Transcript as Delivered on Media Roundtable on SCHIP

Kevin Schweers, HHS:  So those of you on the phone know, we’ve got some reporters here with us, in person, as well.  We’re going to try to keep the questions balanced between those of you on the phone and those of you here, as much as possible.  And just follow the instructions that Brenda, the Operator, has given you.  And with that, here’s Secretary Leavitt.

Mike Leavitt, Secretary of Health And Human Services:  Thank you all.  I think the basic circumstances of SCHIP and the discussion surrounding it are fairly well known to all of those who will have joined us today.  So, I’m going to speak with some abbreviation on what has occurred in the past.  I think you’re well acquainted with the reasons that the President chose to veto the bill. 

He feels as though the low-income children ought to be the focus of the bill.  He believes that the bill should be about children not adults.  He believes the bill should not motivate families with children who are covered by insurance privately to cancel that insurance, so as to have government funded insurance.  He believes that it ought to be within a constraint of a reasoned budget.  And that the amount of money we allocate to this program ought to be consistent with the policy that we select.  I have often said that the pathway to accomplishing agreement is to agree on the policy and then to begin to work out the arithmetic. 

One of the dilemmas I think we face is that this bill was constructed by picking a number and then working backwards to find the policy that would match the number.  I’ll point out why I believe that’s a problem in just a moment.  But, we’ve been listening and meeting with and working to find a place where we can develop common ground.

We heard members of Congress saying, unequivocally, they believe the language around non-citizen children needs to be tightened.  We have heard them say that – to acknowledge that we need to accelerate the speed with which adults are removed from the program or moved to Medicaid.  We have heard a fairly clear indication, a willingness to limit access to SCHIP among those who have relatively high incomes.

Those are all policy concerns we agree with.  And we believe that as we begin to see members of Congress move towards those policies, we find that to be a constructive step. 

We’ve also begun to listen in terms of what – who it is that should be covered in the broader scheme.  We’ve heard members of Congress say, ‘we think that any child who is currently eligible should remain eligible.’  We’re prepared to adopt that banner.

We’ve also heard a significant amount of interest expressed in being able to provide coverage to more children between 200 percent and 300 percent [of the Federal Poverty Level (FPL)].  In the past, we have desired to focus only on those who are under 200 percent if they were currently not eligible.  We have, however, in the last few days concluded that in order to find this common ground, we’re prepared to begin having a discussion about those who are between 200 and 300 percent [of FPL].

We do have a very important condition, however, on our interest in that policy.  It is that states have made a rigorous – have met a rigorous standard in their efforts to enroll those that are under 200 percent of the poverty line.  There are still, as you all know, hundreds of thousands of children who are under the poverty line-200 percent of the poverty line – that do not have insurance.  And we believe that continues to need to be the focus.

Many of you dealt with me while I was governor. You know, I’ve managed this program.  I know how hard it is, at times, to find low-income children and that it takes effort.  I also know that it’s a lot easier to say to a family that makes 275 percent of poverty or makes $65 to $70,000, why don’t you cancel your private insurance and come over and we’ll give you government insurance for free or close to free. That isn’t progress.

So we want to focus – we’re prepared to begin that conversation about the 200 to 300 percent [of the FPL], but with the condition that there is a rigorous requirement for an effort below the poverty level.  Now, to us, rigorous is 95 percent, we’ve made that clear.  But we’re prepared to talk about the definition of rigorous.

So, what you see, I think, if you were (inaudible), if I were to illustrate it with my hands – you see policy moving both directions.  We’re beginning to see policy converge.  We’re coming together, I think, at least with certain members of Congress about policies on both sides.

However, there are a couple of places where I don’t think we’re coming together; a couple of things we’re not prepared to do.  The primary one focuses on how we determine how much money is necessary to fund this.  Now let me just illustrate.  I mentioned the fact that there were some policy areas where I believe common ground can be met and one of them is in children who are not here legally.  There seems to be broad policy agreement on that point.

Well, CBO [Congressional Budget Office] has scored what that policy would reflect.  If my memory is correct it’s $1.6 billion.  If that’s the case, then $35 billion should be modified by the $1.6 billion, because there’s a change in the policy.  There seems to be agreement on the fact that we should remove adults from the program.  Again, CBO has scored that there would be a cost savings if we took adults off the program of about $4 billion.  If that’s the case, then we don’t need $35 billion.  We need at least $4 billion less. 

We can look at the allotments to the states.  The CBO has scored a certain amount for each state as an allotment, but what we know is that allotment in the case – that the states have projected their needs and that it is at least $4 billion higher than what the states themselves projected.

So, here’s my point.  If the policy is going to go closer and closer, then the number that it takes to finance it needs to come closer and closer.  And what we’re seeing at this point is policy moving like this but the budget moves like this.  We’re seeing the administration clearly signal a willingness to put more money on the table.  We believe the policies that I’ve outlined today could be implemented for somewhere in the neighborhood of $15 billion less than the $35.

Now, there are a number of things I haven’t talked about and there’s, obviously, some more exactness that has to be developed.  But, we’re prepared to meet on policy.  But if policy – if we find common ground on policy, we have to find common ground – we have to see changes, as well, in the budget number.  And we’re not prepared to fund the bill with $15 billion more money than is necessary to fund the policy on which we agree. 

This bill has been constructed in a way that floods the program with money and then blows open the doors later for new eligibilities.  And we’re interested in a bill that will define who’s covered, fund it with adequate dollars, and then get on with the business of serving the children who are currently uninsured.

Now, I’m happy to respond to your questions.

Julie Rovner, NPR:  Mr. Secretary, if the money – if the policy – you said you don’t like the bill because they picked a number of put the policy – back loaded the policy to fit.  But in your case, if you agree on a policy, doesn’t the number that results from that, isn’t that just what the number is?

Secretary Leavitt:  That’s right.  We’d like to find a policy that we agree on and then take the CBO scoring and say how much is that going to cost and we’d like to fund it.  And we think the bill, as it is currently in place, has substantially more money built into it than it has requirements – than its policy would currently require.

Rovner:  So, let me give you a for instance.  On the number on the illegals, CBO has said, yes, it costs $1.6 billion, but it says it costs $1.6 billion because most of the people who are not getting the coverage are now legal and eligible.

Secretary Leavitt:  Well it has to do with what we go through in order to determine if there’s legality.  There is a concept they often refer to as Express Lane eligibility – in essence, what you would like to have is a system where if you qualify for food stamps or some other program, where there may not be any kind of immigration or citizenship requirement, then you’re eligible for SCHIP.  Well, that’s essentially a means by which you can say you’re against having people who are non-citizens on the program, but very clearly provide for them.  So we’re anxious to see those kinds of loopholes closed. 

We want to have a bill in which we have agreed who should be covered and then we want to fund it adequately.

Rovner:  But if you were to come to agreement on the policy and CBO were to score it and it were to say it cost $28 billion, would you then say [you] can’t do it because it’s still too expensive?

Secretary Leavitt:  What I have said very clearly is that we need to agree on who should be covered and that needs to be informed by how much it would cost.  And therefore, we need to be in agreement on both who should be covered and how much that total turns out to be.  I’ve already suggested that I believe the policies that I’ve outlined, which would include any child who is currently eligible remaining eligible.  Children who are between 200 and 300 percent [of FPL], states could also cover them, so long as they had properly assured that poor children had been taken care of first, a policy that puts citizens before non-citizens, that we can find agreement on.  And I believe that’s the place where the American people would like to be.  They like to take care of children, but they don’t want to put $15 billion more than is necessary to do that so, in the future, they can’t expand the program to those who currently have higher and higher incomes.

Brett Coughlin, Inside CMS:  Mr. Secretary, at the beginning of the year, in your budget, you had said that – CMS had said they wanted to freeze the ’07 enrollment target for this year at 2005 levels.  And the budget justification documents say, “That associated programmatic changes along with funding levels may effect SCHIP enrollment.  These factors have led CMS to reevaluate its ’07 target.  CMS proposes a more realistic 2007 goal of maintaining enrollment at FY 2005 levels.  We’re talking about the SCHIP program.” 

So you started there, the tight budget situation, you’re going to freeze it.  You move to associating yourself with Chairman Barton’s idea, $5 billion very limited sort of reauthorization.  And now, we’re talking about going a step further.  Do you think this shows compromise with Democrats the way you’ve evolved your policy?

Secretary Leavitt:  That is exactly what this is.  We’re working to find middle ground, to compromise, to find a level of policy we can all feel good about.  We’re prepared to do that.  We’re offering new policy ideas.  We’re agreeing, as they are, and bringing ourselves closer to together on the policy.  The dilemma we now face is that we see policy moving; however, we do not see changes in the budget.  They start at a specific number and this is a policy about a number, not about a – not a policy about who should be covered by the program.  And we’d like to have a frank, honest, discussion about who would be covered and lay out principles about who we think should be covered.

Coughlin:  And on Monday, Assistant Secretary Ventimiglia sent an e-mail encouraging House Republicans to associate themselves with this October 18 letter 38 House Republicans had sent to the President asking for modifications, some of which you talked about. But, have you seen a buy-in from members of Congress to these – beyond the 38 – to these principles for reauthorization?

Secretary Leavitt:  We saw the letter among the 38 as being an important development because we believe and continue to believe that a program built around those principles may, in fact, be the common ground.  So, we have begun to mold our policies to try to use that as a means of bringing us together.  As I indicated, there’s a clear signal that they want adults off the program.  We’d agree to that.

There’s a clear signal they’d like to have insurance provided to citizens, not non-citizens.  We agree to that.  There’s a clear indication they’d like not to have people canceling their private insurance and picking up government insurance.  We agree to that.  Likewise, there’s some indication they’d like to talk about ways that we could cover children in a category 200 percent to 300 percent.  We haven’t been in that area before.  We are not moving our position in order to find common ground.  There are clear limits and I’ve defined them.  One is, if we’re going to go between 200 and 300 percent, we expect the states to have passed a rigorous standard of effort to make sure that they find those children who are poor first.  We ought to be covering poor children who are uninsured before we do adults, before we do children who have private insurance and are in upper incomes.  And we clearly ought to be doing it.  And so, we see that as common ground.  We’re moving there.  And we want to see if we can make this work.

Coughlin:  The rigorous standard, if it’s not 95 percent, what is it?  Because 95 percent, even the states that we’ve talked to says it’s just impossible to do.  Not to mention the amount of Medicaid children that they find when they do this outreach.

Secretary Leavitt:  But that’s the goal, isn’t it?  It’s to find people who are uninsured?  And isn’t that category we ought to be looking at.  Ninety-five is what we believe reasonable standard.  We’re prepared, if they have different ideas, to talk about it.  We think it needs to be rigorous.

Robert Pear, New York Times:  Even if they wanted to go 225 or 240 percent of poverty, you’d want them to meet that rigorous standard?

Secretary Leavitt:  Yes.  Well, we believe that before we begin to cover children in higher income ranges, that states should have put forward the effort to meet that standard.  Again, we believe children should come first. 

What we do know is that the higher a family’s income, the more likely they are to have insurance.  We know that, when you start getting into the range of 275 or 300 percent, that CBO says as many as 75 percent or more of those children already have private insurance.  So any time you start getting into the upper income range, then there’s a very high possibility that you’re just moving people from a private insurance policy in which they’re participating, into a government program which is dependent upon other taxpayers to pay.

Schweers:  Brenda, do we have any questions from the phone?

Operator:  We do.  At this time, I do have one from Aliza Marcus of Bloomberg News.  Your line is open.

Aliza Marcus, Bloomberg News:  Hi, Mr. Secretary.  I was wondering, in the CMS letter from August, you had set some pretty tight standards in terms of trying to avoid crowd-out, that states had to prove certain things.  You didn’t really mention whether you felt that you want the Democrats now to change their policy on that.  Are you expecting them to incorporate some of that from your letter?  Or do you feel that by more or less capping things at 300 percent, that answers your concerns?

Secretary Leavitt:  No.  Actually, the bill, as I understand it, [H.R.] 976 actually had standards.  That, as I recall, was an average of the top 10 states.  We don’t think that passed as rigorous.  We think the one we have is but we’re prepared to talk about it.  The good news here is that there’s an acknowledgement that we need to have a standard that’s rigorous.  Now, we just need to define rigorous.

Marcus:  OK.  Thank you.

Operator:  Thank you.  The next question is coming from Richard Wolf of USA Today.  Your line is open.

Richard Wolf, USA Today:  Hi, Mr. Secretary.  Sorry, I couldn’t get over there in time.  One-and-a-half questions here that I’m sure will come up if I don’t ask them.

Secretary Leavitt:  Could you talk a little bit louder, Richard?

Wolf:  Sure.  If you are coming around now to the possibility of the way I do my math – $20 billion, rather than five. I know you didn’t state that in hard and fast terms.  But, to get up to that level would you need a tobacco tax or some form of revenue?

And secondly, what happens if the changes that the Democrats have indicated they are willing to make in the areas you’ve talked about adults and immigrants and income levels, what if they don’t go any further?  And what if 10 or so – 10 or 12 republicans join them, would you veto anyway?

Secretary Leavitt:  First let me deal with the issue on how we pay for this.  I mentioned there’s a couple of things we’re not prepared to do.  One is, we’re not going to put $15 billion extra dollars – let me restate that – we’re not going to put $15 billion that’s unneeded into the program so that they can expand to higher and higher income levels later and move more and more people off insurance, that’s private insurance, to government insurance.

And the other is we don’t see a need to raise taxes.  The President has put forward $92 billion in offset reductions in the budget that we would be prepared to work with Congress to choose from.  And if there are others that they’d like to talk about, we’d certainly be open to those too.

Pear:  And that sounds like, still, that you would not be receptive to a tobacco tax. 

Secretary Leavitt:  Our policy has not changed on tax increases.

Jeffrey Young, The Hill:  Mr. Secretary, if I may, and I apologize for being late.  It seemed to me that in between the original passage in the House and the Senate of the first bill and the President’s veto, up until the override vote last week, the Congressional Democratic Leadership didn’t appear to be terribly interested in really talking to you guys about changing the inside of the bill, as they evidently are now.  It sounds like you’re engaged in those conversations with them.  And you tell me if I’m correct or not, that your engagement in that is a little more deeper in detail than it was prior to the override (inaudible)?

And second, you know, what do you think that means?

Secretary Leavitt:  Well, I should we clear that we have yet to engage in direct conversations with the Democrats on this bill.  I will be sending a letter this afternoon to Speaker Pelosi and Senator Reid outlining the policy ground that we’re prepared to move to in order to find compromise.  I hope that will result in conversations.  Ultimately, there will need to be a conversation between the Speaker and Leader and the President.  But, before that, we need to begin to work with both parties to find agreement between Republicans in Congress, Democrats in Congress and the Administration.

The – I think this is a natural process that’s occurring.  We have seen two quite disparate views on how this should happen.  And they appear to be moving more closely together in terms of policy within large segments of the Congress.  However, it has – we have not yet seen a reflection of that in the budget discussions.  But, again, this is – the bill’s – we got to this point by the President vetoing the bill.  The veto was then sustained.  And now, we all seek to find a way to reauthorize it.  And we’re moving forward in good faith that that’s what they want to do.

Schweers:  Brenda, any more questions from the phone?

Operator:  Yes, I have a question from Stephen Langel of Congress Now.  Your line is open.

Stephen Langel, Congress Now:  Thank you.  Mr. Secretary, given concerns that Democrats have shown in the past to the CMS letter, concerning a 95 percent cut off on eligibility before expanding.  What makes you think that they might be more willing to compromise on that figure now?  They seemed quite opposed to it in the past?

Secretary Leavitt:  Well, it was – a similar provision was actually contained in the bill they sent the President.  It was not a standard that we deemed to be rigorous and clearly allowed for them to begin to use their money to motivate people to cancel private insurance in favor of government taxpayer provided insurance.

But the fact that they acknowledge a need to focus on low income children was a positive sign.  And I think it forms a possible point of common ground.  We’ll have to decide what rigorous is.  It’s obvious that we have a desire to focus on the low-income children before we start expanding into higher incomes.  And it’s also clear to me, and I suspect to others, that there’s a point that they would have the government providing insurance that we aren’t.  So, we’ll have to work all of that out.  But, I think there’s a reason to feel at least optimistic that we could resolve that.

Rovner:  Mr. Secretary, the Democrats are talking about going back to the floor tomorrow with a slightly modified version of this bill.  It’s unclear whether or not they have found the extra votes they would need to get an override-proof majority.  Would you consider that an act of bad faith?  And what would it do to the negotiations that, as you say, are not even yet, officially started?

Secretary Leavitt:  Well, let me outline the reality of this.  This bill that was vetoed – let me restate that.  The bill that was vetoed was passed through the Congress without committee hearings, without the ability to amend it, with 30 minutes of debate on the floor of the House.  There was no opportunity for anyone to have a discussion about this.  To this point, the President, nor any member of his Administration has had a conversation that would even approximate a negotiation.  The Administration has signaled clearly and now put on the table new policy ground hoping to find a compromise, because we want this bill to be reauthorized, we want this program to be reauthorized. 

If they were to move ahead, it would be clear that they are not interested in a compromise.  That they are not interested in a negotiation.  That they’re simply interested in being able to expand health insurance to higher and higher incomes, they are interested in moving people off of private insurance to government insurance.  That they’re interested in seeing adults on SCHIP and so forth.

Now, I also want to acknowledge that this is a very political town and a very – and highly political process.  I have zero impact on what the Democrats do.  And if they have the votes, they’ll probably do their best to run the bill.  But, we hope they don’t.

Schweers:  Any more questions from the phone before we wrap up?

Operator:  I do.  I have a question from Chris Lee of Washington Post.  Your line is open.

Chris Lee, Washington Post:  Thanks, Mr. Secretary.  You had mentioned – I want to make sure I’m clear on something.  You had mentioned towards the beginning of your remarks that you had heard members of Congress say that any child currently eligible should remain eligible and that you said we are prepared to adopt that standard.

As you know, I think 18 states plus the District of Columbia are already above 200 percent.  New Jersey is the highest at 350 percent.  Are you essentially now saying that, in those states, enrolling children at those higher levels is okay from here on in?  And they would not have to meet the sort of rigorous test you speak of to go above 200 percent?

Secretary Leavitt:  Our policy would be that every state would need to meet a rigorous standard, if they were to continue to expand beyond where they are today.

Lee:  So that’s different than saying and child currently eligible should remain eligible since they’re eligible now under different terms.

Secretary Leavitt:  Well there are – I can’t think of a situation where a person who is currently eligible under the policy (inaudible) wouldn’t be eligible in the future.

Lee: Well, for example, in New Jersey, someone at 350 percent is now eligible.  You would essentially say they can only be eligible if the state meets a new standard that you’ve come to some agreement with the Democrats about.  In other words, it’s not that if you’re eligible now, you’re eligible tomorrow.  It’s you might be eligible tomorrow if you meet this standard?

Secretary Leavitt:  I’m talking only about new enrollees.  Existing enrollees would continue to be eligible.

Lee: Okay.  So people currently enrolled should remain enrolled regardless of their – of whether they’re above 200 percent.  But eligibility is something different in your eyes?

Secretary Leavitt:  Among new enrollees that would be true.

Lee: Okay.  Thank you for clarifying that.

Young:  I’m sorry, can I ask one?

Schweers:  Real quickly.

Young:  Mr. Secretary, I just wanted to follow up from the question that Julie had.  When you were talking about the implications of the Democrats moving ahead with this bill tomorrow or sometime shortly after that, before there’s been an opportunity for the President to get together with the Leadership or you or anyone else.  If they take that strategy, is that also a reflection of them thinking that they don’t need you to get this accomplished?  When I say you, I mean you and the Administration.

Secretary Leavitt:  No, I understand.  Let me – in 1994, Congress – the control of Congress changed.  And there was a period where, by my observation, my own party tested the limits of their capacity to move without the assistance of bipartisan discussion.  I think they found that there was a limit to their effectiveness, and that ultimately, the President of the United States, who at that time was Democrat, would exercise the veto power to require that there would be fair and reasoned compromise.

Welfare reform is an example.  It was vetoed twice.  Ultimately the parties came together.  I think you can expect, as a matter of political science, that any time there’s a change in Congress this kind of activity will occur.  I don’t think it’s right.  I think there always ought to be reason to comprise to find the best policy, but I acknowledge the reality of it.  The fact that the President’s veto was sustained is a very important thing.

Now, I expect it won’t be the last veto the President issues.  And I don’t expect it will be the last one that’s sustained.  But that’s just the operation of democracy right now. 

Rovner:  One more.  Assuming that there is no deal between now and the time that the CR runs out and if so one has to continue SCHIP but a number of states are going to run out of money.  I mean, what does the Administration intend to do at that point?

Secretary Leavitt:  Well, I have teams that have been deployed, literally, in every state.  And we’re working on a state-by-state basis.  We think that the program does need to be continuous and that we ought to not put any child in the position that their coverage would lapse.  And so we’re working on a state-by-state basis.  There are states that ultimately have trouble the further you go into this.  And that’s another good reason for us to be compromising.  Finding a way to make this work, not just for one party but for all parties.  And we hope that our steps today will move us in that direction.

Secretary Leavitt:  Thank you very much.

END

Last revised: March 13, 2008