Lauded healthcare plan for kids takes a hit

After years of little impact, budget woes are now taking a toll on kids' healthcare.

The State Children's Health Insurance Program, known as SCHIP, which provides coverage for children of working parents with lower incomes, has seen the first decrease in enrollment since it was enacted in 1997.

Popular with both parties, SCHIP was one of the few state priorities to emerge unscathed in the face of multimillion-dollar, in some cases billion-dollar, deficits in state budgets, at least until now.

A new study by the Kaiser Family Foundation found that the number of children enrolled in SCHIP dropped for the first time during the second half of 2003. Texas, New York, and Maryland were responsible for 99 percent of the decrease.

Some of the children were moved to Medicaid, the health program for the poor. But others, like Kathy Smith's 3- and 11-year-old, were simply dropped off the rolls. Under a new eligibility formula that was designed to save Texas money, Ms. Smith's income as a third-grade teacher in a small town put her just a fraction over 200 percent of the poverty level.

Many experts worry such budget-driven declines signal the end of SCHIP's surprising resilience. It could push up even higher the overall number of uninsured in the country - now estimated at 44 million - along with the price paid by all Americans for health insurance.

But for Smith, a single mother in west Texas who asked that her real name not be used, the decline is measured in more than numbers. "I just hope and pray every day my kids are going to be OK," she says. "My son's 11, and he's going to be playing football this year."

SCHIP was one of the most successful reforms that came out of the 1990s after the failure of the Clinton health proposal. It's a joint federal and state endeavor, part of what's called the "patchwork approach" to reforming the system.

Americans now spend about 15 percent of the gross national product on healthcare, almost double what they did in 1992. At the same time, the number of uninsured jumped more than 30 percent. Experts agree that the number of uninsured would be far higher had SCHIP not been enacted. Between 1998 and 2002 it was responsible for the first drop in the number of uninsured children in a generation.

"There's been a turning back on some of the progress we've made," says Barbara Lyons of the Kaiser Commission on Medicaid and the Uninsured. "It's particularly unfortunate to see this decline when there still continue to be roughly 10 million kids that don't have healthcare coverage."

Studies have long shown that children who do not have health insurance are less likely to have a regular pediatrician and are more likely to resort to care in an emergency room.

"And unfortunately, they're also more likely either to have not gotten care, or to have put it off for some time before they finally do," says Stuart Schear, spokesman for the Robert Wood Johnson Foundation, which Tuesday will kick off a week of events nationwide dedicated to increase coverage for children.

The current decline in the number of kids with coverage - although small compared with the millions of adults estimated to have lost health insurance in the past few years - indicates to people on both sides of the political divide that some kind of comprehensive healthcare reform is needed urgently.

"The patchwork approach tends to create these pockets of those who slip through the cracks," says Nina Owcharenko, a health-policy analyst at the conservative Heritage Foundation in Washington.

The problem is coming up with a comprehensive approach that Democrats and Republicans can agree on. Conservatives like Ms. Owcharenko say that SCHIP's vulnerability to states' fiscal swings plays into the argument that "public health programs are not a cure-all." She, along with President Bush, believes the private sector and individuals should be encouraged to pick up the slack. They favor refundable tax credits to help individuals buy private insurance, along with the expansion of medical savings accounts.

But other analysts contend that private-sector reforms won't be enough to take care of the problem, particularly for working people like Ms. Smith who make only about $30,000 or less. For instance, one analysis of the Bush plan for a refundable tax credit found that it would increase coverage to only 1.3 million people, a small fraction of the uninsured 44 million. That's in part because the tax refunds contemplated, about $3,000 for a family of four, would not be large enough to offset the cost of insurance - which last year jumped almost 14 percent to more than $9,000 for a family.

Many health-policy experts would like to see more federal dollars go into expanding programs like SCHIP, as Democratic presidential contender John Kerry proposes. He would also offer small businesses a mix of tax credits and subsidies to encourage them to provide insurance to employees.

For Smith in west Texas, it all seems very complicated. But she's clear about one thing: She wants her kids covered, and that will be a deciding factor when she goes to the polls.

"My children need healthcare," she says. "Right now, if anything goes wrong, I don't know what I'll do."