TRENTON--With an economy that continues to weaken and more families unsure of how to pay their mortgage and afford rising gas prices to get to work, the Bush administration has decided that many of their children should no longer be eligible for affordable health coverage. A new report by NJPP explains how new rules issued by the administration would have a more severe impact on New Jersey than had been expected, both in terms of the number of children who would lose health insurance and the loss of federal funding.

A Step Backward: How Federal Rules Would Deny Health Insurance to New Jersey Children, by NJPP Senior Policy Analyst Raymond J. Castro, offers the most detailed analysis to date of how changes in the federal State Children's Health Insurance Program (SCHIP), called FamilyCare in New Jersey, would affect the state.

According to the report, over five years, 35,000 fewer New Jersey children would have health coverage and the state would lose $215 million because of new rules that sharply limit states' abilities to insure kids whose family income is above the limit set by the Bush administration. "The new federal policy is shortsighted and downright stingy," said NJPP President Jon Shure. "Instead of investing in our kids' future it would reduce their chances for a healthy life." The report presents data for the first time broken down by congressional district, showing that the impact on New Jersey is widespread and by no means confined to the lowest-income areas.

Since 1998, millions of working families across the country have received health care assistance through SCHIP. The Bush administration's new rules would very likely reduce the number of eligible children through a directive issued by the federal government's Centers for Medicaid and Medicare Services (CMS). Among other provisions, the CMS directive prohibits states from covering children in families where income exceeds 2.5 times the federal poverty level--about $44,000 for a family of three--unless states can meet certain requirements that are very unlikely to be satisfied. Because of the state's high cost of living, New Jersey currently allows kids to be in FamilyCare if their family income is up to 3.5 times the federal poverty level, or about $61,000 for a family of three.

The current SCHIP law has been extended until March 2009, the deadline for enacting another extension or reauthorization bill. However, the CMS directive will take effect in August 2008 if Congress cannot get the President to sign a bill that at least places a one-year moratorium on the directive, or the states can get the directive overturned in the courts as New Jersey is trying to do.

New Jersey's current policy to make health coverage available to all uninsured children would likely result in the state enrolling 64,000 more children in FamilyCare within the next five years. But under the CMS directive lowering income eligibility, that number would be only 29,000.

The fiscal impact on the state is equally onerous. New Jersey could lose over $200 million in federal funds at a time when the state is trying to address a significant structural budget deficit.

Every congressional district is at risk of losing millions of federal funds as well as state matching funds. Wealthier districts will most likely be very hard hit because they include a higher proportion of moderate-income children who will be targeted by the new rules and whose families are unlikely to have affordable employer-provided health care or to have the money to pay for coverage on their own.

The Child Health Insurance Misery Index developed for the report shows that the hardest hit congressional districts would be the 11th (Morris County and parts of Essex, Passaic, Somerset and Sussex), 7th (parts of Hunterdon, Middlesex, Somerset and Union) and 5th (Warren and parts of Bergen, Passaic and Sussex). The Index takes into account factors including the percentage reduction in eligible children under the Bush rules and the cost of housing. In terms only of the number of children who would likely be without insurance, the most severely affected are the 9th (parts of Bergen, Hudson and Passaic), 13th (parts of Essex, Hudson, Middlesex and Union) and 8th (parts of Essex and Passaic).

The NJPP report calls for several steps to be taken to ensure quality health coverage is accessible for New Jersey's children:

• Congress should place an immediate moratorium on the CMS directive until March 2009, which is consistent with the SCHIP extension.
• Congress should continue to allow states to expand or maintain eligibility levels higher than 2.5 times the poverty level.
• New Jersey should maintain its commitment to reach as many uninsured children as possible, so all working families have equal access to affordable, quality health coverage for their children.
• Regardless of the final SCHIP policy, the state on its own should attract more low-income children by working with minority community organizations to improve outreach.

The CMS directive undermines New Jersey's policy of making comprehensive health care accessible for all children. Without a partnership with the federal government, the state will not have the resources to achieve this goal.

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