Opening Music Plays
HOST: Hi and welcome to the NAIFA advocacy pod cast. I'm Andy Moyer, communication producer for NAIFA. The State Children's Health Insurance Program, or SCHIP, provides federal funds to states on a matching basis to help fund health insurance coverage for uninsured children living in low-income households. SCHIP was set to expire on September 30th of 2007 unless re-authorized by Congress. Today AHIA executive vice president, Diane Boyle joins us to discuss the importance of SCHIP and what it means to NAIFA and AHIA members. Hi Diane, and welcome.
DIANE BOYLE: Thanks Andy.
HOST: First can you address this September 30, 2007 expiration date. Now that the deadline has come and gone has SCHIP expired?
DIANE BOYLE: Yes, Andy, the September 30th expiration date has come and gone. However, Congress has passed a continuing resolution that will allow for SCHIP to continue even though that date has expired. The new expiration date is now November 16th. So if Congress does nothing from now until the 15th the children will still be covered. The new deadline obviously is the 15th and if they don't act by then then SCHIP will indeed expire.
HOST: So why did the President veto the compromise bill?
DIANE BOYLE: Well, as you mentioned there was a compromise bill. The House and the Senate both looked at this issue very closely and the idea of providing coverage to children is a bipartisan effort; it's supported on both sides of the Hill, both in the House and the Senate. And the two bills that were originally passed were very different. There was a compromise bill and the President still felt that that compromise was above what he wanted to spend.
It is funded with a tobacco tax which is something he's also opposed to doing and overall he feels that the compromise bill will still pull children that are above that low income level and pull them off of private insurance. He feels that this is a step towards the government program rather than an incentive for low income individuals to purchase health care coverage.
HOST: Along those same lines I read in some recent articles that some children who are eligible for this program haven't used the funds. So why are they thinking about expanding this if the funds aren't being utilized to their fullest extent?
DIANE BOYLE: That's a good point Andy. One of the concerns at AHIA and NAIFA have with SCHIP in general is that there are a number of children that are eligible for the program now that are not currently enrolled and if we look to expand it we'd rather see efforts focused on getting those eligible for the new program enrolled first before you look at raising the income levels for those children. Also some of the states have used some of the funds for adults rather than just children.
And again it should be, in the association's opinion, focused on those low income children that the program was set up for children not necessarily for adults. And this is true with the President's veto as well, it's not that he was voting for vetoing the program, he's looking at expanding it as well, but he's looking at expanding it to the tune of $11 billion opposed to the $35 billion that was in the compromise bill.
HOST: So how does SCHIP affect NAIFA and AHIA members?
DIANE BOYLE: Well, it's a very good question. As you know the Congress is operating under what's called a PAGO (ph.) rule and for any new incentive or expanded that has to be paid for. So if you're going to expand the SCHIP program beyond where it is now, the Congress has to come up with dollars to fund it. And they can do so in a number of ways. They can either increase taxes, which is what was included in the compromise bill; they were using tobacco tax to fund the legislative. The originally House version had two funding provisions that were very much of concern to our members.
One would have put a $2 per person tax on each health insurance plan. Obviously the cost of insurance is one of the issues that we feel is keeping folks uninsured. We need to address the affordability issue in order to get more people covered and if you're taxing them at a greater rate then that's not going to do anything to address the affordability issue. The other funding mechanism was a provision that would decrease funding to Medicare Advantage plans. And that's obviously something that's of interest to many of our members and not something that we were in favor of.
So as this program evolved why it's extremely important to the NAIFA and AHIA members is that funding mechanism may come back and hurt the industry sales in general. The other issue to look at is if the SCHIP program were expanded well beyond the low income children what you're going to find is that those children that have private insurance now will drop that private insurance and become part of the SCHIP program.
HOST: And are there opportunities for NAIFA and AHIA members in the re-authorization?
DIANE BOYLE: There are. One of the things, you know we talked about PAGO and that you have to find the money for this and if I were a member of Congress and I'm looking to find the funds, you can look at creating new taxes, which is often not welcome with open arms by the constituents or you can look at programs that currently are tax advantaged. And there are a number of our programs that are tax advantaged now.
If you look at just the health insurance, employer provided health care and long term insurance receive $628.5 billion, cafeteria plans is $185.5 billion. So there's significant dollars in our products that are attractive. It posed to raising taxes if you can come to one of these programs and take some of those funding dollars away to pay for a new program, such as SCHIP, that's attractive. And the opportunity for our members is to go back to their members of Congress and explain why these tax advantages exist for life insurance, why the tax advantages exist for employer provided health care and long term insurance.
What are the benefits and re-establish that understanding of our products and why they intended, the tax incentive is needed and should stay in place.
HOST: So Diane now that the House failed to override the President's veto and a new compromise bill has been presented in the House what can we expect to happen with SCHIP?
DIANE BOYLE: Well, you're right Andy on the 25th of October the House of Representatives passed yet another slightly modified version of the compromise bill. It is still $15 billion more than what the President has said that he would like or would be willing to accept. The Senate is expected to vote on the legislation sometime this week. What we'll see is that the President will once again veto the legislation.
The House was short the 290 votes needed to override the veto, but my expectation is that they will go through the process, they will attempt to override the veto and will end up passing a continuing resolution in order to continue the program into 2008. As we said earlier the continuing resolution that's in place now expires on November 16th. In addition to covering the children there are a number of issues that are in play.
You're looking at the political side of things. Why one would ask would the House attempt to override the President's veto if they're short the 290 votes needed to do so? And a lot of that is maneuvering for the elections. We're going to see the Democrats say the Republicans stood in the way, stood behind the President on blocking coverage for children. Some of the Republicans are saying no, that's going to help them in the election because their constituents are going to say no, you were pushing for a more modest SCHIP proposal.
One of the bigger concerns for our members is that when they begin renegotiating, after the continuing resolution expires and they look at this again in 2008, some of those provisions that we talked about earlier, the funding provisions, the $2 tax on each health plan per person could come back into play. The cuts to the Medicare Advantage program could come back into play. So what we're doing on this end is monitoring it very closely to see that once this becomes a live issue again that the advantages that our products now have aren't compromised and that there are no new taxes that are being looked at in order to pay for any new effort that's put forth.
HOST: Now, is there a chance that there could be a change in the level of percentage above poverty level that some children will be eligible or not eligible after this alteration or is that?
DIANE BOYLE: Not with the continuing resolution. What the continuing resolution does is it takes what's in place now, what was originally set to expire September 30th and goes from those provisions, those definitions of what are followed. So any expansion to the program will not happen until the House and the Senate both pass it and the President signs it. So right now we're just looking at a continuation of the program as it was originally set up.
HOST: Diane thank you very much for being on our pod cast here today.
DIANE BOYLE: Thanks Andy, I appreciate the opportunity to share our thoughts.
HOST: NAIFA and AHIA encourage you to learn more about SCHIP and how it will affect your business. For more information on SCHIP log onto AHIA's website at www.ahia.net and look in the Take Notes section.
[This 2007 podcast is a copyrighted production of the National Association of Insurance and Financial Advisors. All rights are reserved.]
Closing Music Plays.
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