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Members of the Health Policy Consensus Group offer the following guidelines to policymakers for consideration during debate over reauthorization of the State Children’s Health Insurance Program (SCHIP). We also offer a brief summary of our larger vision of expanding access to health insurance.

Component #1: Funding for SCHIP should be redeployed to more effectively expand coverage to children who are most in need and give them access to private health insurance.

In order to accomplish this objective, we believe Congress should be guided by the following principles:

• The primary focus of the State Children’s Health Insurance Program should be to cover children in families with incomes at or below 200 percent of poverty. These are children whose families make too much to qualify for Medicaid but who often cannot obtain private health coverage.
• The program’s subsidies should be restructured to encourage the purchase of private health insurance. SCHIP subsidies could be used to allow parents to purchase the health coverage that they believe is best for their children, including adding them to policies that may be offered at their workplaces. SCHIP funds then could be employed to create a bridge to private coverage for children and families.
• The federal-state matching ratio for SCHIP funding should be changed to eliminate the perverse distortions that exist in today’s system. States receive a higher federal matching rate for covering SCHIP recipients (which today include many adults) than they receive for covering children eligible for Medicaid, even though these children are in families with lower incomes.
• SCHIP must not be turned into another entitlement program modeled after Medicaid, with unlimited federal funds matching state spending on benefits. That would add to the taxpayers’ already-overwhelming burden of tens of trillions of dollars in unfunded liabilities. It also would encourage states to use accounting tricks to inappropriately increase federal payments. SCHIP must remain as a capped funding program to the states, and Congress must require states to live within their allocations. The states should, however, be given more flexibility in how they spend both SCHIP and Medicaid funds, as we describe below. . . .

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Joseph R. Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at AEI. John E. Calfee is a resident scholar at AEI. Robert B. Helms is a resident scholar at AEI. They, along with the other signatories of this policy fact sheet, are members of the Health Policy Consensus Group.