With children's healthcare designated as a priority in the federal balanced-budget agreement, Congress and President Clinton now must agree on how best to spend $16 billion over the next five years so that 5 million children can be covered by health insurance.
The five-year balanced-budget blueprint agreed to by Clinton and Republican congressional leaders assumes Congress will subsidize state Medicaid expansions and offer block grants for states to launch additional programs to subsidize children's health insurance premiums.
Congressional and Clinton administration officials, as well as provider lobbyists, recently indicated that some mix of the two will probably be included in a final budget package Congress will consider later this year.
But none of the officials could say how the funding will be allocated between Medicaid expansions and premium subsidies or how the programs to be funded would be structured.
"The plan for increasing kids' health insurance has to be some mix of Medicaid expansions and expansions of private-partnership models," said HCFA Administrator Bruce Vladeck. "I don't think we know what the optimal exact mix is at the moment."
As Congress begins developing its own version of a children's healthcare plan, two basic philosophies have emerged.
One approach is symbolized by bipartisan legislation sponsored by Sens. John Chafee (R-R.I.), John D. Rockefeller (D-W.Va.) and several other members of the Senate Finance Committee, which has authority over Medicaid.
Their proposal, which the sponsors say would cost $15 billion of the total child-care allocation in the budget plan, is for Medicaid to cover children with family incomes of up to 150% of the poverty level. Current income maximums are 133% of poverty for children younger than 6 years and 100% of poverty for children 6 to 13.
Sen. Phil Gramm (R-Texas) is an acolyte of a competing philosophy.
Gramm, chairman of the Senate Finance healthcare subcommittee and lead sponsor of GOP children's health legislation, argues that expanding Medicaid will encourage employers to drop family insurance policies, which still would leave children uninsured.
However, he favors having the federal government pay for immediate Medicaid coverage of children between ages 13 and 18, which is now being phased in gradually by the states.