Wash. state turns down $47 million for kids program Legislators concerned about crowd-out,’ covering those above 200% FPL To the dismay of children’s advocates, the Washington state legislature has passed up the chance for the state to tap into $47 million in federal dollars available to it under the Children’s Health Insurance Program (CHIP). The legislature adjourned March 12 without appropriating even the nominal amount of money that could have "held" or reserved the state’s $47 million allocation for expanding coverage to children. States must file a plan with the federal government by July 1 or lose their right to the money. Washington legislators gave a thumbs down on the federal dollars partly because of concerns about crowd-out and about subsidizing insurance for families with higher incomes. The state’s Medicaid program already covers children up to age 19 from families with incomes up to 200% of the federal poverty level (FPL)—approximately $32,000 a year for a family of four. Under the heading of "no good deed goes unpunished," one lobbyist said Washington has been penalized because it took aggressive steps to insure more of its population before passage of CHIP. Republican legislators opposed Democratic Gov. Gary Locke’s request to include $1.5 million in the state’s budget to cover an estimated 10,000 uninsured children whose families earn between 200% and 250% of FPL. Although the money would have drawn down only a small portion of the federal 2-for-1 match dollars, it would have at least made it possible for the state to access its allocation at some later date. Republican leadership and fiscal committee chairs were adamant that incomes approaching the 250% mark were too high to warrant receiving any subsidies from the state — especially in rural and lower-cost areas. At 250% of FPL, a family of four earns about $38,000 a year. The state had hoped that CHIP money could be used for outreach to the estimated 60,000 to 90,000 children in the state who are eligible for Medicaid but not yet enrolled. Efforts fizzled last year to make changes in the federal law so that states such as Washington, which already cover many of their poor children, could use the federal funds for outreach. To hold the state’s money in place in case the federal government allowed such uses of the money in the future, advocates began meeting last fall to develop a strategy for a campaign to support expanding coverage to up to 250% of FPL. Although advocates generally preferred a Medicaid expansion, Gov. Locke proposed a modified version of the Basic Health Plan as the vehicle for expansion. BHP is the state’s subsidized insurance program. Gov. Locke touted his proposal as an easier sell to cost-conscious legislators, because families would be required to cost-share and the benefits would be scaled down. "It wouldn’t be as rich as Medicaid, but it wouldn’t be substantially different," Sue Crystal, the governor’s policy adviser, told advocates in January. Both Gov. Locke’s proposal and a bill sponsored by Democratic Sen. Pat Thibaudeau to expand Medicaid to 250% died in the fiscal committees. Taking a different tack, advocates then began lobbying for $431,000 to expand coverage to the estimated 1,200 children in the state with special health care needs. But amendments failed in both the House and Senate, largely along party lines. Republican Rep. Tom Huff, chair of the House Appropriations Committee, said during the session that the state can’t pay for the health care programs it currently offers low-income children. Sen. James West, chair of Senate Ways and Means, warned against further spending in view of an estimated $92 million shortfall in next year’s Health Services Account, which finances the Basic Health Plan and the current Medicaid expansion for children. According to health policy analysts, in years past, the federal funds never would have been left untapped by the state. Some observers privately comment that legislators were already unhappy with expansions to 200% of FPL and had strong resistance to further increases, especially because of the political fallout that would result from any efforts to trim them back in the future. The governor, advocates and state agency officials are now turning their efforts to lobbying Congress to give states more leeway in how they can use the money. State Medicaid Director Jane Beyer was in Washington, D.C. last month to meet with advocacy organizations, committee staff members and the state’s Congressional delegation to drum up support for making changes in the federal law. A draft bill — with bipartisan support from the state’s delegation — is expected to be introduced by Rep. Jennifer Dunn (R-WA). The amendment would allow states that already cover up to 200% of FPL to use the federal funds for outreach, said Ms. Beyer. Washington, Minnesota and possibly Vermont would be covered by the amendment. "It’s not going to be a slam-dunk," said Ms. Beyer. Both parties have concerns about reopening CHIP — Republicans worry that further expansions will be made to the program, while Democrats are afraid that coverage will be reined in. Decision may have repercussions This year’s legislative action could come back to haunt the state, predicted Ms. Beyer. Congress is considering whether to require some indication of a state’s financial support of expansions to 250% of FPL before allowing it to use funds for augmenting their current efforts to cover populations under 200% of FPL. And lawmakers on both the state and federal level remain deeply concerned about "crowd-out" — families dropping private coverage to enroll in subsidized insurance. But Ms. Beyer noted that it is sometimes only luck that separates uninsured and insured families under 250% of FPL, with the insured families having the good fortune to be able to access dependent coverage through an employer. Families with insurance can sometimes afford only high-deductible coverage, which she said could create barriers to getting children the preventive care they need. Medicaid outreach survives Some Medicaid funding did survive in the budget, said Ms. Beyer. Legislators retained a measure that provides that will make it possible for the state to access some of the $10 million of federal funds available to it for outreach to Medicaid-eligible children not enrolled. The funds, which come from a $500 million pool set up under the welfare reform law, require a 10% state match. Ms. Beyer said the matching funds will be put up by local communities, not centrally directed by the state. "I want to go to the people who have the profound knowledge of their community’s needs and give them the dollars," said Ms. Beyer. —Shauna Brown. Ms. Brown is editor of Washington Health, a monthly publication covering health policy issues in Washington state. Contact Ms. Beyer at 360- 902-7806; Rep. Tom Huff 360-786-7802. NASHP launches clearinghouse for CHIP programs The National Academy for State Health Policy has established a clearinghouse to help states plan, implement and refine their Children’s Health Insurance Programs. With the aid of funding from the David and Lucile Packard Foundation, the center will provide a range of services to states including: • small meetings on key topics; • policy papers ("A Policymaker’s Guide to the State Children’s Health Insurance Program" is now available); • case studies/best practices; • technical assistance, including on-site expert team visits to individual states; • teleconferences; • a web page and interactive forum called "CHIP CHAT" (available at www.nashp.org); an annual survey and analysis of state progress in implementing CHIP; and • other activities in response to requests from state officials. A special preconference in San Diego before NASHP’s annual meeting will focus on the challenges of implementing CHIP. For more information, go to www.nashp.org, or call 207-874-6524.