February 17,2004

Senators Urges Administration to Protect Integrity of Children's Health Insurance Program

Baucus, Grassley, Kennedy, and Hatch Contact Sec. Thompson to Oppose Certain Waivers

(WASHINGTON, D.C.) U.S. Senators Chuck Grassley and Max Baucus recently contacted U.S.Secretary of Health and Human Services Tommy Thompson to urge reconsideration of awaiver policy that would shift funds away from the State Children's Health Insurance Program(CHIP). Sens. Edward Kennedy (D-Mass.) and Orrin Hatch (R-Utah) also signed the letter.

"The Children's Health Insurance Program has allowed us to make great strid es in providinghealth coverage to kids across the nation," Baucus said today. "The program has helped thousandsof children in my state of Montana and I'm very concerned by the Administration's approval ofyet another waiver that could shift vital CHIP funds away from children.

"Congress intended that this program provide insurance to children, and we know that in thenext few years, many states are expected to run out of money. So while it's critically important thatwe continue to work for solutions to cover all uninsured Americans, we must understandthat this kind of waiver comes at the cost of a program specifically designed to help our nation'skids. I urge the Administration to stop granting waivers of this type."

The Department of Health and Human Services has approved several waivers that wouldpermit states to use funds designated by Congress solely for children's health coverage to programsserving childless adults. The Senators stressed the importance of ensuring that all Americans haveaccess to health insurance coverage, but not at the expense of an insurance program that wasdesigned to specifically help children. The U.S. General Accounting Office has twice indicated thatwaivers such as the one approved in Michigan may not be in compliance with the CHIP law.

“We should find ways to help cover uninsured adults, and we should be creative about it,"Grassley said. "But that creativity can’t come at the expense of low-income uninsured children andwhat I believe is in defiance of congressional intent and the recommendations of the GeneralAccounting Office. If that happened with every issue, we’d have chaos. The executive branch hasto administer the laws as the legislative branch intended, plain and simple.”

In addition, the General Accounting Office (GAO) released a report that was requested bySens. Grassley and Baucus regarding the continued use of CHIP funds to cover childless adults andthe policy and legal concerns surrounding those waivers. The report is at www.gao.gov,correspondence # GAO-04-166R.

Full text of letter to Sec. Thompson follows:

February 13, 2004

The Honorable Tommy G. Thompson

Secretary of Health and Human Services

200 Independence Avenue, S.W.Washington, D.C. 20201

Dear Mr. Secretary:

We were very concerned to learn of your recent approval of the Michigan Section 1115Medicaid and State Children's Health Insurance Program (CHIP) waiver, which permits the state todivert funds designated by Congress solely for children's' health coverage to programs servingchildless adults. While we are all sympathetic to the need to expand coverage for childless adults,as you know, we continue to be extremely concerned that similar section 1115 waivers are in directconflict with Congress' intent in enacting the CHIP program. In addition, the U.S. GeneralAccounting Office has twice indicated that such waiver approvals may not be in compliance withthe statute.

Our bipartisan concern with your action stems from our respective roles as chief authors ofthe CHIP legislation and as the Chairman and Ranking Member of the Committee on Finance,which has jurisdiction over the program. We have an oversight responsibility to ensure that fundsset aside by Congress for certain purposes are spent on those purposes.

As you know, in adding CHIP to the Social Security Act, Congress explicitly specified thatCHIP allocations could only be used "to enable [States] to initiate and expand the provision of childhealth assistance to uninsured, low- income children in an effective and efficient manner." [SocialSecurity Act Section 2101(a)]. Note that the statute references children, not adults.

We find particularly weak the agenc y’s justification for this breach of congressional intent.In approving the Michigan waiver, the Administrator of the Centers for Medicare and MedicaidServices (CMS) wrote that the purposes of the Children’s Health Insurance Program would be metbecause coverage of childless adults would nonetheless "foster[] a broader awareness of health carecoverage in low- income communities, and ... improv[e] the overall health of low-incomecommunities." He also pointed out that uninsured childless adults "can become parents at a futurepoint, and can be involved in decisions concerning children in the community." While we do notdoubt that these statements could be true, the connection they describe between a new healthinsurance program for adults and the health of uninsured American children is tenuous at best.Indeed, those vague statements could be used to justify using CHIP funds for a variety of purposesnot contemplated in the law, including education, child care, family planning and unemploymentinsurance. In brief, in enacting CHIP, Congress did not write the Department a blank check to usethese children’s health funds for other purposes.

As recent deficit projections point out, Federal funding is extremely constrained. Simplyput, using CHIP dollars for adults takes funding away from children. Through P.L. 108-78,Congress approved legislation to redistribute unspent CHIP funds to states that are eager and able tocover children through this program. As you know, the redistribution process allows states thathave spent their allotments on congressionally-authorized purposes to continue to enroll eligiblechildren in their programs. If CHIP funds are spent on childless adults, there will be less money toredistribute to states with robust programs for children. Our concern with limiting the availabilityof funds for redistribution is underscored by recent findings that over five million children who arefully eligible for low- income health programs are not yet enrolled in these programs and remainuninsured. Furthermore, projections show that federal CHIP allotments are expected to run out ineleven states in the next three years. Until all children in America who are eligible for CHIP havehealth insurance coverage, we do not believe that money should be diverted from the purposesspecifically set out when we passed legislation implementing this targeted, very successful program.For these reasons, we strongly oppose the Department's view that CHIP funds can be used toinsure adults without children at the cost of the health of low- income children. It is our continuedbelief that you are acting outside the scope of your waiver authority when you approve waivers thatdivert funds set aside by Congress for children to insure childless adults.

We appreciate your willingness to engage in an ongoing dialogue on the important issuesraised by waivers, and we appreciate your own commitment to increase accountability and integrityin the Medicaid and CHIP programs. We hope that you will view our stated concerns as anopportunity to work together to ensure that the integrity of the CHIP program is maintained and thatthe needs of the uninsured receive the highest attention. However, if legislation is needed to ensurethat the legislative intent of the Congress is not bypassed, we will redouble our efforts to clarify theCHIP law and raise the profile of this issue within the Congress to ensure that consider suchlegislation is enacted.

Finally, we thank you for your continuing attention to this very important matter, and welook forward to working closely with you to develop a plan for expanding health insurancecoverage to all Americans.

Charles E. Grassley
Max Baucus
Edward M. Kennedy
Orrin G. Hatch