December 20,2007

Grassley: GAO Report Shows Problems With Adult Coverage in SCHIP


To: Reporters and Editors
Re: GAO report on SCHIP coverage of adults
Re: Thursday, Dec. 20, 2007

Sen. Chuck Grassley, ranking member of the Finance Committee, today released a report
from Government Accountability Office (GAO) entitled, “State Children’s Health Insurance
Program: Program Structure, Enrollment and Expenditure Experiences, and Outreach Approaches
for States That Cover Adults,” GAO-08-50. The issue of adult coverage was a central issue during
the year-long debate on the reauthorization of the State Children’s Health Insurance Program
(SCHIP). Grassley made the following comment on the GAO report.

“I hope we can reauthorize the State Children’s Health Insurance Program during the second
half of the 110th Congress. A major outstanding issue in coming to consensus is the treatment of
adults. This report provides valuable insight into the issue of adult coverage through SCHIP. I hope
it will inform members’ thinking as we renew our reauthorization debate.”

Several key report findings include:

The degree to which states are using SCHIP funds to cover adults. Grassley and other
members of Congress have raised concerns over reports that many states were spending more on
adults than children – hardly an appropriate use of funds in a children’s health insurance program.
The GAO study confirms that in the nine states for which the GAO had fiscal year 2006 expenditure
data that, “overall, adults accounted for about 54 percent of total SCHIP expenditures.”

Information on the cost effectiveness of adult coverage. Despite the assertion that
covering parents was an effective tool to cover low-income children, the GAO study found that “per
capita expenditures for parents were on average 82 percent higher than those for children in five of
the six states that offered direct coverage to parents.”

The feasibility of rolling adults covered by SCHIP into Medicaid. During the debate on
SCHIP, arguments were raised about the feasibility of moving parents covered in SCHIP to
Medicaid. However, the GAO report notes that, “in some cases, states that covered adult populations
in SCHIP had previously covered them in Medicaid.”

The effect of adult coverage on state shortfalls. The GAO makes the point that states
covering adults were more likely to be in shortfall than states that did not cover adults. The GAO
study also reveals that in several shortfall states, the “expenditures for adults alone exceeded the
state’s allotment.”

The report is available at