Children's Health: Crowd-Out
Crowd-Out Directive Overturned
On February 4, 2009, President Obama issued a memorandum officially instructing the incoming Secretary of Health and Human Services (HHS) to overturn the previous Administration's August 17th Directive (as well as the subsequent letter that the previous Administration issued on May 8, 2008, relating to the Directive). This simple administrative action will protect countless low-income children from losing health coverage in the future due to the extreme and unnecessary restrictions the Directive imposed on children's eligibility for public health coverage programs.
The Latest Developments Surrounding the August 17 Letter from CMS
On the evening of Friday August 17, 2007, long after most CHIP directors had gone home for the weekend, CMS sent a “Dear State Health Official” letter "clarifying" the provisions in the current CHIP regulations that states must follow to minimize crowd-out (substitution of public coverage for private coverage).
The new policies that the Administration seeks to impose on states are outrageous and effectively set a new income limit for CHIP at 250 percent of poverty. If implemented, these policies will increase the number of uninsured children and stymie states' efforts to expand children's coverage.
Families USA has joined scores of others—including governors, members of Congress, state Medicaid and CHIP directors, and state advocates—in decrying the directive (see our press release). For more information, see our analysis of the guidance and our issue brief on the Administration's attacks on children's coverage.
Families USA will continue to monitor this issue and post relevant information on this page.
News:
- California Will Not Comply with Directive California officials stated in a letter to CMS that they will not seek to comply with the directive because "key requirements articulated in the directive are inconsistent with current California law." (August 12, 2008)
- Rhode Island First State to Comply with Directive Rhode Island became the first state to be officially declared by CMS as in compliance with the directive, although it was able to negotiate with CMS on certain things, such as the 12-month waiting period. (May 9, 2008)
- New York's 2008-09 Budget Includes Funding to Cover All Children (April 9, 2008)
- Health Policy Scholars File Amicus Brief for New Jersey Suit (April 7, 2008)
- State and National Advocates File First Lawsuit on Behalf of Children Affected by the Directive (January 17, 2008)
- Governor Spitzer Announces Multi-State, Bipartisan Lawsuit Challenging CMS Crowd-Out Directive (October 1, 2007)
- Governor Corzine (NJ) Announces Lawsuit Challenging CMS Crowd-Out Directive (October 1, 2007)
- CHIP reauthorization compromise bill includes language to replace crowd-out directive with federal studies on crowd-out in CHIP and less onerous crowd-out prevention requirements for states. See Families USA's side-by-side of the CHIP reauthorization bills.
Resources:
- Detour on the Road to Kids Coverage: Administration Creates Roadblocks, So States Seek Alternative Routes examines the current state of children's coverage and finds that, while the Administration's new directive has created roadblocks that stymied state efforts to expand eligibility, it has not stopped states from making progress. (July 2008)
- CMS Clarification Letter This letter clarifies the Administration's interpretation of several parts of the August 17th directive, but it does not change or soften any of the requirements. It also confirms that CMS will negotiate compliance with the directive on a state-by-state basis. (May 8, 2008)
- 9 Million Children and Counting: The Administration's Attack on Health Coverage for America's Children examines how the President's two vetoes of CHIP reauthorization legislation, combined with the August 2007 CMS directive, will jeopardize health care for thousands of children. And the President's proposed fiscal year 2009 budget would hurt children's coverage even more. (February 2008)
- Two new analyses from the Congressional Research Service and the Government Accountability Office both conclude that the August 17 directive is a rule and that, as such, the Congressional Review Act applies to it. This means that, technically, CMS must submit the directive to Congress and to the Comptroller General before it can take effect.
- CMS Letter Denying Ohio's Medicaid Expansion to 300 Percent of Poverty (December 20, 2007)
- Moving Backward: Status Report on the Impact of the August 17 SCHIP Directive to Impose New Limits on States' Ability to Cover Uninsured Children (Georgetown Center for Children and Families, December 2007)
- CMS Letter Denying New York’s CHIP Expansion to 400 Percent of Poverty (September 7, 2007)
- Medicaid and SCHIP Participation Rates: Implications for New CMS Directive (Urban Institute, September 2007)
Letters to CMS, the President, and Congress from:
