Texas SCHIP cuts seen as harbinger

Washington -- Since it was created in 1997, the State Children's Health Insurance Program has been popular with patients, physicians and politicians alike. But for the first time, the program's future seems in doubt.

Some experts worry that program cutbacks in Texas offer a glimpse of what could happen in other states as they struggle to make ends meet during tough fiscal times. Texas launched its SCHIP plan in 1999 and quickly enrolled almost a half-million kids with the help of a streamlined application process and aggressive outreach. Despite that success, or perhaps because of it, the Texas Legislature passed sweeping changes to the program last year.

"It appears that the changes to SCHIP eligibility and enrollment in the Legislature were designed to reduce enrollment in SCHIP and thus the state budget," said Richard Wayne, MD, of Christus Santa Rosa Children's Hospital in San Antonio.

Those adjustments include switching from 12 months of continuous coverage to six months, higher premiums and co-pays, a 90-day waiting period, and a new asset test for families above 150% of the federal poverty level. Lawmakers also eliminated the program's dental and vision coverage and halved mental health benefits.

The state expects to save $1.6 billion in 2004 and 2005 from the combined cuts to Medicaid and SCHIP, and more than 100,000 children ultimately could be dropped from the SCHIP rolls, said Anne Dunkelberg, a senior policy analyst with the Center for Public Policy Priorities in Austin, Texas.

"One of the most distressing things about what's happened with our program is that virtually all of the decline in enrollment of SCHIP children in Texas has been among the lowest-income families," she said.

The changes also have disproportionately affected poor areas, where coverage for these children has dropped by 60% to 70%, said Roland Goertz, MD, who runs a community health center in Waco.

"Our numbers have essentially fallen back to the first year of enrollment levels," he said. SCHIP visits peaked at 516 a month in June of 2003, just before the Legislature trimmed the program. In June of this year, the clinic saw 124 SCHIP-enrolled kids.

Cutting cost, cutting care

The result is that more children go without basic health care.

"When health care avenues are cut, what you do is eliminate the preventive aspect, because moms and dads are going to bring the kids in for acute care whether it's funded or not," Dr. Goertz said.

A recent report from the Urban Institute showed that children without health insurance are much less likely to receive well-child checkups and much more likely to have unmet medical needs than insured children.

"Regular checkups, immunizations and eyeglasses are all part of maintaining a healthy and active childhood. Every child should have access to basic medical services," said American Medical Association President John C. Nelson, MD, MPH.

Dr. Wayne said that since the changes, his hospital had seen more uninsured children in the emergency department, where he works one day a week. Although children can always receive care on an urgent basis, families often cannot afford follow-up visits or drugs prescribed by emergency physicians.

"What generally happens is they're back in the emergency room the next night. And maybe after the third or fourth visit, the acuity has reached a point where they need to be admitted to the hospital," he said.

Changes to eligibility, the enrollment process, premiums and co-pays have all had an impact on enrollment numbers in several states, but a more widespread problem may be the scaling back of state outreach efforts.

"The main barrier to getting these families to enroll their kids is that the parents just don't know that their kids are eligible," said Stuart Shear, a spokesman for the Robert Wood Johnson Foundation. "A lot of people who work, even if they earn a modest income, believe they are not entitled to any kind of a helping hand when it comes to health care."

Because states have cut back on efforts to get the word out, Cover Kids and Families, a national outreach effort sponsored by RWJ and supported by the AMA, is trying to pick up the slack with a major back-to-school initiative, launched this month.

"No child should have to go without medical care and treatment when health coverage is widely available," Dr. Nelson said. "Through community outreach and assistance, more children can move closer to having their medical needs met."

States feel budget strain

Nationally, enrollment is still on the rise, but experts see some troubling trends on the horizon.

"SCHIP, which was this program that was growing like gangbusters, now has essentially plateaued, come to a standstill," said Leighton Ku, senior fellow at the Center on Budget and Policy Priorities in Washington, D.C.

Job losses in recent years have led to a major shift of children from private health insurance to public programs. SCHIP and Medicaid continue to absorb newly uninsured children, as well as those who have never had coverage, experts said.

Together, the programs have helped reduce the number of children without insurance by one-third in the past six years. But recent surveys show that 8.5 million low-income children still go without health insurance coverage.

"Conceivably, we're going to see some reversal for kids at some point in the future," Ku said. "If public coverage does not continue to grow, or it doesn't grow as quickly as it has been and they're still losing their employer-sponsored coverage, what this might mean is we won't continue to make progress in reducing the number of uninsured children."

States will continue to struggle with shriveling budgets. Enhanced federal matching funds that helped many states through the past year ran out in June.

At current spending levels, two states will run through their share of federal funding by the end of the year, and five more will by the end of next year, Ku said.

Legislation recently introduced in Congress would help by returning $1 billion in unspent SCHIP funds to states that have used up their allotment, but that will help only those that can raise the local dollars to take advantage of the federal match.

Without some federal help, states will have to make more cuts to their programs or find alternative revenue sources, such as new tobacco taxes, experts said.

"We've already cut dental. We've already cut podiatry. We've already cut populations out. What do we do now?" Michigan Governor Jennifer Granholm asked at a recent National Governors Assn. meeting.