Both the US House and the US Senate have passed new versions of legislation that would reauthorize the Children’s Health Insurance Program (CHIP). Both congressional chambers passed CHIP reauthorization legislation in September, but President Bush vetoed that legislation on October 3.

The new versions make some changes to the bill the President vetoed, but they still include an increase in the federal excise tax on tobacco. National media reported on October 31 that in meetings with lawmakers, the President indicated he would veto any legislation that raised the tax on tobacco.

Because the President has said he will veto new legislation that includes a tobacco tax increase, House and Senate leaders are working to craft a bi-partisan compromise that can garner enough votes to override a veto. However, in recent votes the new versions of the CHIP legislation did not receive any more votes in the House than the previous version and lost votes in the Senate.

For lawmakers, the sticking point is not the tobacco tax but rather a few key provisions that have led to increasingly partisan rhetoric on both sides of the aisle. Misinformation and misunderstanding about these key provisions is creating an impasse in legislative negotiations.

Opponents of the reauthorization bill say the bill would permits states to continue covering adults under CHIP.

Some states (not Texas) have received special permission from the Bush administration to cover some adults under their CHIP programs. In the past, the Administration maintained that covering parents improves health outcomes for children and also approved covering childless adults under certain circumstances. More recently, the Administration has decided that covering adults saps program resources that are needed to cover more children. The new legislation would phase out coverage for adults in all states, but opponents say the phase-out wouldn’t happen fast enough.

Opponents say the reauthorization bill leaves “loopholes” that let states cover families at incomes above 300 percent of the federal poverty level, or $62,000 for a family of four.

The reauthorization bill would maintain the standard policy of allowing states to disregard certain parts of a family’s income in determining eligibility for CHIP. This is a long-standing policy that Congress uses in a variety of other programs such as Medicaid and housing assistance to encourage work and prompt payment of child support. Income disregards in assistance programs correspond to tax code provisions designed to encourage important activities: for purposes of paying taxes, families are allowed to deduct income used for a range of critical activities such as childcare expenses and mortgage payments. Income disregards are not “loopholes,” but rather provide states with flexibility and authority to target limited dollars most effectively.

Opponents say the reauthorization bill would allow CHIP to cover illegal immigrants.

Illegal immigrants have never been eligible for CHIP and still would not be eligible. The proposed legislation would make CHIP follow new rules for proving U.S. citizenship to parallel rules that Medicaid has been required to follow since July 2006. Since then, state Medicaid programs have reported that the new rules are the main reason for enrollment declines, due to U.S. citizens failing to provide a birth certificate or passport (driver’s licenses are no longer accepted). In several states, Medicaid enrollment has dropped for African Americans and Anglos but kept growing for Hispanics, and research revealed that the former groups were unprepared to prove their U.S. citizenship because it had never before been questioned, while Hispanic Americans--accustomed to having their citizenship questioned--were more likely to have their documents readily accessible.

At the request of state Medicaid directors, the CHIP reauthorization legislation would make improvements to both the Medicaid and CHIP eligibility systems designed to reduce enrollment declines from lack of appropriate citizenship documentation. Reauthorization bill opponents say that the changes would increase the possibility that ineligible individuals could “slip through the cracks” and become enrolled. However, the proposed legislation includes financial penalties to states that fail to prevent illegal immigrants from enrolling.