Republicans and state officials are trying to reverse the momentum for federal legislation on children's health insurance by warning that federal programs actually could erode children's coverage.
Senate Republicans last week cautioned that a massive expansion of Medicaid or premium subsidies for children could cause private employers to drop their family health coverage, which they call the "crowd-out" phenomenon.
"Once you get into the range of giving away something that 82% of people buy, you have profound impact," said Sen. Phil Gramm (R-Texas), chairman of the Senate Finance healthcare subcommittee. "The states are in a much better position to tailor their programs to avoid the crowding-out problem."
A Senate Democratic aide objected, saying a program can be designed to avoid erosion in employer coverage of families and children.
In addition, the GOP joined state health officials in warning that new federal mandates could impede state programs designed to expand health coverage to children not covered by Medicaid.
"State initiatives are important, (as is) not expanding bureaucracy if there are existing programs," said Sen. William Frist (R-Tenn.), a co-sponsor of a Senate GOP children's health initiative. "We don't want to create a new entitlement if we already have programs that do the job."
That would be particularly true if, as President Clinton has proposed, the federal government caps its contribution to state Medicaid budgets on a per-enrollee basis and cuts disproportionate-share payments to finance an expansion in children's health coverage.
"We would be taking from one needy group to pay for another," Barbara DeBuono, commissioner of the New York state health department, told the Senate Finance Committee last week.
"I think if this per-capita cap stays on the table, some of these initiatives (states are) talking about will go by the boards," said Raymond Scheppach, executive director of the National Governors' Association. "We have real problems with talking about expanding children programs while this is on the table."
If the federal government enacts a program that causes states to rescind their children's healthcare initiatives, coverage in fact may shrink while the national program is phased in, Scheppach said.
Congress is considering numerous proposals to expand children's healthcare coverage through Medicaid or by subsidizing health insurance premiums (April 28, p. 23).