Through SCHIP, the federal government and the states split the cost of insuring children whose families are near the poverty line. It has two fundamental problems: The income requirements for eligibility are set too low in many states, meaning families can't apply even though they can't afford to insure their children on their own, and many eligible families are unaware that the program exists. In the guise of solving the second problem, Bush is attempting to worsen the first.
Recognizing that even his threatened veto might not stop an expansion of the program because the Senate bill passed with a bipartisan, veto-proof majority, Bush is trying to sidestep Congress entirely. In the dead of recess Friday night, the Department of Health and Human Services sent a letter to state health officials to "clarify" existing policy. Among other things, it forbids states from loosening income restrictions unless they can demonstrate that they have already enrolled nearly all the children who are currently eligible.
California's program covers children in families with incomes up to 250% of the federal poverty level, which is $20,650 for a family of four, and it's seeking a jump to 300%. Under the clarified policy, it will be unable to do so until it signs up 95% of all eligible children. No state has been able to achieve close to that kind of coverage.
Bush fears that if higher-income families become eligible for government health coverage, it will simply encourage those who could afford private policies to drop them. There's some truth to that argument, but it ignores the plight of families in high cost-of-living states such as California, where health insurance is often beyond the reach even of those well above the poverty level. When the House and Senate reconcile their SCHIP bills, they should legislate the Bush administration's clarifications into the trash bin.