N.J.'s Corzine to Defy New Health-Care Rules
Fight Grows Over Changes in Children's Program

By Christopher Lee
Washington Post Staff Writer
Friday, September 14, 2007

Democratic Gov. Jon Corzine informed President Bush this week that New Jersey will not obey federal rules that would make it harder to enroll middle-income kids for a popular government-subsidized health insurance program.

His move escalated the growing confrontation between a number of states and the administration over the new rules imposed on the State Children's Health Insurance Program (SCHIP). They have been criticized as unfair and overreaching by children's advocates and politicians of both parties, but Corzine's declaration marks the first time a governor has openly vowed to defy them.

New Jersey's action comes against the background of a larger debate over the $5 billion-a-year program's future. The Senate and the House have passed legislation that would dramatically increase funding and make it possible to sign up millions of children for coverage.

Bush has sought a much smaller funding increase and has promised to veto either bill, saying they would inappropriately enlarge the federal role in health care. The program, which serves 6.6 million kids, will expire at the end of the month if Congress does not reauthorize it or pass a temporary extension.

House and Senate negotiators were making progress toward a possible compromise last night, but no deal had been reached yet, congressional aides said.

The rules, spelled out in an Aug. 17 letter from the Centers for Medicare and Medicaid Services, restrict efforts to enroll children whose families earn more than 2 1/2 times the federal poverty level, or $51,625 for a family of four.

In a letter to Bush on Wednesday, Corzine called the new rules "onerous," said they go beyond federal law and predicted that they would deny coverage to as many as 10,000 New Jersey children.

"I am deeply concerned about the devastating impact that this misguided policy will have on our efforts to address the growing problem of the uninsured," he wrote.

Corzine added that the state, which covers about 122,000 kids in its program, known as FamilyCare, "will continue to provide health care to children in families with income up to 350 percent" of the federal poverty level -- or $72,275 for a family of four. He also wrote that he is prepared to file a lawsuit challenging the new rules.

Bush officials argue that the rules are necessary to keep the 10-year-old program focused on low-income children whose families earn too much to qualify for Medicaid but not enough to buy insurance on their own. Expanding SCHIP to middle-class children will induce many families to drop private coverage, they say.

"New Jersey is free to use its own funds to cover children who are not eligible under the federal guidelines," said Tony Fratto, a White House spokesman. "It's premature to say what CMS would do if they are not in compliance. . . . We hope that New Jersey would focus on the core mission of this program."

Among the rules to which Corzine and others object is a requirement that the program be available to children from middle-class families only if they have had no health coverage for at least a year. Another change would prevent the program from being opened to middle-income families unless at least 95 percent of eligible children from families whose earnings are less than double the poverty level ($41,300 for a family of four) are already enrolled in Medicaid or SCHIP. Critics say no state can meet that requirement.

Sens. Edward M. Kennedy (D-Mass.) Gordon Smith (R-Ore.), John D. Rockefeller IV (D-W.Va.) and Olympia J. Snowe (R-Maine) introduced separate legislation this week to block the rules.

The rules, scheduled to take effect next August, would jeopardize health coverage for tens of thousands of children in the District and 18 states, including Maryland, that offer wider coverage or have recently passed laws to do so, according to the nonprofit Center for Children and Families at Georgetown University. At 3 1/2 times the poverty level, New Jersey's income threshold is the highest in the country.

States contend that they are already taking adequate steps to keep parents from switching from private insurance, including imposing waiting periods and requiring families on SCHIP to pay premiums that rise as income levels go up.

Last week, the administration rejected an application from New York to open its SCHIP program to children from families earning as much as four times the poverty level, or $82,600 for a family of four. Gov. Eliot L. Spitzer (D) said the state is considering legal action.

Some analysts argue that the changes were so substantial that federal law required the administration to go through the formal rule-making process, including soliciting public comments, before implementing them.

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