Yesterday I decided to do a little research on the State Children’s Health Insurance Program(SCHIP). The media is not much help in this area but the testimony before the Senate Committee of Finance was pretty informative. You can read the testimony here. The program is in the news because it is up for reauthorization. Some presidential candidates want to expand the program but there are some fundamental questions about whether the program is working as intended. Eighteen states are projected to have a funding shortfall. The three most common characteristics of the shortfall states is that they include a Medicaid component, they cover a higher percentage of adults, and they have a broader eligibility range. The states that have opted to use Medicaid to provide children’s health insurance have higher costs than the states with a separate program. As of 2005 the state programs are not allowed to add non-pregnant adults to the program. It is surprising to see how many adults are in the SCHIP program. Several states have more adults than children in their program. The sad part is that the availability of this program does not appear to have made much of an impact the two states, Texas and Florida, who have the highest percentage of uninsured children. Health insurance availability is just a part of the children’s health care problem.

I did find an interesting problem with the eligibility range that could make the SCHIP program a little less political. The SCHIP program eligibility is defined as twice the federal poverty guideline(FPL) although several states use a much higher multiple. At first glance the states that use the higher multiple look like they are taking advantage of the system. That got me to thinking so I did a little more research and then I cranked some numbers. The problem is pretty obvious. The federal poverty guideline is the same for the 48 states excluding Hawaii and Alaska. Hawaii and Alaska have their own poverty guidelines. Using a single poverty guideline for the remaining 48 states is a pretty crude tool to estimate a family’s need for assistance. It is difficult to understand the rationale for using the same poverty level in New Jersey as in Mississippi. On the other hand some of the states look like they are targeting a different and larger population segment than the legislation intended. My solution is pretty simple and is modeled after the practices we use at Habitat. Create a new set of income ranges based on a percentage of the local median income. As an example a two person family could earn up 62% of the local median income. That number should be pretty close to the median of the current plans. Like the present system we could have a higher percentage for the families with more children. This proposal is much easier for the average person to understand and a little harder to mangle by the media and political candidates. This does not solve the problems the SCHIP programs has with too many adults in its program and its inability to lower the percentage of uninsured children in states like Texas and Florida. It is just a start in the right direction of better transparency, lower abuse, and better focus on children’s health care.