Children's health bill could pose challenges for employers
By Rob Smith, Ceridian manager of Government Relations
Any time our nation has a two-term president and a Congress ruled by the opposite party, the legislative process is bound to get ugly. And this includes the debate raging between the Democratic Congress and President Bush over reauthorization of the State Children's Health Insurance Program (SCHIP). Created in 1997, SCHIP helps states provide health coverage for over 4 million children. By law, Congress is required to reauthorize funding for this program every 10 years, which is up in 2007. Under SCHIP, the states receive federal grants to set up programs to provide health insurance for children whose families make too much to qualify for Medicaid, but whose incomes are too low to afford health insurance. Although there are some differences among the state programs. In general, SCHIP coverage is available for children in families who make up to 200 percent of the federal poverty level -- $41,300 for a family of four. Congress wants to expand SCHIP eligibility to cover families up to 300 percent of the federal poverty level -- $61,950 for a family of four -- and increase funding for the program by about $35 billion over the next five years -- a cost that would largely be offset by an increase in the tobacco tax. The House and Senate passed a bill in May to make these changes, but the president vetoed it, stating that the program would cost too much and that expanding government coverage would encourage individuals to give up their private health insurance. Congress passed another version of the bill on a largely bi-partisan basis in early November, but the president has indicated that he will veto this legislation as well. The bill's supporters contend that the president and other opponents don't care about children's health care, and President Bush claims that Democrats are trying to use SCHIP to bring about socialized medical care. On the surface, this debate may seem to be the common Washington squabbling, but lost in the rhetoric are some fairly serious new reporting requirements and compliance challenges employers would face if the bill becomes law. Employer plan reporting and noticesEmployers in states that offer premium sharing to SCHIP beneficiaries would be especially affected by this legislation. SCHIP premium assistance programs provide beneficiaries with subsidies to help them purchase private coverage. These arrangements are increasing in popularity as health care costs continue to rise, and they are aimed at a growing portion of the uninsured who are unable to afford the employer-sponsored coverage they are offered. Premium assistance arrangements can be cost efficient because they take advantage of the group rates businesses are able to negotiate. They also utilize the contributions employers make toward employees' health coverage. Using the health insurance marketplace to deliver assistance to these families is also more agreeable to those who fear that expanding government health programs will erode private coverage. Fifteen states currently offer SCHIP premium assistance. Although this is a fairly small number, more states would be sure to consider these plans under several administrative changes and financial incentives the SCHIP bill would provide. Although premium assistance programs can be beneficial to SCHIP enrollees, it's difficult for states to assess how cost effective the programs are. In general, states are barred from requiring employers to share health plan cost and coverage data with state SCHIP agencies. States can ask employers to submit this information voluntarily, but many employers are wary of involvement with a government program and choose not to respond. If the new SCHIP bill becomes law, employers in states that offer premium assistance would be required to report plan cost, eligibility and coverage information. The legislation does not make it clear how extensive this disclosure would have to be, so these requirements most likely would vary from state to state. In addition, states could require employers to inform employees of the availability of state health insurance programs and premium assistance. This notice would have to be provided to all employees, not just those who are eligible for assistance, and employers with workers who live in other states would be required to comply with the requirements of each state. Employers would also be required to establish a special enrollment period to allow employees to enroll in an employer health plan once they become eligible for premium assistance. Employees would have 60 days from the date of eligibility to join a plan. FMLA expansion
The SCHIP bill also contains what would be a significant expansion of the Federal Medical Leave Act (FMLA). If enacted, the bill would amend the FMLA to require employers to provide up to 26 weeks of leave for an employee to care for a family member injured in the armed services. And employers could not deny employees who qualify for this extended leave promotions or benefits for one year. Together, despite their obvious merits, these amendments would add to the already confusing and murky world of FMLA absence management. SCHIP's ship sinking for 2007?
SCHIP funding runs out on December 16, and the clock is ticking quickly with Congress's weeklong Thanksgiving recess and a number of appropriations measures that will use up the bulk of time left in the 2007 session. If Congress is unable to reach an agreement with the president or rally the two-thirds majority vote necessary to override his veto, lawmakers most likely will pass a measure to extend funding for the current SCHIP program into next year and resume the debate in 2008. Although significant changes to the current SCHIP legislation are anticipated, the employer reporting requirements and the FMLA amendments are expected to remain in the final bill. Ceridian will continue to closely monitor SCHIP's progress and its potential impact on employers.
