Barton's provision would strip $400M earmarked for the program. | JAY WESTCOTT/POLITICO GOP: End CHIP enrollment bonus

House Republicans want to stop rewarding states for finding and enrolling low-income children in Medicaid and the Children’s Health Insurance Program, and public health advocates are livid.

The Republicans say it’s a smart fiscal move that will better protect the program against fraud; their critics say it’s undermining years of progress states have made in identifying and enrolling a hard to serve population.


“The whole purpose of the funds is to make sure that children who are eligible based on state-determined standards have an easier time — rather than a harder time — getting enrolled,” said Ron Pollack, executive director of Families USA.

Energy and Commerce Committee Republicans voted last week to strip about $400 million earmarked for a bonus program created by the 2009 law to extend the Children’s Health Insurance Program. The bonus payments run through 2013.

The provision, sponsored by Rep. Joe Barton (R-Texas) and passed without Democratic support, is part of a $115 billion package of health care savings included in the House’s reconciliation process. The House Budget Committee plans to mark up the reconciliation package on Monday. And although the package won’t make it through the Senate, some of these health cut proposals could resurface this year.

Barton contends that when states loosen enrollment procedures, they remove some of the safeguards that weed out people who want to defraud or game the program. He cited a study that found Medicaid made more than $15 billion in improper payments because of eligibility review errors — though not specifically from this bonus program.

To qualify for the bonus program, states must implement new enrollment policies, such as automatically enrolling children whose parents are on public assistance, waiving asset tests and eliminating face-to-face interviews with applicants.

“By definition, it weakens the enforcement of eligibility of the program,” Barton said. “So in attempting to increase enrollment, the federal government was inviting states to weaken enforcement, weaken eligibility.”

So far, 23 states — 16 of which had increased enrollment by more than 10 percent — have received the additional dollars. The Department of Health and Human Services had paid out about $300 million by the end of last year.

Spencer Harris, a health care policy analyst for the Texas Public Policy Foundation, a think tank that supports limited federal government, said he agrees with Barton but added that the real focus should be on the extra costs states must shoulder when the bonus payments run out and the kids are still on the Medicaid rolls.

“This happens a lot in Medicaid,” he said. “The federal government says, ‘We’ll give you an additional payment or an enhanced [Federal Medical Assistance Percentages] if you just extend your benefits package.’ But it almost always overextends the state in the long term.”

Matt Salo, executive director of the National Association of Medicaid Directors, however, said he sees a broader divide at play.

“In Congress and across the country, there are philosophical differences about whether public programs should be available to everyone with as little effort as possible,” he said. “And there are others who believe they should be made available, but don’t beat down their doors to force it on them.”

It’s a cost states have to weigh, he said.

“You can make something as easy as possible, and more people will do it — and more people will do it inaccurately,” he said. “It’s a balance. It’s a political and philosophical balance on how you want to do this.”

Although the Senate is unlikely to pick up this measure, Pollack said he’s concerned it could reappear when Congress returns after the elections with a full plate of legislation in need of offsets.

“When you start with the House-passed budget and efforts like this, while it’s clear that they’re not going to become law, it’s just part of an opening bell about how the Republicans in the House want to handle a larger effort that will take place some time after the elections,” he said.