Bush Administration directive to enroll low-income children in SCHIP before expanding coverage is unenforceable because it violates Federal law, according to GAO

Apr 21 2008

The Bush administration violated federal law last year when it issued a policy directive that restricts states' ability to expand their SCHIP programs, according to a Government Accountability Office legal opinion released Friday, the New York Times reports (Pear, New York Times, 4/19).

The new guidelines, issued in an August 2007 letter, state that before expanding SCHIP eligibility to children in families with incomes greater than 250% of the federal poverty level, states must demonstrate that they have enrolled at least 95% of children in the state below 200% of the poverty level who are eligible for Medicaid or SCHIP.

States seeking to expand SCHIP eligibility also must establish a minimum of a one-year period of uninsurance for individuals in families with incomes greater than 250% of the poverty level to prevent them from switching from a private insurance plan to a public program (Kaiser Daily Health Policy Report, 8/21/07).

In the legal opinion, GAO states, "The Aug. 17 letter from CMS to state health officials is a statement of general applicability and future effect designed to implement, interpret or prescribe law or policy with regard to the SCHIP program. Accordingly, it is a rule under the Congressional Review Act" (Young, The Hill, 4/18). The Congressional Review Act establishes the formal rule-making process, which includes submission to Congress and a public review period. According to GAO, the directive is invalid because it did not follow this process (Armstrong, CQ Today, 4/18).

GAO's findings are in line with a Congressional Research Service analysis released in January. Neither GAO nor CRS has authority to rescind the policy directive, but Sens. John Rockefeller (D-W.Va.) and Olympia Snowe (R-Maine), who requested the GAO opinion, said that the agencies' conclusions should lead the administration to do so (Johnson, CongressDaily, 4/18).

CMS spokesperson Jeff Nelligan said that despite GAO's opinion, the directive will remain in effect (AP/Lexington Herald-Leader, 4/19).

State Lawsuits

An aide to Rockefeller said that while the GAO report is not legally binding, states could use the report to bolster their case in a lawsuit against the federal government that seeks to block the new policy. The aide said, "The anticipation is that the states will now have a much stronger hand when they go to court." Several states have sued to prevent enforcement of the policy directive. Many states have "argued administration standards were impossible to meet, saying the 95% participation requirement was too high," according to CQ Today. CMS has said at least nine of 17 states affected by the policy directive eventually will be in compliance with its requirements (CQ Today, 4/18).

In addition, the opinion "strengthens the hand of at least 22 states ... that already provide such coverage or want to do so," according to the Times (New York Times, 4/19). House Democrats also have "hinted that legislation addressing" the policy directive will be on the floor this summer, according to CongressDaily (CongressDaily, 4/18).

Comments

"The directive is a bold-faced attempt to subvert the law and prevent states from implementing their plans to provide health insurance coverage to millions of uninsured children nationwide," Rockefeller said in a statement (CQ Today, 4/18). Snowe said, "CMS chose to circumvent the rules and go their own way," adding that "this is clearly the wrong approach" (CongressDaily, 4/18). Rockefeller and Snowe in a release wrote, "CMS now has a critical choice to make: rescind the rule or continue to spend taxpayer money defending a growing list of lawsuits it is unlikely to win" (AP/Lexington Herald-Leader, 4/19).