the lower FMAP matching for those 
people?
    Mr. Vitale. We currently cover parents, only parents of 
children, not the childless adults but parents, up to only 115 
percent of poverty. There are parents in Medicaid of course who 
would otherwise not be eligible for FamilyCare or SCHIP but I 
think it is appropriate that we cover--100 percent of the 
poverty level, even 200 percent of poverty in New Jersey is an 
extremely low amount of annual income for a family and since we 
don't cover childless adults, only parents of children who are 
in the program but not all children, and since we go to 350 
percent for our kids and for a time we were at 200 percent for 
parents, it was really a match-up for parents and kids and now 
we of course have abandoned 200 percent and we are back down to 
115. It seems appropriate. These are individuals who will 
never, ever in their wildest dreams have access to health 
insurance. Their primary care physician is the emergency room 
doctor or nurse.
    Mr. Deal. When a State like yours and others--I think when 
you put Illinois along with you, those two States alone have 
consumed all of the unused funds from all of the other States 
combined over the last 2-year period. I believe you all have 
consistently been at like 270 percent of your allocations. Now, 
my State, as I say is not blameless because we haven't kept and 
lived within our means either. The problem I think we have with 
it is that hopefully we will keep this as a block grant 
program. It gets to look more and more like an entitlement when 
we consistently overspend at the State level and then expect 
the Federal Government to make up the shortfall. It begins to 
make it look like an entitlement program but only an 
entitlement program for those States who have overspent and 
that creates the inequity I think we have to deal with and 
obviously is going to be one of those situations that we all 
have to be concerned with in reauthorization.
    I overstayed my time, I guess. Thank you, Mr. Chairman.
    Mr. Pallone. Thank you, Mr. Deal.
    Mr. Green.
    Mr. Green. Thank you, Mr. Chairman.
    I guess coming from Texas I philosophically agree with my 
colleague from Georgia although in Texas we haven't overspent 
our allocation. In fact, we haven't spent what I wanted them to 
on their allocation, but that is an issue hopefully we will 
deal with. My State of Texas provides 6 months for SCHIP 
coverage before kids have to re-enroll in the program. The 
States that operate the separate SCHIP, only Texas and Oregon 
cover children for the 6 months at a time, and since Texas 
implemented the policy in 2003, we lost approximately 180,000 
children from SCHIP rolls and 50 percent of those children 
remain uninsured. It seems pretty simple that 12 months of 
uninterrupted coverage will help keep kids on the rolls and 
result in better health care outcomes for children. However, 
according to the Texas Children's Hospital, one of the HMOs 
insuring Texas children under SCHIP in Houston, a 12-month 
coverage policy has added benefit, actually saving the States 
money. In fact, Texas Children's Health Plan data shows that 
12-month coverage results in a 25 percent reduction in claims 
cost per child, and can the witnesses speak to that issue and 
the cost savings that States accrue by covering children for 12 
months as opposed to the 6 months? Because it is clear that at 
least in Texas the 6 months coverage was enacted to suppress 
the enrollment and keep State costs down.
    Mr. Vitale. If I could, I think there are certainly a 
number of issues. One, of course, is the issue of the continuum 
of care and that children have access and they may not access 
their insurance or access a provider within the first 6 months 
of their enrollment, and if they have to re-enroll every time 
and if that re-enrollment process is a little difficult where 
there are barriers to re-enrollment in terms of when they have 
to begin to reapply, if there are mistakes in their 
application, that holds up their re-enrollment. So I think for 
any numbers of reasons it makes sense that we do in New Jersey, 
we have annual enrollment. We have one card that we give to the 
parent for the child for their coverage. That saved the State 
millions of dollars. We were giving out one card per month for 
membership. But enrolling them for the entirety of the year 
gives them the continuum of care for that 12-month period and 
in New Jersey what we have provided is for an aggressive re-
enrollment process to make sure that they are, No. 1 eligible 
to re-enroll, and we do that not only through the application 
process but through Wage and Hour and Treasury. We have 
backtracked electronically what the income is for the family to 
make sure that it is valid. For any number of reasons an annual 
enrollment or an annual eligibility is the best way to go for 
two different reasons.
    Mr. Green. When you say you backtracked it, that is through 
your State treasury?
    Mr. Vitale. Yes, through Wage and Hour through the 
treasury.
    Mr. Green. Is that information available to some States--we 
don't have an income tax, for example. Is that available from 
the Federal side?
    Mr. Vitale. Gee, I don't know. It is from our Wage and Hour 
locally so when companies submit their data monthly, we were 
able to capture that information.
    Mr. Green. Any other response to that question?
    A follow-up question is, can you speak to the effect of the 
6- versus 12-month coverage for the State Medicaid cost? For 
example, 2004 data from our Texas Health and Human Services 
Commission indicates that the number of children moving from 
SCHIP to Medicaid is far higher than the number of children 
moving from Medicaid to SCHIP, so we are having children going 
from SCHIP to Medicaid and less than from Medicaid to SCHIP. 
While the 6-month coverage period may keep enrollment down, and 
ironically also contributes to a net loss of State dollars, 
since the State receives a better match for children under 
SCHIP than they do under Medicaid, can you comment on the 
effect of keeping children in SCHIP longer would have on the 
State Medicaid budgets? Is there an effort to keep children on 
SCHIP as compared to Medicaid because of the additional cost to 
the State?
    Mr. Weil. I think it is very difficult to generalize about 
the budget effects across different States in these policies. I 
do think the States have learned a lot in these 10 years and 
one of the things they have learned is that 12-month continuous 
enrollment helps achieve the objective of the program, which is 
to assure that children have health insurance. But you do have 
in the structure of this program, States have the choice to 
decide a lot of things, and for budgetary reasons, for their 
own decisions about the kind of program they want to run, they 
don't have to do that. There is a combination of a financial 
component to the decisions States make but there is also a 
choice about how they want to run the program and I think those 
States that are most interested in achieving enrollment and 
retaining enrollment have gone the route of longer periods of 
eligibility. Clearly there is a cost to Medicaid to programs 
that do not take full advantage of SCHIP so just because a 
State saves money on one side does not mean they will save it 
on the other side, and similarly, there is a cost to the 
Federal Government if States are not fully--although they get a 
higher match in SCHIP, if they are taking actions that yield 
more folks over on the Medicaid side, then the cost may show up 
over there.
    Mr. Green. Mr. Chairman, I know my time has run out, and I 
have two other questions that I would like to submit to the 
panel later if that is OK.
    Mr. Pallone. You can, but we also will have a second round, 
so it is up to you.
    Mr. Green. I will probably submit them.
    Mr. Pallone. I will leave it up to you. So moved. That is 
fine.
    Mr. Engel.
    Mr. Engel. Thank you, Mr. Chairman.
    Dr. McDavid, I want to thank you for being here on behalf 
of the National Association of Children's Hospitals. I have 
great admiration for the service that Children's Hospital in my 
area such as Montefiore Children's Hospital in my district in 
Bronx, New York, and Blythedale at the New York Presbyterian in 
Manhattan provide to my constituents, and I am thrilled to 
welcome you to our committee.
    Sixty-one national advocacy groups devoted to improving 
children's health requested $60 billion in additional monies to 
reauthorize SCHIP this year. The President countered with $4.8 
billion. Clearly there is a disconnect and we know based on the 
administration's own estimates, only funding the program at 
$4.8 billion could cause up to 400,000 children to lose SCHIP 
coverage. Can you please tell me where does the National 
Association of Children's Hospitals stand on the issues of 
SCHIP funding? I think I know but I want you to say it. And do 
you believe that it would be acceptable for Congress to allow 
so many children to lose their SCHIP coverage over the next 5 
years? Obviously I am outraged over it and I think it is 
morally imperative and fiscally responsible to devote more 
resources to providing and even improving and extending 
children's coverage. So I hope you agree with this statement 
and I would like to hear your views on it.
    Dr. McDavid. Well, the National Association of Children's 
Hospitals would like to have all children covered, that funding 
for SCHIP and Medicaid be sufficient not only to cover the 
children who are now enrolled but to enroll the children who 
are eligible but are not enrolled, Mr. Engel. The exact number, 
I would respond that NACH can help with that but that will be a 
CBO designation. That number will evolve as we know what the 
requirements are going to be. The position of NACH is that all 
children be covered, that Medicaid and SCHIP be appropriately 
funded, and eligible and unenrolled children be enrolled.
    Mr. Engel. Thank you. I want to ask you about asthma 
because my area of the world in the Bronx, we have the largest, 
I think, percentage of asthmatic children of virtually anywhere 
in the country. Two of my own children have asthma, my wife has 
asthma, and a study several years ago noted that children 
living in New York City primarily in the Bronx were almost 
twice as likely to be hospitalized for asthma compared to the 
nationwide average. Obviously it contributes to school 
absenteeism for children and it is very, very difficult and I 
want to tell you that I was pleased that in your testimony you 
focused on the importance of comprehensive care for children 
with chronic illnesses so I would like if you could please 
comment on how chronic care management by programs like SCHIP 
and Medicaid can reduce overall costs to families and safety 
net providers.
    Dr. McDavid. Well, medicine has evolved. We have learned 
more in the last 100 years that we knew in the previous 1,000 
years, and the illnesses that children used to die from they no 
longer die from. Immunizations have made an incredible inroad 
into child health. With the introduction of the H. influenza B 
vaccine, we basically eradicated the No. 1 cause of bacterial 
meningitis in children under 6 within 8 years of the 
introduction of that vaccine. My residents don't know what 
measles looks like. They don't know what chicken pox looks 
like. Those are the diseases that used to make children sick 
and also families would have to lose time at work.
    Mr. Engel. I had them both.
    Dr. McDavid. Well, they wouldn't know what it looks like 
now. When I was training, which wasn't that long ago, but it 
was some time ago, 80 percent of all children who were 
diagnosed with leukemia would die and now 80 percent of 
children who are diagnosed with leukemia live. That is a 
chronic illness. Asthma is a chronic illness. Diabetes is a 
chronic illness in children and we are seeing type 2 diabetes 
in children. So a lot of diseases that children didn't live 
long enough to have or didn't live long with, they are now 
living. We are doing better. So we have to provide that kind of 
care. My concern is that children go to school and families are 
allowed to work and that is what good care on a routine basis 
does for families.
    Mr. Engel. Thank you.
    Thank you very much, Mr. Chairman. I see my time is just 
about up. So thank you.
    Mr. Pallone. Thank you.
    We are going to go into a second round, so I guess I am 
next. I will just yield myself 5 minutes.
    I wanted to follow up on this idea of, I call it 
flexibility. That when the SCHIP program was founded and I 
think everybody who is up here now was here at the time, it was 
not an entitlement the way, Mr. Deal mentioned. It wasn't 
intended to be. And the idea was flexibility, that each State 
basically would be able to try to tailor the program to its own 
needs and so now we do have the proposal by the President to 
cut back the 200 percent and not include for children and not 
include the adults other than those I guess that have already 
been covered and so I just wanted to hear from some of you 
about why you think some States have gone beyond the guidelines 
now that the President is proposing and what it would mean if 
we cut back, and I guess I will ask Senator Vitale, I will ask 
Dr. Sloyer, anybody else who wants to get into it, but just 
explain to us why this was done. One of the statements that was 
made by the Governor of Tennessee at the National Governors 
Association--I was there on Monday--was that we submitted these 
proposals to go beyond the 200 percent or to include adults and 
they are approved. They have been approved all along so why all 
of a sudden are we being told to cut back. And if you just 
would comment on it?
    Mr. Vitale. Sure.
    Mr. Pallone. I will start with you.
    Mr. Vitale. Thank you, Congressman. You are right that when 
we were first at 200 percent of poverty in the beginning of 
KidCare in 1998, it was widely publicized and accepted that it 
was a great thing for kids. But we also recognize that New 
Jersey's cost of living was much higher than most States, its 
median income, per capita income was much higher and the cost 
of living--to rent a one-bedroom apartment in the average 
community is nearly $1,300 a month, and those are issues that I 
can't solve but what I can try to solve is the health care 
issues for children. We did apply and it was Governor Whitman 
at the time, a Republican Governor, who applied for expansion 
to 350 percent. It was approved by CMS and so essentially we 
believed that we a deal. We had an agreement and this is going 
to be a partnership that would be ongoing. We didn't decide to 
go to 350 percent because we wanted to relieve someone else the 
responsibility and obligation to provide the health care. It 
wasn't affordable for those individuals. It should also be 
noted that at 350 percent or even at 300 percent and even below 
that, there is a premium contribution by the parent so it is 
not a freebie. There is, for lack of a better term, skin in the 
game for those who are above 200 percent and get closer to 350 
percent and it is significant in terms of being responsible and 
we found also that those parents how are covered closer to 350 
percent want to be able to contribute some dollars toward that. 
Some of them that we have interviewed and we have talked to 
have said that they don't--maybe it is a personal thing but 
they don't feel as though--it is an entitlement that they don't 
think that they want to be associated with. They don't mind 
spending a few dollars to provide their premium coverage.
    But the comments that other States have lived within their 
means, I don't understand that. I think I understand the 
perspective that at one time the Federal Government gave us the 
opportunity to go to 200 percent, this was the limit, but when 
you say you can go to 350 percent and we will match it at 65 
percent, then it is that we took advantage of that for the sole 
purpose of providing health insurance for children who would 
never, ever have that opportunity for that kind of care.
    Mr. Pallone. Well, let me just ask Mr. Weil, over the past 
few weeks we have heard a number of people suggest that SCHIP 
has gone well beyond its intended reach. Do you think the 
program really has run amok with all these waivers that were 
permitted under the law? Are there beneficial aspects to the 
fact that we are going above the 200 percent for kids and 
allowing adults, parents, or do you think we have gone amok?
    Mr. Weil. We certainly haven't gone amok, and the statute 
in its own language says that HHS will reallocate unspent 
dollars to those States that need them and therefore seeing 
other States not using the funds did exactly what the statute 
anticipated. Why did States go further? Some were already 
covering at higher levels and the statute took that into 
consideration. Some found that the data on which their 
allocations were based didn't match the reality as they went 
out to find families. Some used the funds as part of an overall 
strategy to try to reach more uninsured people in their States 
whether children or families and in some instances, but not 
many, childless adults and of course Congress has already taken 
that option away, and States are charging cost-sharing to 
families. I would just note the real bottom-line answer to your 
question is, States took advantage of this program because the 
Federal Government was taking no action on a problem that 
States saw as central, which is the growing number of uninsured 
and the growing cost problem that small businesses and families 
were facing, and this was the only opportunity for States to 
interact with the Federal Government and Federal programs to 
address that problem. If there had been other avenues open, I 
am sure States would have considered them as alternatives. 
There were no alternatives.
    Mr. Pallone. Thank you.
    Mr. Deal?
    Mr. Deal. Thank you.
    I want to get back to considerations for reauthorization 
and I think the first place we ought to start is to remember 
that the C in SCHIP is children, and they ought to be the 
primary focus. Now, some people are saying we ought to have 100 
percent of all children who are 200 percent of poverty or below 
enrolled in SCHIP. I personally don't think you will ever get 
100 percent of any particular category enrolled. What is an 
agreeable percent of 200 percent of poverty of children that 
should be sort of a baseline, if you will? Should it be 90 
percent? Anybody think it ought to be lower than 90 percent of 
below 200 percent of poverty children in the SCHIP program as a 
priority? Anybody think it ought to be less than 90 percent? Is 
90 percent achievable? I think we have had States that 
demonstrated that it is achievable. Does anybody disagree with 
that? Does it get problematic when you fix that baseline above 
90 percent? Does it become very difficult to achieve? I think I 
see most people agreeing that it probably does. OK. So if we 
are looking at where we should spend our money, is there 
anybody that disagrees with the fact that we ought to set a 
baseline of, say, 90 percent of children at 200 percent of 
poverty or below as a prerequisite for spending SCHIP money on 
other categories such as adults or pregnant women or whoever? 
Does anybody disagree with that proposition?
    Mr. Vitale. I do, Congressman.
    Mr. Deal. Why?
    Mr. Vitale. Because it is that there are children who live 
at 210 percent of poverty or 250 percent of poverty and that 
is----
    Mr. Deal. They are not as bad off as the ones below 200 
percent though.
    Mr. Vitale. Well, you are right, but it is also marginal, 
so let me give you an example of a family of two in New Jersey 
at 200 percent of poverty is $27,000 a year. That is one parent 
and one kid.
    Mr. Deal. Well, let me stop you though. If we agree 90 
percent of those below 200 percent of poverty ought to be the 
sort of thing everybody ought to be able to achieve, I am not 
saying you can't spend it on those above it. I am just saying 
that as a prerequisite to that, you ought to achieve a certain 
penetration level of those lower income children. OK. That is 
the point I was making.
    Let me go quickly to another part, and Ms. Allen, I was 
looking in the recommendations section because one of the 
things that my State says is a problem is the formula. You 
allude to it, and as I understand the formula, 50 percent of 
the formula is based on the Medicaid formula of per capita 
income. Is that correct? Same as you use in the Medicaid 
program?
    Ms. Allen. That is correct.
    Mr. Deal. The other 50 percent is based on the uninsured 
children and those in the poverty level and the complaint my 
State makes is that once they have been successful in enrolling 
the children in an SCHIP program, they don't get to count those 
children for future allocations of money. Does that make any 
sense to anybody?
    Ms. Allen. Yes, sir. There are concerns about the formula 
does disadvantage those States that are achieving a high rate 
of insuring children and that is one of the recommendations 
that some are making to relook at that formula.
    Mr. Deal. So theoretically, if you have 100 percent of your 
eligible poverty children, you would lose 50 percent or more of 
your funding for the next allocation period. I think that is a 
huge problem and that does penalize the good actors in the 
process. Would anybody agree we ought not to look at trying to 
fix that? Anybody disagree with trying to fix that? OK. I think 
I got your approval on that one.
    One of the things that I think we also have to look at as 
we approach this is that we shouldn't lose sight of the fact 
that it is a block grant program and trying to keep it in that 
category I think is very important. We earlier in the day 
talked about the possibility that this might foreclose private 
insurance in the marketplace for employer-based insurance that 
might be available to families who might say well, I can get 
under the SCHIP program and therefore, I don't elect the 
employer-based. One of the suggestions--and some States I think 
are already doing it. I know there is some in Medicaid--of 
using SCHIP money to assist families in that situation to buy 
in to the private plans that are available through that 
employer-based system. It certainly saves a State money, I 
think, to do that. Have you all done, Senator?
    Mr. Vitale. Yes, sir, we have. In New Jersey we have the 
premium assistance program for parents whose children are 
already covered in dependent coverage at work, so in a small 
group market if your child is covered, the State if they would 
be--if they are FamilyCare eligible but enrolled in their 
parent's employer's plan, then two things can happen. One is 
that they would have to go bare for 3 months before they would 
be eligible for our SCHIP program, which prevents the crowd-out 
piece. But we do though say that since you are doing the right 
thing, you are insuring your kid at work and you are paying the 
premium but you are FamilyCare eligible, we will pay a piece of 
your premium to help you support that premium because we know 
that you are eligible so let us do the right thing; you have 
done the right thing, we will help you out a little bit as well 
through premium support. And then our next sort of iteration of 
that is to make a determination upon enrollment going forward 
this legislation we are considering that would first ask 
parents if they have health insurance opportunities at work, 
and if they do and they are FamilyCare eligible and if the 
premium is equal to or greater than, then we would help them 
with that as well to sort of try to keep them in employer-based 
coverage and support that system as well.
    Mr. Deal. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Pallone. Mr. Burgess, questions?
    Mr. Burgess. Thank you, Mr. Chairman. If you don't mind, I 
actually do have a couple of questions that have come up and I 
apologize about our voting schedule. At least we got to hear 
from all of you before we had to leave.
    I apologize because I wasn't here for the early questions. 
If I am re-asking something that has already been covered to 
just be patient with me, it won't hurt for this committee to 
hear it more than once anyway.
    Ms. Allen, let me ask you about the eligibility for SCHIP 
in New Jersey for those whose net income is 200 percent of the 
Federal poverty level or below. That is by definition the 
definition of eligibility. Is that correct?
    Ms. Allen. In New Jersey it is 350 percent percent of 
poverty.
    Mr. Burgess. Well, is that technically in compliance with 
the requirement that the program cover a population of 200 
percent of poverty and below as was intended when Congress 
passed SCHIP? Anyone can answer.
    Mr. Vitale. I can answer that. We first began in 1998 with 
SCHIP when it first rolled out and we went to 200 percent of 
poverty for kids but we received a waiver from CMS to go to 350 
percent the following year to enroll more children. So our 
waiver was granted by the Federal Government and maintaining 
that 65 percent/35 percent Federal match.
    Mr. Burgess. So you covered all the kids in New Jersey if 
they were 200 percent of poverty and below by that time?
    Mr. Vitale. Most of the children in New Jersey are covered 
below 200 percent, either FamilyCare or Medicaid, and we have 
more children enrolled above 200 percent to 350 percent. The 
numbers get a little less as you go closer to 350 percent 
because those are kids whose parents come in and out of 
insurance. They lose their job, they lose their insurance and 
get back into it. So we have a much higher enrollment at 250 or 
at 200 percent below and above that.
    Mr. Burgess. So now we go up to 350 percent percent of 
poverty basically. Now, let me just be sure that I am correct 
on my understanding of this. This is not the State of New 
Jersey spending New Jersey money for everything above 200 
percent percent of poverty to 350 percent? It is the Federal 
money that you are drawing down from the SCHIP program?
    Mr. Vitale. That is correct. The Federal Government is 
paying 65 percent. We are paying 35 percent out of our State 
treasury.
    Mr. Burgess. So in a sense, you are then disregarding the 
income for those between 200 percent of poverty and 350 percent 
of poverty?
    Mr. Vitale. Well, sir, we are not disregarding anything. We 
are not disregarding a Federal rule because we were given a 
waiver by CMS to allow us to cover kids above 200 percent to 
350 percent so we are in compliance with the waiver.
    Mr. Burgess. Then we would be in agreement that the waiver 
is the problem? OK.
    Mr. Vitale. No, we would not.
    Mr. Burgess. Well, Senator, let me just stay with you for a 
minute. It is my understanding that legislation has been 
introduced in Congress that would take 2005 allotments and 2006 
allotments from States that have not yet expended these 
allotments before the 3-year time period that they had to 
expend the funds and take those monies and redistribute to 
States who will spend their entire 2007 allotment before the 
end of the fiscal year. Am I correct about that?
    Mr. Vitale. Yes.
    Mr. Burgess. I think I am one of those States that would 
lose money in a deal like that, but you are supportive of that 
concept?
    Mr. Vitale. Well, sir, I am not supportive of any State 
losing their allocation but I do believe that all States that 
enter into this partnership with the Federal Government have an 
obligation to do all that they can to enroll all the children 
above--or not above but to their limit.
    Mr. Burgess. No argument.
    Mr. Vitale. There are States that have done a less than 
adequate job in enrolling those children so since there was a 
finite pot of money, we want to be able to redistribute it to 
those States who actually use it.
    Mr. Burgess. But we heard from other witnesses earlier in 
their testimony that one of the problems is that we are 
inconsistent and it would seem to me to be the height of 
inconsistency if we say Texas, you have got 3 years to spend 
these funds but oh, by the way, now we are doing a quicker 
look-back for you and we are going to take those funds that 
should be yours until 2008, 2005 funds that should be yours 
until 2008 but we are going to zip those off to someone else to 
cover their population. In Texas, we are not as generous as you 
are in New Jersey. We don't go up as high as 350 percent of 
poverty. Well, it is just a question of fundamental fairness. 
Your position is that since the Federal Government allows that 
to happen and you have the waiver that that is OK? We are 
looking at reauthorizing this bill and we want to do it as best 
as we can. We want to be fair to all the States and we hope the 
States will play by the rules but then we should play by those 
rules that we set out, I think. I had a discussion with Albert 
Hawkins, our State HHS director, last week when I was home, and 
I said Albert, is 3 years not enough time for you to allocate 
that money? Texas of course has a legislature that meets every 
2 years. Some people say that is too often. But because of 
that, that was the reason we were behind on spending our money 
going back to 1998. We didn't meet in 1998. We met in 1999 and 
began our expenditures of the SCHIP program. But we have 
adjusted to that and now we are on that steady state of a 3-
year timeline and Mr. Hawkins said as long as we stay on the 3-
year timeline, we are fine. Because I asked him, I said do you 
need more time to spend the money; maybe you ought to spend 
more on doctors because they could get paid more. And he said 
no, what we are doing is good but we just need the stability of 
having that 3-year timeline not be interrupted for us to be 
able to make our plans back in the State with the partnership 
that Texas entered into with the Federal Government.
    I see my time has expired, Mr. Chairman. You have been very 
indulgent. Thank you.
    Mr. Pallone. OK, sure. We are just going to go one more 
round here and then we will close because I don't want to keep 
all of you.
    I just wanted to ask about more outreach because we know 
for example in New Jersey, and I know it is true in other 
States, that even now there are more kids eligible for the 
SCHIP program that are not enrolled than are actually enrolled, 
at least in my State, and I know that is true in many other 
States. I would ask Dr. McDavid and then again Senator Vitale 
if he likes, there are currently 9 million uninsured children 
in the country. Of those, two-third currently qualify for 
public programs such as SCHIP and Medicaid but are not 
enrolled. Some States have more barriers to enrollment than 
others, but just talk to us about what things States have done 
that have improved enrollment, what kind of barriers have been 
put up and certainly part of this may be--because I know that 
Senator Vitale has told me in the past that enrolling the 
adults is one way of enrolling the kids. What would you 
recommend to get more kids enrolled? What kind of outreach, 
what kind of changes to the program as we go through the 
reauthorization?
    Dr. McDavid. I can tell you what we have done in Ohio, and 
Ohio has actually put everyone into Medicaid. We don't have a 
separate SCHIP program. Twelve months continuous eligibility is 
very helpful. I think that if any of us in this room had to 
pick our insurance every 6 months and gather up a bunch of 
materials and take it down to the center, we probably wouldn't 
get it done. So we have to think about the barriers that low-
income working families have to face to get re-enrolled. So 12 
months continuous eligibility, presumptive eligibility. If your 
income is low enough for you to meet certain other programs in 
your State, then families need to know about for us Medicaid 
and make sure that we get their kids enrolled. At my hospital, 
we have a person that we hire that we pay for who literally 
helps families get the documentation together so that they have 
the receipts and they help them get the birth certificates and 
the things that they need, because for many families it is a 
very difficult thing to do. If you are born at our hospital, 
then we know that you have got a birth certificate somewhere--
not our hospital, we have a women's hospital with us.
    The other thing we did in Cayuga County, which is the 
county that I am from, we did a 2-year pilot with self-declared 
income. People could say what their income was, and when we did 
it we found that there was very little fraud, that people do 
honestly self-report their income. So there are things that you 
can do to decrease the barriers. Personally, I find that we ask 
people who have less resources and skills than we do to do 
things that we probably wouldn't do, and I think we have to 
think about how the people who stock the shelves at--can I say 
it--Wal-Mart and change your oil at the lube stop and pass you 
your burger at the Burger King, the kinds of things that you 
and I may not think of as barriers are huge barriers to them.
    Mr. Pallone. Talk to me or tell us, Senator, about how, 
enrolling the adults is a factor in enrolling the children or 
any other outreach that New Jersey has done to try to get more 
kids enrolled.
    Mr. Vitale. We have seen that. We don't know what the 
reasons are. We kind of guess why that is. We know that when 
families participate as a family, that there is higher 
enrollment for kids. I don't know why that is. You would think 
that even if a parent weren't eligible that they would get 
their kids in anyway. So I kind of scratched my head on that 
notion. But 2 years ago when we reformed FamilyCare and we did 
FamilyCare II, our original application was 14 pages long, two 
sides. I used to joke that it looked like an application for 
tuition assistance to Annapolis and it was that difficult to 
fill out, and it was a challenge for me and for my staff to 
fill it out without making a mistake, and if you mail it in and 
you had a mistake, then it wasn't processed, it sat in a pile 
for 6 months until they figured out where it came from. So we 
went down to a 1-page form and asked for income. We went from 
three pay stubs to one pay stub. We enroll online now. We have 
reached out to hospitals to get them to participate in 
enrollment. We weren't asking for a Medicaid waiver so that we 
can have a certified individual in the hospital actually 
certify the application as opposed to having that application 
filled out by a hospital employee, then have to go to the 
country to be certified and find its way through the process 
and finally make it down to Trenton to be finalized. We have 
also done a lot of average with FQHCs with schools, with 
clinics. We have set up enrollment sites at legislative offices 
inclusive of mine, then in reach within the departments, the 
Department of Health and Senior Services. We have women's, 
infants' and children's program and through the FQHC process 
where we begin to now enroll. Each department head meets--every 
time there is a staff meeting in Trenton, every department 
head, every commissioner has to report to the Governor and to 
the commissioner of human services what they have done to help 
provide outreach and awareness through their department, 
whether is the Department of Education, Department of Health.
     And last, in the Department of Education, we have 
identified through a pilot program that will expand next year, 
we have been outreaching to all children who are eligible for 
free and reduced school lunch. So everyone who is eligible is 
certainly eligible for SCHIP. But in New Jersey, since we have 
a higher eligibility, we are looking for all children so now we 
are educating school districts, school nurses and others so 
that they can participate in the enrollment process as well.
    Mr. Pallone. OK. Thanks a lot.
    Mr. Deal.
    Mr. Deal. One of the things that I encounter when I talk 
with my State legislature and Governor with regard to their 
shortfall was that the Georgia statute that put in place our 
Peach Care program prohibits our State from adding State 
dollars when the Federal match runs out. Do you have a similar 
prohibition under New Jersey law, Senator, that you are aware 
of?
    Mr. Vitale. No, Congressman, we do not.
    Mr. Deal. And as I understand it, there is no prohibition 
in the Federal statute that would prohibit a State when they 
are approaching a shortfall from self-funding whatever the 
shortfall might be. Am I correct on that? There is no Federal 
prohibition against it?
    Ms. Allen. I am not aware of any, no.
    Mr. Deal. Obviously one of the reasons that SCHIP is so 
popular is that the FMAP differential is much more favorable to 
a State than is the Medicaid FMAP. In my State, it is little 
slightly less than a 16\1/2\ percent differential and I know 
that must vary from State to State. Ms. Allen, did you all look 
at that issue of the differential between the Medicaid and the 
SCHIP differential on the FMAP, and how big of variance do we 
see in States. Mr. Weil, you may know.
    Mr. Weil. The formula is in statute and it is a little 
complicated. The State has to put in 30 percent less than it 
would for the Medicaid program. So for the States at the 50 end 
of the range, it is 50/65 so it is a 15-point gap as you move 
up into matches that move slightly but it is a pretty good rule 
of thumb.
    Mr. Deal. So it sort of starts at 15 percent? Is that what 
I understand you to say?
    Mr. Weil. Yes.
    Mr. Deal. So there is great incentive to maximize the use 
of your SCHIP if at all possible.
    Ms. Allen. Yes.
    Mr. Deal. Well, we have a task of reauthorization and 
trying to deal with some of these issues that we are confronted 
with. I have come to the conclusion though that there are some 
things that are immutable. One is, if it is a choice of me 
paying for something or somebody else, namely the taxpayer 
paying for it, I am going to choose the taxpayer every time. If 
it is a choice of the State paying for it or the Federal 
Government paying for it, the State is going to always choose 
the Federal Government to pay for it. Those are the laws of 
human nature and we are not going to pass anything up here that 
is going to repeal the laws of human nature, and I think what 
we have to do is work within those to try to make a program as 
far as possible. Because quite frankly, people from States like 
Texas, as Dr. Burgess has indicated, they have a right to be 
indignant when they were given their allowance by Uncle Sam 
just like my State was given its allowance by Uncle Sam and we 
have overspent ours and we come running back and saying well, 
take part of his or give me some more to make up the 
difference. Those inequities are going to haunt us until we try 
to get a handle on them to address them as appropriately as 
possible, and it is going to take good faith and it is going to 
take a willingness to try to deal with the tough issues because 
otherwise politics will take over and human nature is going to 
take over and sometimes it does not draft the best kind of 
legislation for the long term.
    So Mr. Chairman, I appreciate the time and I especially 
appreciate these witnesses being here today, and we probably 
are going to have questions that some of our members who are 
not here are going to submit to you and hopefully you will be 
able to respond to those, and any suggestions--I would simply 
say that any suggestions that you have about things we haven't 
even talked about or haven't even thought about perhaps, and I 
would and I am sure the chairman would too, we would welcome 
your input on all those. Thank you.
    Thank you, Mr. Chairman.
    Mr. Pallone. Thank you. Dr. Burgess.
    Mr. Burgess. Thank you, Mr. Chairman.
    Let me just echo what Ranking Member Deal just outlined 
because I think that is extremely important. Maybe since I am 
so new to this process and I really don't understand all the 
time what something like a waiver might be or might look like, 
perhaps we can ask CMS for some examples of waivers, perhaps 
the waiver that is provided to your State, Mr. Chairman, and 
waivers that have been provided to some of the other States as 
well just so we have an opportunity to look at--I am always 
concerned about Medicaid as a Federal program because it 
requires 2,800 waivers to work well. Maybe we ought to try to 
get it right the first time and not require the CMS to come 
back and give us waivers to make it work when it is not working 
well for the people it is intended to serve, and it is a good 
goal to serve children, provide children with coverage. It is 
after all preventive medicine at its best. I think we heard 
from our previous panel when we had our first hearing that for 
every dollar that it costs to cover an adult, you can get 
comparable coverage for a child for about 60 cents because we 
are obviously treating disease much, much earlier in someone's 
life span and so we can expect our therapeutic outcomes to be 
enhanced, which leads me to the question of--well, let me back 
up for a minute and ask Ms. McDavid, I think I heard you say 
during your opening statement that you are looking at possibly 
providing financial incentives for people to enroll in SCHIP. 
Is that correct?
    Dr. McDavid. That wasn't me.
    Mr. Burgess. Maybe I misheard that. Well, the whole concept 
of covering adults on a children's health insurance statute is 
one that I just intellectually have some trouble with. If we 
are going to be covering adults, we should cover adults. If we 
are going to be covering children, let us cover children. Let 
us decide what we are going to do and do it well and do it 
better than anyone else. Does anyone have any thoughts on the 
concept of expanding the populations to include adults? In the 
interest of full disclosure, I was an OB/GYN doctor in my 
former life so I do think we ought to cover pregnant adults 
because that really is preventive medicine at its very best 
because we are going to prevent problems before birth. But 
aside from the individual who is pregnant, non-pregnant adults 
and childless adults, does anyone have any thoughts about it? 
Are these populations we should be seeking to cover with the 
SCHIP program?
    Dr. McDavid. I would like to state on behalf of the 
National Association of Children's Hospitals that our 
fundamental focus should be making sure that children are 
insured, that there is an adequate amount of money to cover the 
children who are already enrolled and that we do outreach and 
enroll those children that are not enrolled. I agree with you, 
in Ohio we cover pregnant women to 150 percent of poverty and, 
as you know, it is very effective. You come in, you give your 
urine, you get measured, you get your blood pressure taken, you 
have ruled out gestational diabetes, intrauterine growth 
retardation, preeclampsia. We understand that, but for 
children, our emphasis is that children should be adequately 
covered and after that has been taken care of, then we can look 
at other populations.
    Mr. Burgess. So we would be in agreement that the children 
should be the primary focus of this as we reauthorize this 
legislation?
    Dr. McDavid. Yes.
    Mr. Burgess. And, Mr. Chairman, I may be wrong on this but 
I think when we do our supplemental appropriation request from 
the administration in a couple of weeks, we are going to be 
asked to add funding to SCHIP for the shortfalls that are 
occurring throughout the country and all well and good if we 
are not paying our bills, by all means, let us step up and do 
that, but if we are incurring those bills because of not using 
the program for the original intention, the original purpose 
for which it was intended, then I think we have to look at how 
we have structured it, and again, it just leads me back to the 
coverage of adults. So if anyone else has any thoughts on that, 
I will be happy to hear them in the 54 seconds I have left.
    Mr. Vitale. If I could be so bold, Doctor----
    Mr. Burgess. Actually, if you are talking, I will bet the 
chairman will give you as much time as you may consume.
    Mr. Vitale. Congressman, thank you. I think fundamentally 
that there is--let me back up. I believe that we can cover all 
the children in our States. In New Jersey we have done a great 
job. We only have 64,000 kids left who are not covered at our 
poverty level of 350 percent. The States who are at 200 percent 
or 250 percent or 225 percent, I believe that with the right 
kind of effort they can get to their goal of almost 100 percent 
coverage if they really try because generally they don't 
mandate coverage but through the appropriate kind of average we 
can get really close to insuring most of those kids. But it is 
fundamentally important as a matter of not just fairness and 
equity. As a physician, you understand that. Anyone who goes 
uncovered for so long, the health consequences are enormous and 
it is also health consequences that provides for an enormous 
amount of strain and burden on State and Federal budgets.
    Mr. Burgess. I am not going to argue about that but let me 
just----
    Mr. Vitale. We can change the name, change SCHIP to 
something else.
    Mr. Burgess. And if that is something that this Congress 
needs to take up, then perhaps we should do that. But there are 
four States that I am aware of where there are more adults 
covered then children. Clearly the intent of the program is not 
being followed if you have four States where you might have 
double the number of adults that you have children covered. I 
would suspect that just looking at the numbers that I was given 
the other day, that in those States there are probably children 
under 200 percent of poverty who are not being covered in those 
States, and for that reason we are not doing the job that--and 
I see we but I wasn't here in 1997 but that the Congress 
intended when this legislation was passed 10 years ago.
    Mr. Vitale. I think you are right. I think it is a shame 
that there are more parents than children covered in those four 
States but I would just caution all of us not to throw the baby 
out with the bath water because there are 46 other States doing 
the right thing.
    Mr. Burgess. Well, yes, but we do need to be good stewards 
of the taxpayer money at the Federal level. We are not always 
seen in that role but it is important that we keep that role in 
mind.
    Thank you, Mr. Chairman. You have been very indulgent. I 
will yield back.
    Mr. Pallone. Thank you, and I want to thank all of our 
witnesses for being here today. I thought this was very 
thought-provoking and helpful for us as we move to 
reauthorization of SCHIP. I just wanted to mention--well, first 
of all I will enter into the record a letter that went from the 
National Governors Association. This is from Governor Corzine, 
Governor Douglas on a bipartisan basis to the House leadership 
about the SCHIP program, and I also wanted to remind the 
members that you may submit additional questions for the record 
to be answered by the relevant witnesses. The questions should 
be submitted to the committee clerk within the next 10 days and 
the clerk of course will notify your offices of the procedures.
     Thank you all again. This was very helpful. And without 
objection, this meeting of the subcommittee is adjourned.
    [Whereupon, at 4:58 p.m., the subcommittee was adjourned.]
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                     Statement of Lolita M. McDavid

    Mr. Chairman and members of the committee, thank you for 
the opportunity to testify on behalf of the National 
Association of Children's Hospitals (N.A.C.H.) in support of 
Federal efforts to ensure all children have health coverage, 
beginning with reauthorizing and strengthening the State 
Children's Health Insurance Program (SCHIP).
    I am Lolita M. McDavid, M.D., M.P.H. As a pediatrician, I 
have devoted my medical career to children. Currently, I serve 
as medical director of child advocacy and protection for 
Rainbow Babies and Children's Hospital, the pediatric hospital 
of University Hospitals of Case Western Reserve University 
School of Medicine in
    Cleveland. Earlier in my career, I was head of general 
pediatrics at MetroHealth Medical Center in Cleveland, the 
largest public hospital in Ohio. I am also an associate 
professor of pediatrics at Case Western Reserve University.
    N.A.C.H. is the only national, not-for-profit trade 
association of children's hospitals, including more than 135 
independent acute care and specialty children's hospitals and 
children's hospitals that operate within larger hospitals or 
health systems. A longstanding member of N.A.C.H., Rainbow 
Babies and Children's Hospital was founded in 1886. It is a 
244-bed pediatric academic medical center that serves children 
from every county in Ohio, as well as children from many other 
states throughout the country. We devote more than 52 percent 
of our patient care to children assisted by Medicaid or the 
Ohio version of the State Children's Health Insurance Program.
    Children's hospitals are the backbone of health care for 
children in America. Less than five percent of all hospitals in 
the nation, children's hospitals deliver more than 40 percent 
of all hospital care for children as well as the large majority 
of hospital care for children with complex and serious medical 
conditions such as cancer or heart defects.
    In addition, children's hospitals are the health care 
safety net for their communities, devoting, on average, more 
than 50 percent of their patient care to uninsured children or 
children covered by public programs, despite the fact that 
public programs often pay well below the cost of care. Finally, 
children's hospitals train most of the Nation's pediatric 
workforce and house the nation's premier pediatric research 
centers. Directly or indirectly, through clinical care, 
training and research, children's hospitals touch the lives of 
every child in this country.
    Children's Stories I have been asked to draw from my 
professional experience to describe the importance of health 
coverage for children. I have two stories.
    The first is a story about the powerful difference that 
health coverage can make in the life of a child and the child's 
family. Eugene and Rhonesha are a brother and sister who are 
both patients in my practice. They live with their mom and dad, 
and their family income qualifies them for SCHIP.
    Gene is 10 years old--the same age as SCHIP. He is a great 
student and a great kid. And with the exception of needing 
glasses, he has had only routine health care needs. But 
Rhonesha, who is 6 years old, has a diagnosis commonly seen in 
our patient population--asthma.
    I became Rhonesha's doctor when she was 2 months old. She 
had required well child care visits like all children but by 
the time she was 17 months of age, she was showing signs of 
reactive airway disease, often a precursor of asthma. We 
supplied her with an aerosol machine and instructed her mother 
in how to use it. By the time Rhonesha was 22 months of age, it 
was clear that she was asthmatic. She is categorized as having 
mild persistent asthma.
    In many cases like this, I could tell you about emergency 
room visits, hospitalizations and missed days of work, but that 
has not happened with Rhonesha. Her asthma has been controlled 
by medications. When she has an occasional flare-up, because 
she has a cold or there is a climate change, her mother manages 
her illness. Dr. John Carl, a pediatric pulmonologist at 
Rainbow Babies and Children's Hospital, sees her every six 
months for evaluation and any needed medication adjustments.
    We are now at the point that I only see Rhonesha for her 
annual routine visits. When I last saw her, she was as healthy 
as her brother Gene. She is an outstanding first grade student 
whose favorite subject is math. And, like Gene, she was wearing 
glasses. Because Gene and Rhonesha have coverage through SCHIP, 
her mother has a relationship with Dr. Carl and me. Rhonesha 
can access regular care and not use costly emergency care 
services. And because she has the medications she needs, her 
asthma is controlled and she doesn't need to be hospitalized. 
She doesn't miss school and her mother doesn't miss work. 
That's the wonderful promise of health coverage--it not only 
directly promotes health, it also indirectly promotes learning 
and employment.
    My second story is about a child who was eligible for 
public health coverage but who was not enrolled until after he 
was admitted to our hospital. Baby Nick (name changed) was 
brought to our emergency department by his parents on New 
Year's Day. He was 5 weeks old with respiratory symptoms, 
vomiting and diarrhea.
    Although Nick's mother had insurance coverage for herself 
from her employment at a supply company, Nick was uninsured. He 
was admitted to Rainbow Babies and Children's Hospital with a 
diagnosis of respiratory syncytial virus (RSV) pneumonia. While 
hospitalized, it was determined that his family income 
qualified him to be enrolled in SCHIP. Happily, Nick went home 
after three days. He was well and now had health insurance 
through SCHIP that will cover his immunizations and doctor's 
visits, which hopefully will keep him out of the emergency 
room.
    Ohio's Story In the last decade, expanded public coverage 
has made a world of difference not only to individual children 
such as Rhonesha, Gene, and Nick but also to children across 
the country, including in my home state of Ohio.
    According to Georgetown University's Center for Children 
and Families, over the last decade, the number of uninsured 
Americans has steadily risen, now totaling more than 46 
million. At the same time, however, the number of uninsured 
children declined by about one-third, even as private and 
employer-based coverage for children continued to erode.
    Together, Medicaid and SCHIP cover more than one-third of 
all children in the country, and they have made the difference, 
according to U.S. Census Bureau analysis. In fact, the number 
of uninsured children began to increase in 2005 but only after 
states, faced with record breaking deficits, were forced to 
curtail Medicaid or SCHIP or both. Today, 69 percent of all 
uninsured children nationwide are eligible but not enrolled in 
Medicaid or SCHIP, according to the American Academy of 
Pediatrics.
    These programs have been especially important to industrial 
states such as Ohio, which have been losing not only employer-
based insurance but also industrial jobs that in the past 
provided insurance for the families of those who fill them. The 
Brookings Institution reports that the between 1995 and 2005, 
Ohio lost more than 52,000 manufacturing jobs--a decline of 
more than 26 percent of such jobs. The loss of those jobs 
brought with it the loss of health coverage for thousands of 
families.
    Ohio is one of 33 states that have opted to administer 
SCHIP either through its Medicaid program or through the 
combination of its SCHIP and Medicaid programs. Together, 
Medicaid and SCHIP cover about one-third of all Ohio children, 
according to the Ohio Bureau of Budget Management and Analysis 
in 2006. Between 1998 and 2004, the percentage of uninsured 
children declined from 9.8 percent to 5.4 percent, based on 
data from the Ohio Family Health Survey. In state fiscal year 
2007, Ohio's SCHIP program will cover an estimated 145,000 
children, at a cost of about $290 million.
    The proportion of Ohio children who remain uninsured could 
be reduced substantially simply by fulfilling the promise of 
existing Federal and state law, since 68 percent of all 
uninsured children in Ohio are eligible for, but not enrolled 
in, Medicaid or SCHIP, according to the Health Policy Institute 
of Ohio.
    Recommendations As the stories of Rhonesha, Gene and Nick 
demonstrate, having health coverage makes a real difference--
not only in a child's health but also in the cost of the 
child's health care and in his or her ability to be ready to 
learn and grow up to be healthy and productive.
    Building on the foundation of Medicaid's coverage of 28 
million children--who are among the nation's poorest and 
sickest children--SCHIP has made it possible for states to 
cover an additional 6 million children of families whose 
incomes exceed Medicaid eligibility criteria but who cannot 
afford or are unable to obtain private coverage for their 
children. At a time when the rising number of uninsured 
Americans is testimony to the limitations of our system of 
health coverage, the last decade of declining numbers of 
uninsured children is a measure of the combined success of 
SCHIP and Medicaid.
    The program's success can be seen in the broad spectrum of 
support that exists for the reauthorization of SCHIP. No matter 
where you turn, national organizations of business groups, 
insurers, providers and consumers are saying the best way to 
turn
    around the loss of health coverage for Americans is to 
start by building on a solid foundation of Medicaid and to 
expand SCHIP to cover more children.
    The same breadth of support can be seen across Congress and 
state capitals, where there is strong support among members of 
both parties for reauthorizing SCHIP and expanding children's 
coverage. Many governors have made expanded coverage for 
children one of their priorities. Many more, including Ohio's 
new governor, a former member of your committee, are exploring 
how expanding children's health coverage might be possible.
    Because of this success, N.A.C.H. recommends that Congress 
commit to achieving the goal of health coverage for all 
children. The first step should be to build on the foundation 
of Medicaid and SCHIP. In particular, N.A.C.H. offers four 
recommendations:
     Reauthorize and Fully Fund SCHIP: Congress should 
reauthorize and fully fund SCHIP--at least to fill in all 
projected state shortfalls and to enable states to cover all 
eligible but unenrolled children.
     Improve Outreach and Enrollment: Reauthorization 
of SCHIP should include specific measures that help states to 
improve outreach and enrollment of children who are eligible 
for Medicaid or SCHIP. Measures might include financial 
incentives, simplified and unified application forms, extended 
continuous eligibility, and others.
    For example, a few years ago, Cuyahoga County in Ohio 
undertook a 12-month demonstration of self-declaration of 
income by low-income families applying for Medicaid and SCHIP, 
as part of a larger strategy of improving enrollment of 
eligible children. A study found that self-declaration of 
income by parents resulted in at least 24,000 eligible children 
being enrolled, with a 98 percent accuracy rate. Approval rates 
of applications reached 85 percent, up from 65 percent prior to 
self-declaration, and the time taken to process applications 
was reduced from between 30 and 60 days to between 14 and 30 
days.
    In Ohio, we are recommending to our governor new public 
investment in outreach, enrollment and retention, which were 
successful before the state cut back its funding. We also are 
recommending a change in the frequency of re-determination of 
eligibility so that it is the same for children and adults, as 
well as establishment of presumptive eligibility for children, 
among other initiatives.
      Protect Medicaid's Safety Net for Children: As I 
have said, the success of SCHIP stands on the shoulders of 
Medicaid. Our ability to sustain this success, as the Nation 
reaches out to cover all children, depends on both programs 
having the funds to meet their goals.
    To be sure, neither Medicaid nor SCHIP is perfect. SCHIP is 
capped; when funds run short, as 14 states are projected to 
experience this year, children are left waiting in line for 
coverage. Medicaid's historically low reimbursement rates--
particularly for physicians--too often leave children without a 
community physician or medical home. Nonetheless, together 
SCHIP and Medicaid have created an essential safety net of 
coverage for low-income children and children with disabilities 
or other special needs.
    Children's health care, especially for children with 
serious illnesses or chronic conditions, is much more 
concentrated and regionalized than comparable care for adults. 
Health coverage for all children, including all of the patients 
of children's hospitals, relies heavily on the strength of our 
public insurance programs for children of low-income families.
      Invest in the Development of Quality and 
Performance Measures for Children: Finally, more and more 
payers are asking for quality and performance measures for 
health care providers. Providers like Rainbow Babies and 
Children's Hospital are pursuing quality and performance 
measurement as well. We are responding not simply to payers but 
also to the need for ever better, safer care for our patients.
    The American Academy of Pediatrics, American Board of 
Pediatrics, Child Health Corporation of America and N.A.C.H. 
are working together to identify measures for hospital and 
physician care for children and for ways to validate those 
measures. But we cannot do this alone. Achieving quality and 
performance measures for children needs Federal leadership.
    Measures need to be tested, and they need to gain consensus 
support and wide-acceptance. Private and public investment has 
made this progress possible for measures for adult health care. 
The Federal Government's leading role in public investment has 
focused largely on adult measures and Medicare. A commensurate 
investment for children's measures has not been made, even 
though public coverage through Medicaid and SCHIP is the 
nation's single largest payer of children's health care.
    It's time to make the same investment in quality and 
performance measures for children's health care that has been 
made for adults. We ask that you provide the Federal 
Government, though the Centers for Medicare and Medicaid 
Services, with the authority and resources needed to support 
the development and advancement of pediatric quality and 
performance measures. This will greatly enhance our ability for 
states, providers and consumers to have a portfolio of measures 
they can use for children.
     Ten years ago, Congress faced and met an unprecedented 
bipartisan challenge-- how to put the Federal Government on a 
solid path toward elimination of the Federal deficit. That 
successful effort culminated in the ``Balanced Budget Act of 
1997'' (BBA). And, precisely because it was setting priorities 
vital to the future of our nation, Congress created SCHIP as 
part of the BBA to expand health coverage for children. In 
effect, Congress made children's coverage a priority within a 
balanced budget.
    Ten years later, Congress faces the same challenge--to 
achieve fiscal control while at the same time taking the next 
step to cover all children. It should reauthorize and expand 
SCHIP, while keeping Medicaid coverage for children strong. Ten 
years of success, broad support throughout the private sector, 
and bipartisan support in Congress and state capitals all argue 
for taking that next step.
    As a spokesperson for children's hospitals, I can tell you 
that Medicaid and SCHIP are fundamental to the financial 
infrastructure of health care for all children, through the 
work of children's hospitals. The decisions Congress makes on 
SCHIP and Medicaid will affect the health care of every child 
in this country.
                              ----------                              


                   Statement of Senator Joseph Vitale

    Good morning. It is a welcome opportunity to be here to 
discuss the importance of the SCHIP program across the Nation 
and in particular to the many children and parents of New 
Jersey.
    New Jersey implemented the SCHIP program in March 1998 by 
covering children of families with annual income up to 200 
percent of the Federal Poverty Level (FPL) and called it NJ 
KidCare. An example of 200 percent FPL is a family of three 
whose annual income does not exceed $33,200. The program was 
met with great anticipation and excitement over the prospect of 
providing health insurance to thousands of uninsured children.
    As enrollment slowly grew, we recognized how many more 
children needed health care coverage and in July 1999 expanded 
eligibility to children with family income up to 350 percent 
FPL (ex. family of 3 with income not exceeding $58,100).
    The KidCare program was successful and through it we 
learned more about the uninsured population in New Jersey and 
how great the need was to provide health care to children and 
their parents. We learned that there is increased participation 
among eligible children when parents are made eligible for 
health care coverage. We also know that providing health care 
coverage to pregnant women leads to healthier babies and moms.
    And so in September 2000, New Jersey made a decision to 
cover parents up to 200 percent FPL and the program was re-
named NJ FamilyCare.
    Unfortunately, due to consecutive budget crises, New Jersey 
had to close the program to parents in June 2002, leaving only 
those already enrolled to continue participating.
    In September 2005, I sponsored legislation that in addition 
to streamlining the application process, again made FamilyCare 
available to low-income parents and guardians up to 115 percent 
FPL ($19,090 family of 3) in 2006 and up to 133 percent FPL 
($22,078 family of 3) beginning September 2007.
    We now provide health insurance coverage to over 125,000 
New Jersey children and over 79,000 adults through our SCHIP 
program. In addition, we cover over 450,000 children and close 
to 350,000 adults through our Medicaid program. As a result, in 
partnership with the Federal Government, New Jersey provides 
health insurance coverage to over one million parents and 
children.
    While New Jersey uses a higher percentage of the Federal 
poverty level for eligibility for its SCHIP program than all 
other states, we also have one of the highest costs of living 
in the nation. Simply put, it costs far more to be poor in New 
Jersey than in almost all other states.We have no choice but to 
use a more generous eligibility income level in order to reach 
those truly needy children and families with low income levels.
    Through SCHIP and Medicaid, it is also a much more 
economically responsible way to provide health care. In New 
Jersey, where we have 1.4 million uninsured, access to all 
levels of care for that population is typically provided by our 
State's hospitals. In fiscal year 2007, the State has budgeted 
nearly 900 million dollars to reimburse hospitals for a 
percentage of the costs they absorb treating the uninsured. In 
total, our State's hospitals provide nearly 2 billion dollars 
of uncompensated care; a financial strain that has put many 
hospitals at risk.
    New Jersey greatly appreciates the opportunities that the 
SCHIP program provides states. Through our SCHIP program, we 
have been able to provide health insurance and needed health 
care to the most vulnerable population: our children.
    New Jersey has made a strong commitment to the SCHIP 
program. This commitment is evident in the generous benefits 
package that we offer, our attention to simplifying the 
application process and the intense outreach efforts we have 
undertaken. The prospect of limiting or, at worse, eliminating 
our SCHIP program to lower income level families would be 
devastating to our State's budget and to the families of our 
State.
    New Jersey has historically spent its entire annual Federal 
SCHIP allotment. And though we have been eligible for SCHIP 
funds not used by other states, these reallocated resources 
have been diminishing over the years. There is an urgent need 
for Congress to increase annual allocations to states to meet 
the ever-growing national need for health care insurance.
    I will conclude my remarks by asking the members of this 
important committee to prevent shortfalls in funding for the 
SCHIP program and to advocate for increased support. Both 
Medicaid and SCHIP have been successful and efficient in 
expanding coverage to children. By promoting the continued 
success of these programs, we can ensure that children and 
families get the health care that they need.
    This collaboration between the Federal Government and the 
states, and with premium sharing by consumers where it is 
possible, allows the kind of partnership in health care that is 
a model for success. Without this continuing alliance, millions 
of children and families will simply be unable to access the 
kind of care that the rest of us have and some take for 
granted.
    Thank you, again, for your interest in this urgent issue. I 
hope that my remarks will help to support the need for 
leadership and long-term solutions to this ever increasing 
need.
                              ----------                              


                       Testimony of Alan R. Weil

     Chairman Pallone, Ranking Member Deal, and members of the 
committee, my name is Alan Weil and I am the Executive Director 
of the National Academy for State Health Policy (NASHP), a non-
profit, non-partisan organization with offices in Washington, 
DC, and Portland, Maine. Thank you for the opportunity to 
appear before you today to discuss health insurance for 
children and the reauthorization of the State Children's Health 
Insurance Program (SCHIP).
     This hearing comes at a very important time for the SCHIP 
program and for children's health insurance. There is much to 
celebrate. The Centers for Medicare and Medicaid Services (CMS) 
reports that approximately 6.1 million children were enrolled 
in the SCHIP program during the past fiscal year. Millions more 
children have obtained Medicaid coverage due to the outreach 
and enrollment efforts associated with SCHIP. A solid base of 
evidence now exists linking the SCHIP program to improved 
access to health care services for children. The nation 
observed declines in the percentage of uninsured children for 
six consecutive years, coinciding with the development and 
maturation of the SCHIP program. But now, as the SCHIP program 
is up for reauthorization, these gains have come to a halt. 
Your decisions with respect to the program will determine 
whether we continue to make progress on children's coverage or 
we return to the gloomy days when we took as a given that the 
number of uninsured children would grow inexorably year after 
year.

                             NASHP and SCHIP

     My organization is dedicated to promoting excellence in 
state health policy and practice. We have provided technical 
assistance to state SCHIP programs and worked in partnership 
with the Federal Government since the program was created. We 
serve as the informal ``home'' of the SCHIP directors'convening 
them each year to discuss their progress and concerns 
implementing the program, and maintaining inter-state 
communication throughout the year. We track state choices in 
the SCHIP program and have published three surveys of state 
SCHIP programs, entitled ``Charting SCHIP: An Analysis of the 
Comprehensive Survey of State Children's Health Insurance 
Programs.'' The ``Charting SCHIP'' series, published in 1998, 
2001, and 2006, has documented the progress states have made 
building their SCHIP programs and described the various choices 
made, including program design, populations covered, and 
benefit offerings.
     While my organization works closely with the nation's 
SCHIP directors, I do not purport to speak for them. My 
testimony is solely on behalf of my organization, but its 
content is shaped by the lessons I have learned from the SCHIP 
directors and my great respect for their commitment and 
dedication to the people of their states as they have developed 
and refined this important program.
     The primary goal of my testimony is to provide context to 
the SCHIP reauthorization debate--context that sometimes seems 
absent as I listen to characterizations of the program's design 
and evolution. My testimony will focus on why the program looks 
the way it does today and what is at stake in your 
deliberations.

                       ``Cooperative'' federalism

     The SCHIP program is a good example of ``cooperative 
federalism.'' The states and the Federal Government shared a 
goal. The Federal Government developed a framework for 
addressing that goal and provided substantial resources to the 
states. The states, in turn, contributed their own resources 
and tailored the program to their own circumstances. In an 
unusual step, many of the major features of the program, 
including the key regulations and reporting requirements, were 
developed through negotiations directly with the states rather 
than through edicts handed down from Washington.
     Within the constraints of the Federal statute and 
regulations, states took the program in different directions. 
Recently, there has been a great deal of attention paid to how 
state choices vary on the income guidelines for eligibility and 
on the choice to cover some parents and other adults. But state 
choices vary on a tremendous range of dimensions such as the 
benefit package, the delivery system, provider payment levels, 
health plan accountability mechanisms, family premiums and 
copayments, and integration with employer-sponsored insurance 
and Medicaid. And, of course, states have made varying 
decisions on what was a key compromise in the original 
statute--whether to operate SCHIP as a Medicaid expansion, as a 
separate program, or a combination of the two.
     federalism is frustrating--it allows for, indeed it 
celebrates, the diversity of our nation--and it is not orderly. 
Each of you may have a preferred vision for the program with 
respect to these many parameters. Your preferences may be 
aligned with the choices made in your own state, or you may 
look around the country and see other states operating programs 
more in line with your own views.
     My overarching message to you is that the tremendous 
success and bipartisan popularity of this program is directly 
tied to its flexible, Federal structure. Efforts to remake the 
program with a different vision run the risk of undermining the 
Federal-state partnership that has allowed it to thrive. This 
is not to say that the program cannot or should not be 
modified. It is to say that the balance that SCHIP represents 
was carefully crafted to meet objectives that spanned the 
political spectrum and met the needs of the Federal Government 
and states. Altering that balance risks undermining the roots 
of the program's success.
     As someone who has been studying the SCHIP program since 
its inception, I find the current focus on the dozen states 
that cover families, the half-dozen states that cover childless 
adults, and the eight states that extend SCHIP coverage above 
250 percent of the Federal poverty level to be strangely 
removed from context.
     Washington Called--and States Answered
     States embraced the SCHIP program far more quickly than 
they did the Medicaid program when the latter was enacted four 
decades ago. Forty-five states and the District of Columbia 
created programs within one year of SCHIP enactment and all but 
one jurisdiction had a program in place by 2000. Yet, as was 
expected, it took time for eligible families to learn of the 
program, come to trust it, and ultimately enroll. And there was 
great uncertainty at the time of enactment regarding the 
precise number of eligible children in each state so states 
tended to be conservative in their estimates, not wanting to 
overspend the available resources.
     In the early years of the program, states were subject to 
substantial criticism for underspending. As the unspent balance 
amassed, Congress seriously considered reducing the size of the 
SCHIP appropriation. Ultimately, political pressure within 
states combined with urgings from the Federal Government led to 
four responses.
     First, states substantially increased their efforts to 
reach out and find the eligible children within their states. 
The working families that are served by SCHIP are not the 
traditional Medicaid or welfare population. No one had much 
experience marketing a program to this population. States took 
a variety of approaches and learned from each other as they 
developed outreach plans. Such state-to-state learning has 
continued as states have sought to retain children on the 
program rather than have them cycle on and off.
     Second, states increased their eligibility standards. The 
trend line is clear. In 1998, twenty-two states had income 
limits for SCHIP below 200 percent of the poverty level. By 
2005, only eight states had income limits that low. In 2005, 
twenty-nine states were at twice the poverty level, and 13 
states were above that level.
     Third, every state had an SCHIP allocation--even those 
like Minnesota that already covered children up to 275 percent 
of the Federal poverty level at the time the program was 
enacted. Facing the same pressures to spend their allocation 
that every other state faced, these leadership states had the 
choice of going even farther up the income scale or seeking 
permission to use their SCHIP funds to cover families or other 
adults. States that chose to cover parents and families did so 
on the basis of a diagnosis of unmet need, an understanding 
that families are the typical unit for health insurance 
coverage, and evidence showing that family coverage improves 
program enrollment and increases the odds of appropriate 
utilization by the children.
     Fourth, the Bush Administration's announced in 2001 its 
Health Insurance Flexibility and Accountability (HIFA) waiver 
initiative which explicitly encouraged states to apply for 
waivers to expand coverage to low income populations. Since the 
overwhelming majority of low-income children were already 
eligible for existing programs, the target population for HIFA 
was adults. CMS also explicitly identified SCHIP funds as a 
desired source of funding for these waiver programs. In the 
absence of any other major Federal initiative, this waiver 
process, which included no new resources, represented and 
continues to represent the primary vehicle available to states 
that wanted to provide health insurance to childless adults.
     These four steps took place at a time when the available 
resources to any given state seemed limitless. With states 
given three years to spend each year's allotment, as the 
program's fourth year approached it was clear that there would 
be substantial funds available for at least a few years for all 
states that exceeded their allotments. The combination of large 
unspent balances, pressure to draw down all available funds, 
and the incentive of an enhanced matching rate, made it 
possible for all but the largest states to expand their 
programs as far as they wanted to, confident that reallocated 
funds would be available to pay for the Federal share. And it 
is worth noting that the larger states are underrepresented in 
lists of states that have gone beyond the original core 
parameters of the SCHIP program. Larger states could not be 
confident that reallocated resources would be sufficient to 
meet their greater needs.
     The purpose of telling this story is to explain that, as 
the program was maturing, ample Federal resources were 
available. States were under great pressure to spend those 
resources, and the Federal Government was actively encouraging 
states to draw down SCHIP dollars to meet the needs of children 
in families with income above twice the poverty level as well 
as low-income adults. Washington called, and states answered 
the call.

              The SCHIP Structure Makes Planning Difficult

     Today the picture looks quite different. We speak of 
shortfalls and states are criticized for the choices they were 
encouraged to make just a few years ago.
     Rather than point fingers we should acknowledge that the 
structure of the SCHIP program makes planning difficult, and at 
times impossible. The actual resources available to a state in 
a given year cannot be known until shortly before the year 
begins, at which point it becomes possible to estimate how many 
funds are available for reallocation and how many other states 
are eligible to receive reallocated funds. The reallocation 
formula and timelines have been modified over the years--
generally with the positive intention of preserving resources 
for children's coverage--but the knowledge that the formula can 
change at any time makes planning quite difficult. And, of 
course, with any health insurance program, the needs of the 
population are constantly changing.
     Why is there a hint of approbation directed at those 
states that have shortfalls, when there is mostly silence 
regarding those states that have not spent their full 
allotment? The fact is that the allocation formula and process 
all but guarantee that there will be overspending and 
underspending. The law creates an impossible task for states: 
project your spending perfectly using imperfect information. 
The states should not be scapegoats for problems inherent in 
the program's design.

                   Learning from the SCHIP Experience

     The SCHIP program has been a successful Federal-state 
partnership. By delegating key decisions to the states, the 
Federal Government has obtained a level of political, 
financial, and administrative support at the state level that 
is unusual in the realm of social programs. States' choices 
reflect the economy, health care systems, values, politics, and 
fiscal capacity that each state has. What happens if Congress 
substitutes its judgment for those of the states? Of course 
that is your prerogative, but with that authority comes the 
responsibility to recognize the likely consequences. Taking a 
program that states consider a success and a reflection of 
their values and priorities and forcing them to modify that 
program in a manner that may diverge from those priorities 
risks losing the investment and support that states currently 
have. Changes at the margin likely have limited risks, but 
major changes carry substantial risks.
     In addition, please keep in mind that the states have 
their own list of concerns regarding the program. In 
particular, SCHIP directors have told us of their frustration 
at their inability to provide supplemental benefits in key 
areas such as dental care for children whose private insurance 
does not include this benefit. The prohibition on covering 
children of state employees not only is inequitable but it 
poses administrative barriers to enrolling all children since 
it lengthens the application process. Rules regarding premium 
assistance programs are cumbersome. My point in listing these 
items is to remind you that the program is not perfect in 
anyone's eyes. Compromise is a central feature of SCHIP.
     But the most important lesson from SCHIP is that it is 
possible to develop a successful program that overcomes the 
ideological chasm that has generally prevented progress toward 
addressing the needs of the 47 million Americans without health 
insurance. Congress could not resolve the key ideological 
choice when SCHIP was enacted: Should it be a Medicaid 
expansion or should it be a separate program patterned on 
commercial health insurance? Congress passed that decision to 
the states. These were hard-fought battles in some states, but 
every state rose to the occasion, made choices, and moved 
forward with implementation.
     In an era in which people question whether or not 
government can do anything right, here is a program that has 
accomplished exactly what it set out to accomplish. It has not 
done it perfectly, and it has not done it consistent with any 
one person's unified vision for how a program ought to look, 
but it has done it in a truly American way reflecting our 
nation's diversity and diverse values.

                  What is at Stake in Reauthorization?

     It might be tempting to go back and use the same playbook 
in reauthorizing SCHIP that was used ten years ago. Yet, that 
would overlook a whole wealth of information, gained through 
experience, states have provided policymakers. States know 
first-hand what has worked and what has failed in their state. 
In many cases states have redesigned their programs over time 
to achieve better results. States have taken seriously the 
flexibility and responsibility granted in the original statute.
     Much of the reauthorization debate focuses on the level of 
funding. This is a critical issue, but it is a debate to which 
I have little to add. Other aspects of the debate have turned 
to whether or not the target population for the program should 
be redefined. On that issue I simply note that each of the 6 
million Americans reached by this program last year came to his 
respective state because he needed help meeting a basic need--
the need for health insurance. Any modifications that prohibit 
covering anyone currently on the program will add another 
person to the growing ranks of the uninsured. Any calculation 
of future levels of funding that fails to account for the 
resources needed to retain coverage for those currently on the 
program will have the same negative effect. Funding allocations 
that fail to consider the eroding effects of health care 
inflation and premium increases will result in fewer people 
covered each year. And any funding level that fails to account 
for the costs of reaching those who are eligible for this 
program but not enrolled will serve as a barrier to finishing 
the job that SCHIP so successfully began.
     While the Deficit Reduction Act prohibited CMS from 
approving additional waivers that enable states to use SCHIP 
funds to cover childless adults, one comment on this topic is 
warranted. Nearly one out of three 19 to 24 year olds in this 
country is uninsured--a rate far higher than for children. 
Targeting limited resources to children is an appropriate value 
judgment, but we should not ignore the fact that as children 
become young adults (and enter their child-bearing years) our 
existing public programs and private insurance policies shove 
them off a cliff of eligibility. The importance of health 
insurance for a 20 year old is no less than for a 17 year old, 
but our nation's commitment to meeting the health needs of 20 
year olds is far more limited than it is to people just a few 
years younger.
     At a time when the number of uninsured Americans continues 
to rise and ideological division often impedes broader health 
reform efforts, SCHIP has been a tremendous achievement. States 
rose to the occasion, showing an ability to break through the 
ideological divide and implement a successful health program. 
States expanded coverage and helped cut the ranks of the 
uninsured. States need prompt reauthorization so they can plan 
for the future--the expiration of the current authorization is 
only seven months away and states are already well into the 
process of setting their budgets for next year. And, 
ultimately, states need an expanded Federal financial 
commitment of resources so they can continue making progress 
meeting the needs of their citizens who would otherwise go 
without health insurance.
     An effective Federal/state partnership brought us to this 
point. A continued partnership is the best framework for 
meeting the tremendous remaining needs of children and 
families.
                              ----------                              


                   Statement of Janet Stokes Trautwein

    The National Association of Health Underwriters (NAHU) is 
the leading professional trade association for health insurance 
agents and brokers, representing more than 20,000 health 
insurance producers and employee benefit specialists 
nationally. Our members service the health insurance policies 
of millions of Americans and work on a daily basis to help 
individuals and employers purchase health insurance coverage.
    In the course of conducting their business, NAHU members 
regularly encounter parents of SCHIP-eligible children that 
have access to employer-sponsored health insurance coverage but 
cannot afford their portion of the dependent premiums. Some of 
these parents enroll their children in SCHIP, but many children 
remain uninsured. NAHU would like to see the process for states 
to voluntarily use SCHIP dollars to subsidize such employer-
sponsored coverage made much simpler so that more families can 
be covered together under the same private-market plans.
    With the upcoming reauthorization of SCHIP, NAHU feels that 
there is a great opportunity at hand to improve SCHIP's 
existing public/private partnership structure and more cost-
effectively cover more low-income uninsured children by 
removing some current restrictions that have hindered premium-
subsidy efforts of private-market employer-sponsored coverage. 
Doing so would have the following benefits:
      More families would accept employer-sponsored 
coverage for their children, lowering the number of uninsured 
children.
      The administrative burden on low-income families 
would be lessened, as families could be covered together on the 
same health insurance plan.
      It would reduce the ``crowd-out'' of the private 
market that occurs when parents decline employer-sponsored 
coverage in favor of SCHIP coverage for their dependents.
      It would lower costs by taking advantage of any 
premium dollars employers are willing to contribute toward 
their eligible employee dependent premiums--money that is now 
often ``left on the table.''
      It would also reduce SCHIP costs because the risk 
associated with covering the children with employer-sponsored 
coverage would be borne by the private market plan rather than 
the public program.
      Licensed health insurance producers, who are 
already helping millions of business owners purchase health 
insurance coverage for their employees nationally, could 
provide outreach and enrollment assistance at virtually no cost 
to the SCHIP program.
    The original SCHIP legislation included an option for 
states to subsidize employer-based family coverage for eligible 
children if the coverage met certain requirements. But these 
rules are considered onerous by states; consequently, only nine 
have attempted to implement premium-assistance programs. In 
order to receive federal approval to operate an employer-buy-in 
program under SCHIP, states must demonstrate that the premium 
assistance will be directed to employer plans that meet SCHIP 
requirements, including benefit standards, enrollee cost-
sharing limits, and minimum employer premium contribution 
levels. In addition, states must show that buying the private 
insurance plan is cost-effective in comparison to the cost of 
covering the enrollee directly through the state SCHIP program.
    NAHU feels that it is crucial for Congress to make the 
SCHIP premium subsidy process as simple as possible for both 
states and employers during the upcoming program 
reauthorization process. While subsidization of employer-
sponsored health insurance certainly won't be the solution for 
all SCHIP-eligible children, it would be an attractive option 
for many working families, and NAHU members work every day with 
employers that would love to be able to offer this type of 
subsidized coverage to their eligible employees as a benefit. 
However, for this option to work, it needs to be easy for 
states to implement and administer, and more importantly, the 
regulations governing this option need to be flexible enough to 
apply to all different types of employers and their varying 
benefit plan options. Congress could improve the ability of 
states and employers to offer and qualify for premium subsidies 
by making the following changes to SCHIP:
    Restructure the Cost-Sharing Requirements. The current 
SCHIP legislation virtually prohibits cost-sharing for children 
in families under 150 percent of the poverty level, and it is 
limited to five percent of family income for families with 
incomes that exceed 150 percent. Unfortunately, cost sharing is 
defined to not only include premiums, but also co-payments, 
deductibles and co-insurance. As such, most ``average'' private 
plans would exceed the five-percent maximum for many eligible 
participants, and the rule hinders qualifying employers from 
making changes to plan designs. If the cost-sharing language 
was amended to only cover health plan premiums, this problem 
would be alleviated.
    Make Changes to the ``Crowd-Out'' Requirements. A further 
challenge is that SCHIP regulations specify that children have 
to be without employer-sponsored coverage for at least six 
months to be eligible. This provision was originally put in 
place to prevent the crowd-out, but it actually has had the 
reverse effect. It hinders employer subsidization efforts as it 
penalizes those employers that have already been subsidizing 
the coverage of SCHIP-eligible dependents. The SCHIP crowd-out 
requirements are also inconsistent with Medicaid rules, which 
allow for children to receive subsidized coverage if they have 
employer-sponsored coverage. Since the majority of states 
combine their SCHIP programs with Medicaid in whole or in part, 
the inconsistency serves as a further obstacle to premium 
assistance. To fix this problem we would like to see the 
reauthorization legislation specify that income-eligible 
children who already have access to employer-sponsored coverage 
be immediately eligible for SCHIP premium assistance.
    Make it simpler for employer-sponsored health benefit plans 
to qualify. Current SCHIP rules require that states set minimum 
employer contribution amounts or percentages for employers to 
qualify for premium subsidy programs. Employers structure 
employee cost-sharing requirements differently based on a 
variety of factors, and don't always use percentages or flat-
dollar amounts to determine their contribution. Also, overly 
specific requirements can be difficult for states to 
administer, as it necessitates that they review every potential 
participating employer's benefit plan structure every year. 
This regulation was put into place to make sure that 
participating employers contribute to premiums, but it is 
really not necessary to ensure employer participation. The 
cost-effectiveness test, if properly applied, will enough to 
determine adequate employer contributions. As such, NAHU 
recommends that the reauthorization legislation specify that 
premium contributions are required for an employer plan to 
qualify for participation in any SCHIP premium-subsidy program, 
but it should also specify that the means of contribution must 
be left up to the individual employer's discretion.
    Improve the design for the cost-effectiveness test. Like 
with Medicaid, any SCHIP premium subsidy must be cost-effective 
for the state. However, unlike with Medicaid premium subsidy 
programs, states with SCHIP programs that are separate from 
their Medicaid programs must apply for a special waiver when 
non-eligible family members are included in the employer-
premium that is being subsidized. Under this ``family waiver'' 
scenario, the cost of insuring the entire family privately must 
be less than the cost of insuring just the SCHIP-eligible child 
in the public program. Since almost all employer health 
insurance policies for dependents are based on a family rate 
and/or a rate for a parent plus his/her dependent children 
rather than a separate rate for just the children, the vast 
majority of private plans fall into this family waiver 
category, making this test formula virtually impossible for 
most employer plans to meet. NAHU recommends that the SCHIP 
reauthorization legislation eliminate the family waiver: 
requirement and instead apply the Medicaid cost-effectiveness 
standard, which merely compares the cost of covering the 
eligible individual(s) privately versus publicly.
    Make Medicaid and SCHIP rules consistent. In addition to 
the cost-effectiveness test requirements, many SCHIP premium-
subsidy regulations are inconsistent with Medicaid rules on the 
same topics. This poses a significant administrative challenge 
to states, because in the majority of states these programs are 
at least partially combined. The reauthorization legislation 
should specify that all of these regulations be reviewed and 
the inconsistencies resolved, with the goal of simplifying the 
employer plan integration process for both Federal programs.
    Make premium subsidy programs easier to administer. One of 
the biggest obstacles to successful premium subsidy programs, 
from both the employer and administrative perspective are the 
plan benchmark standards. Since these requirements must be 
implemented on a case-by-case basis, with an annual review of 
every employer-sponsored health benefit plan that wishes to 
participate, they are very hard for states to administer. Also, 
since SCHIP benchmarks do not conform to most private-market 
employer-sponsored plan designs (in some states, there aren't 
even fully insured products available for private employers to 
buy that would meet these standards), the benchmarks have 
really hindered program enrollment in the states that have 
attempted premium subsidies.
    Clearly, the reasons plan benchmarks were included in the 
original SCHIP legislation was to ensure that program 
beneficiaries were receiving adequate coverage. However, NAHU 
feels that this goal can be achieved in a way that would be 
simpler for the states to administer and allow many more 
employer plans to qualify. We recommend that instead of 
including benchmarks for employer-sponsored plans, the 
reauthorization legislation should specify that eligible 
children who participate in an employer-subsidy program also be 
eligible for SCHIP wrap-around coverage for services not 
covered by their employer-sponsored plan. SCHIP coverage would 
be used by eligible children merely to fill in any gaps in 
coverage, a method that has been used successfully and cost-
effectively in the Medicaid programs in many states.
    Make sure that employees know about the programs. In order 
for employer premium-subsidy programs to work, employees have 
to know about them. However, ERISA prevents states from 
requiring employers to notify their employees about the 
existence of such programs. As such, NAHU recommends that 
Congress amend ERISA as part of the reauthorization legislation 
to require employer notification about Medicaid and SCHIP 
premium subsidy programs, similar to way that employers are 
required to notify eligible employees about Medicare Part D 
benefits.
    Make it easier for states to get information about employer 
sponsored plans. A final challenge to SCHIP subsidization of 
employer coverage is state-level reporting requirements. To 
calculate the cost-effectiveness test needed for employer 
premium subsidy programs, states need to obtain information 
about employer-sponsored plan designs. Due to ERISA obstacles, 
there is no way of imposing reporting requirements on private 
employer-sponsored plans. This barrier has hindered many states 
from taking up the idea of premium subsidies. Under current 
law, states can either ask employers to provide this 
information voluntarily (which many do, but not all) or ask the 
parents of SCHIP beneficiaries to obtain/provide it (which is 
both inefficient and also overly burdensome for parents). 
Congress could make this process much more efficient for states 
and also easy for employers by amending ERISA to require 
employers participating in an SCHIP premium subsidy program to 
directly provide their summary plan descriptions to the state 
upon request. Right now ERISA plans are already required to 
provide employees, upon their request, with summary plan 
descriptions. The information contained in these summaries 
would be sufficient for the states to determine the cost-
effectiveness of an employer plan.
    Thank you for this opportunity to provide information about 
how SCHIP could be modified to cover more uninsured children 
through the employer-based health insurance delivery system. 
NAHU feels that SCHIP effectiveness could increase dramatically 
by eliminating legislative and regulatory barriers that have 
made it difficult for states to develop private-market based 
plans. We look forward to working with Congress and the Energy 
and Commerce Committee during the upcoming reauthorization 
process to address this issue. If you have any questions, or if 
NAHU could be of further assistance, please do not hesitate to 
either contact me directly at either (703) 276-3806 or 
[email protected], or speak with our Vice President of 
Congressional Affairs, John Greene, at (703) 276-3807 or 
[email protected].

                                 
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