Transcript as Delivered on Conference Call with Editorial Writers and Bloggers on SCHIP Reauthorization

Operator:  Welcome, and thank you for standing by.  All participants will be on listen-only until your question and answer portion of this call.  To ask a question at that time, please press star one on your touch-tone phone. 

Please begin.

Christina Pearson:  Hello.  This is Christina Pearson with the HHS press office.  And thank you for joining us today.  We have speaking HHS Secretary Mike Leavitt who wants to talk to you a little bit about the reauthorization of the State Children’s Health Insurance program, speak for a couple moments, and then we’ll open it up to your questions and answers. 

And Secretary Leavitt?

HHS Secretary Mike Leavitt:  Thank you.  First let me acknowledge that you were required to wait for a moment.  I regret that.  I was in a meeting with some diplomatic sensitivity and could not extricate myself to start this on time, which is our general practice.

First I would like to emphasize that the administration views the State Children’s Health Insurance program as a vital and important part of our human service fabric and that reauthorizing it is a priority.  We would desire it to be reauthorized before the expiration date of September 30.

It appears at this moment that the Congress will be sending the President a bill that will not be acceptable.  That – and he has indicated that he will veto it.  We – that of course creates a short-term concern that we need to assure that no children are in any way disrupted from coverage, that they have continuity of coverage. 

And so we would ask the Congress and have made contact with the Congressional leadership requesting that they do an extension of the existing program until we have a chance to work out our differences.

The President has made clear that the bill has a number of deficiencies.  The first is that it is targeted at the wrong group in our mind.  We think SCHIP is fundamentally about helping poor children with offers of health insurance. 

This bill would offer coverage to those who are as high as 400 percent of the federal poverty level.  That would mean, of course, that families making $80,000 a year and greater would – or up to $80,000 a year would be offered coverage. 

A member of Congress a couple of days ago I thought expressed this well.  It was pointed out to him that many who are currently having to pay the alternative minimum tax, which is a tax to assure that those who are well off pay their share, that many in this group that would now be eligible have to pay the tax for those who are rich and qualify to be poor at the same time, that only in Washington can you be rich and poor at the same time.

The second reason is that the cost is extraordinarily high when you begin to ensure people who currently – at government expense who are currently being insured in the private market.  This is intended to be for low income people, not to move people from the roles of the private insurance to government-funded insurance.

But that would be the case with a near majority of the people who would now be new entrants onto this program.  CBO estimates that by 2012, 2.6 million people would be insured under SCHIP who are not now.  Of that number, only 900,000 are in eligible class.  Most of the others would come from high income families or would come from those who are currently insured elsewhere.

This goes the wrong direction.  Instead of helping people who are uninsured become insured, it’s helping people who have private insurance move to government insurance.  We think that underlies the fundamental difference in philosophy. 

Those who would advocate for this bill believe that the federal government should insure everyone.  And this is the means by which they can move yet more people from private insurance onto public insurance at taxpayer expense.

The SCHIP bill that’s likely to be presented to the President uses budget gimmicks to finance it.  In the – it has a steady increase in the amount of government expense, and then in the final year or in the first year of the next budget cycle, it drops from about $16 billion down to a little over $3 billion.  It drops 80 percent.

Well, that’s clear that they have used a gimmick to try and keep this under the number of $35 billion. 

It includes adults.  We think SCHIP to be focused on poor children, not adults.  It provides to the states a substantial amount of money that doesn’t have to be used for healthcare.  Some of this money will end up being used to build roads, not to supply health insurance.  And we think that’s wrong.

And it also uses tax increases to finance it.  Those are the reasons that the president will veto this bill.  He believes that we ought to reauthorize SCHIP, keep it as it was intended, as program to help poor children.  But once it is reauthorized, we think it’s necessary that we move on to the real question which is how do we get all Americans access to an affordable basic insurance policy.

There are existing proposals on the table in Congress that would, for a substantial amount fewer dollars, produce a better result with more children being insured, more of one proposal that would offer tax credits for families.  That bill is – that bill would insure 5.25 million children, and it would be essentially budget neutral because of the way it solves a problem with the tax code.

So basically if you look at a choice you could say we can do about 900,000 children under the senate bill or we could do 5.25 million.  And we could pay 35 billion, which was what the bill that would be sent to the president would cost, or you could do it on a budget-neutral basis like the one I just described.

There are better ways to accomplish insuring more people than to simply have the government pay for all of them, including those who are insured in the private market. 

Those are essentially the major points I wanted to make.  And I’m happy now to respond to your questions. 

Pearson:  And Terri, if we may ask that when media are asking questions if they would – if we can make sure we have their name and media outlet, please?

Operator:  Thank you.  To ask your question at this time, please press star one on your touch-tone phone.  You will be asked to record your name.  I will announce you prior to asking your question.

To withdraw your request, press star two.  Once again, to ask your question please press star one on your touch-tone phone.

Our first question comes from Robert Bluey, Heritage Foundation.

Robert Bluey, Heritage Foundation:  Hi, Secretary.  How you doing?

Leavitt:  Good.

Bluey:  Thanks for doing the call.  I wanted to ask specifically the bill that you referred to, is there – who’s the sponsor of that?  Is there a number?

Leavitt:  This is the Coburn Bill…

Bluey:  OK.

Leavitt:  …that offers the credit.  There are a number that have been talked about.  But it’s again worth reflecting this act that if – I think it was the Lewin organization that did the estimate that said 21 million people would be added to the roles of the insured with that bill.

We expected about five and a quarter million would be children.  So if you juxtaposed that, the Coburn approach – and there are others.  And, you know, the president made a proposal as well.  The president’s proposal was scored out to be – to offer coverage to about four and a quarter million children.

But just look at the difference.  You know, the cost of this becomes evident.  When you use the Senate bill and you pay for everyone they say will be there, just take the 2.6 million people and divide it by the 35 billion and you get $2,600 per person per year.  The current cost of SCHIP is $1,152 a year.  So you can see we’re at well over double, almost – you’re pressing three times as expensive per person.

If we’re interested in adding people to the roles of the insured we ought to focus on the uninsured, not the – not just moving people out of private insurance into government insurance.

Bluey:  Well, I wanted to ask one follow-up question to that.  You know, related to SCHIP still but focused on the state level because New York and New Jersey obviously are, you know, challenging some of what the Bush administration has done.

What’s your response going to be to Governor Corzine?

Leavitt:  Well, let me first of all clarify exactly what we did with that guidance.  Most of you will be aware that SCHIP is an allotment of money.  It is a sum total of money.  And states have to make a decision along with the federal government on who will get the priority.  We believe SCHIP should put poor children in line first before we start spending money on people who are already insured in the private sector.

We know that – or at least CBO has told us that those between 200 and 300 percent of the poverty level, that 75 percent of them already have coverage.  Those that are between three and 400 percent that 90 percent already have coverage.

So it makes little sense to begin focusing those limited dollars, or the dollars we’ve allocated to SCHIP, on higher income people who already have coverage.  And so the guidance essentially said we want to put poor children in line first before we start moving people onto government insurance. 

And those states who are already covering populations over 200 percent, like New Jersey, we would give them one year to achieve 95 percent of those below 200 percent.  So they would be able to continue under this arrangement for the next year, but they’d have to demonstrate that they were able to come into compliance.

I was told today that Pennsylvania, who has chosen to go to 300 percent, that they are at 93 percent of those under 200 percent.  And they would have – and the next year they’d have to find those that were under 200 percent and insure them.  And that seems quite achievable. 

And so that’s the guidance, and that would be the impact. 

Operator:  Thank you.  Our next question comes from Jim Wooten, The Atlanta Journal-Constitution. 

Jim Wooten, Atlanta Journal-Constitution:  Mr.  Secretary, I noticed that the bill that seems likely to pass now would strip out the option of extending coverage to illegals and to children either up to age 21 or 25. 

Is there anything that is likely to emerge that the president would not – that you would not recommend that the President veto?

Leavitt:  Well, there’s a long list, Jim, of things that you can see trouble us.  They gratefully have taken out the house provision that would have declared a 25-year-old person a child.  They gratefully have taken out apparently the provision that would allow anyone who has non-citizens to be covered on a presumptive basis.

But I think I – and then rated at least seven reasons that the president has trouble.  Now – with this – now we don’t know exactly what will come out.  We’ll have to wait and see.  But there are at least seven good reasons why we would like to work with them and come up with a better bill.

Wooten:  Thank you. 

Operator:  Once again, to ask your question please press “star one” on your touch-tone phone.  One moment, please. 

Currently at this time no further questions. 

Leavitt:  Well, thank you all very much.  Christina Pearson and others from our public affairs operation stand ready to be helpful to you in supplying information as this begins to unfold.

I would like to emphasize that we are calling on Congress to provide a clean extension to this so we can work these differences out without their inaction, threatening the continuity of coverage for those who depend on it.

Pearson:  Thank you, Terri.

Operator:  Thank you.  That does conclude your conference for today.  Please disconnect all remaining lines at this time. 

Once again, your conference has concluded for the day.  Please disconnect all remaining lines at this time. 

END

Last revised: March 13, 2008