Democratic Proposals To Expand SCHIP Might Require Reductions in Medicare Advantage Plan Reimbursements

Democratic efforts to expand SCHIP come with "a catch": Senior citizens enrolled in Medicare Advantage plans might have to "help pay the bill," the Los Angeles Times reports. Lawmakers this year have proposed increasing federal spending by as much as $60 billion over five years to provide health care coverage to as many as six million of the estimated nine million uninsured U.S. children. Federal budget rules require new spending to be offset by tax increases or cuts in other programs, and Congress is considering cuts to Medicare Advantage plans, which cost the federal government about 12% more than traditional fee-for-service plans, to fund the expansion. Reimbursing MA plans at the same rate as traditional Medicare would save about $65 million over five years, the Times reports. However, if MA plan funding is reduced, the plans might cut benefits, such as dental and vision coverage. According to the Times, "Lawmakers from both parties, most governors and much of the medical establishment agree that it's important to expand coverage for children, but there is no consensus on how to pay for it." HMOs, the Bush administration and other groups oppose cuts to managed-care plans, and the insurance industry wants Congress to expand health insurance to all children "but to find other ways to pay for it," the Times reports. Adam Carasso, an analyst at the Urban Institute, said, "The budget squeeze is on, and in some ways this is the first salvo." According to Carasso, "It's getting to the point where you are going to have to ask the dreaded question: Is it children or the elderly?" Carasso added, "The way we have allocated our spending, it's coming down to an either-or proposition." Jay Gellert, CEO of Health Net, said, "I don't think a choice between adequate care for seniors and adequate care for kids is the right debate." He added, "I think that is a false choice, and each program has to be debated on its own merits" (Alonso-Zaldivar, Los Angeles Times, 3/26).

Opposition to Bush Plan
In related news, the New Orleans Times-Picayune on Monday examined how the Bush administration's proposal for changing SCHIP has "galvanized ... opposition in Congress." The program expires Sept. 30. Under Bush's plan, uninsured families would be offered tax credits to help them pay health insurance premiums and states would create insurance pools to allow sick and low-income residents to purchase less-expensive, private coverage. Critics of Bush's proposal say it would "force millions of children off SCHIP and handcuff states in reaching out to those who are eligible but not enrolled," the Times-Picayune reports. Democrats and some Republicans "see SCHIP as the foundation on which to build universal health care" for uninsured U.S. children, according to the Times-Picayune. In addition, the Times-Picayune reports, "Democrats have long been skeptical" that tax credits would provide substantial help to low-income residents who do not pay federal income taxes (Walsh, New Orleans Times-Picayune, 3/26).