States sue federal government over tighter SCHIP limits

The Bush administration wants proof that low-income kids are enrolled. State officials say HHS changed enrollment standards without getting public input.

By Doug Trapp, AMNews staff. Oct. 22/29, 2007.

Washington -- Four states joined in a lawsuit and a fifth filed its own to block new rules limiting eligibility for the State Children's Health Insurance Program.

The group lawsuit, filed Oct. 4 in a federal court in New York, says the Dept. of Health and Human Services should have provided the public notice and comment period required by law for program changes as significant as those in its Aug. 17 guidance.

The new rules would strictly limit states' ability to get SCHIP matching funds for children in families earning more than 250% of the federal poverty level, or $42,925 for a family of three. States first would have to prove they have enrolled 95% of children at or below 200% of the poverty level in the program. They also would have to show that private health insurance enrollment had not declined more than two percentage points among targeted income groups and that new program enrollees had been uninsured for one year.

At least 16 states have SCHIP eligibility limits higher than 250% of poverty. They have until Aug. 17, 2008, to meet the new criteria or they will receive Medicaid-level federal matching funds, which are lower than those for SCHIP, for children in families above 250% of poverty.

Late last month, Congress adopted a compromise SCHIP reauthorization bill that would nullify the new rules, but President Bush vetoed it on Oct. 3. As of press time, bill supporters were trying to gather support for a veto override.