Shock and awe: Congress may do the right thing on children’s health

Signs that the gears are beginning to turn? House Minority Leader Nancy Pelosi (D-San Francisco) with House Speaker John A. Boehner (R-Ohio). The congressional leaders have worked out a tentative deal on Medicare and children's health.
(Pablo Martinez Monsivais / Associated Press)

The moments when Congress appears to function effectively are rare and fleeting these days. So it’s proper to recognize that the House is on the verge of taking the right steps on the Children’s Health Insurance Program, or CHIP, which was on the cusp of losing its funding later this year.

A bipartisan deal likely to be voted on before the House leaves for recess Friday would extend CHIP’s funding for another two years, or through fiscal 2017. What’s more, the extension comes without the cutbacks that House Republicans were proposing as recently as a week ago, not to mention the spectacularly draconian cuts embodied in a Republican discussion draft last month.

We reported two weeks ago that CHIP was dangling over the cliffside of extinction because the state agencies that administer the program need to know its funding is secure well in advance of the deadline. Hanging in the balance was healthcare for more than 2 million children in low- and lower-middle-income families that earn too much to qualify for Medicaid.


In addition to extending CHIP for two more years, the draft coming before the House this week continues the “express-lane” eligibility system that allows states to put kids in CHIP based on their families’ eligibility for other government assistance, such as food stamps, without requiring a separate application. It increases the federal share of CHIP costs, forbids states to tighten eligibility standards and provides money for outreach, so that eligible children can get the coverage they need. It extends funding for home visiting services and other programs that are good for children.

House and Senate Democrats have been pushing for a four-year extension of CHIP; the two-year limit falls into the category of compromise, though Democrats may push for four years when the measure comes to the Senate next week (assuming it’s passed by the House).

The CHIP extension is part of a deal aimed at a permanent resolution of the Medicare “Doc Fix.” That’s an artifact of 1997 budget deal that was designed to slow the growth of Medicare reimbursements to doctors. The formula was botched, however, and drove payments so low that Congress has had to suspend it every year in what has become yet another opportunity for a tense political standoff that no one needs.

Should the Doc Fix -- in formal terms, suspension of the sustainable growth rate, or SGR -- not be enacted by April 1, physician reimbursements will be cut by 21%, “almost surely triggering a large-scale exodus of doctors from Medicare,” according to a forecast by the Center on Budget and Policy Priorities. Even without the SGR, Medicare reimbursements have been declining anyway.

The SGR/CHIP deal would replace the annual Doc Fix with modest annual increases for the next five years, followed by no increases for another five years. That will squeeze doctors, but the theory is that changes in physician reimbursement policies that pay doctors for performance instead of procedures will benefit patients and America’s healthcare bottom line alike. Doctors will be paid an incentive to move to “alternative” payment systems. (See this excellent explainer by Mary Agnes Carey of Kaiser Health News.)

Medicare advocates aren’t entirely delighted with the compromise. Much of the higher cost of Medicare will be imposed on enrollees, especially wealthier seniors -- Medicare premiums will rise sharply for single persons with incomes of more than $133,500 and couples earning more than $267,000. Since the median income of Medicare enrollees is $26,000, the changes will affect only about 2% of them, according to a congressional background paper.

Another change affects Medigap policies, which are private health plans that pay expenses not covered by Medicare. Medigap plans would be forbidden to pay for the Medicare Part B deductible, which is $147 this year. The idea here is that the deductible encourages seniors to be penny-wise when accessing healthcare. That’s debatable, but by the CBPP’s reckoning, for most seniors the drop in the Medigap policy premiums will more than cover the effective increase in their deductible.

Since neither house has acted yet, the whole deal could fall apart. Conservatives may grouse that its costs aren’t sufficiently offset by higher patient charges or other revenue, for example. As Carey observes, “There’s enough in the wide-ranging deal for both sides to love or hate.” But there is a deal. How often in the recent past have we been able to say that?

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