Healthcare for US children: controversial budget-cut target

With a swipe of a budget-committee pen, Missouri almost dropped from one of the top states in caring for children to dead last.

Like lawmakers nationwide, Missouri legislators are struggling to close a gaping budget gap. Theirs is $323 million. So the house voted to eliminate its State Children's Health Insurance Program (SCHIP), which insures children just over the poverty level - potentially making Missouri the first state to abolish the five-year-old program designed to give America's children the same medical care it affords the elderly.

From Connecticut to Montana, budget cutbacks are affecting everything from gym classes to fire stations. But one of the most emotional areas that may be pruned is children's healthcare. While every downturn brings fiscal dilemmas, the current quandary poses piercing questions about whether medical care is a right or a commodity, and where federal responsibility lies in caring for the vulnerable.

But one thing is clear: Hundreds of thousands of the more than 5 million children covered for the first time under SCHIP may find their insurance curtailed - or gone. Only a handful of states are talking about eliminating SCHIP. But dozens are trimming eligibility, benefits, and enrollment in a program that was the most dramatic expansion of low-income federal healthcare in 40 years.

"There's tremendous political support in the states [for SCHIP], but there's also tremendous budget pressure," says Shelly Gehshan, a health-policy analyst with the National Conference of State Legislatures. "Something has to give somewhere and we aren't at the stage where we feel that any group is entitled to medical coverage, except people over 65."

Eliminating SCHIP would save Missouri taxpayers almost $25 million - money that could be shifted to other areas to avoid a tax hike. But it would leave 83,000 children uninsured.

In Jefferson City, a pitched battle ensued: SCHIP opponents charged the program was "Medicaid for Millionaires" and the governor countered that it was "morally wrong" to leave so many children vulnerable. In a compromise late Thursday night, SCHIP was spared. "It was drastic, so we're happy that we defended the program," says Joe Squillace of Citizens for Missouri's Children. "But the budget crisis is supposed to be worse next year."

The battle over SCHIP in Missouri is typical of what's playing out nationwide. Opponents argue that the program is just too generous in tough fiscal times. Supporters - including parents, low-income advocates, economists, and health-policy analysts - argue that it saves money in the long term through preventive care.

Add to that the financial incentive from Washington. For every dollar Missouri spends on SCHIP, the federal government sends almost three: the state's contribution of $25 million was leveraging more than $72 million.

Then there's the healthcare spiral. If SCHIP were eliminated, another 83,000 would join Missouri's uninsured. Each time another person loses insurance, it adds to the crisis by sending costs higher. And each time costs rise, more people end up uninsured.

But states set their own eligibility levels, and Missouri had a generous program, including families earning up to 300 percent of poverty-level income. A family of four was eligible with an annual income of $50,000. Rep. Chuck Purgason, a Republican from rural Missouri, said his family would qualify.

"It is an expansion into health insurance that the state and nation should not be doing," he says. "It's an attempt to get more people on the universal health care system." In the end, the legislature kept SCHIP, but made more recipients pay part of the costs.

For many healthcare advocates, this year is just round one in what they worry could be a slow erosion of SCHIP. The Bush administration has proposed combining SCHIP with Medicaid and turning the matching-grant programs into one block grant. Then, instead of federal funds increasing with state spending, each state would get a set amount of money. In exchange, the federal government would give states more flexibility in designing their own healthcare programs.

"There needs to be a wake-up call," says Nina Owcharenko, a senior analyst at the Heritage Foundation. "The states cannot continue to provide these generous packages and sustain themselves fiscally, and the federal government can't pick up the tab either. We've got to figure out a more efficient way to use these dollars."

But healthcare advocates contend the states have already pared their spending to the bone. A report released on Tuesday by Families USA, a healthcare consumer group, contends the changes would cost states $492 billion dollars over the next decade - and leave millions of seniors, disabled people, and children without medical coverage.

"Over time, if this proposal passes, there will be even fewer funds available to provide coverage for children as well as adults," says Ron Pollack, executive director of Families USA. "That will make he overall healthcare crisis even worse."