This vote was on an amendment by Jon Kyl, R-Ariz., that would have required each state to submit a detailed plan describing how it will limit families with higher income from “crowding out” from the State Children’s Health Insurance Program (SCHIP) families with lower income.  This is a phenomenon Kyl said he was concerned about happening as families drop their higher-cost private health insurance in favor of SCHIP.  The amendment also would have required the Health and Human Services Department to ensure that states that cover higher-income populations also cover a certain quota of low-income children, or risk losing its funding.  The amendment was offered to a bill that expands and reauthorizes SCHIP, which offers health insurance for children of families who are too poor to purchase private health insurance, but not poor enough to qualify for Medicaid.

Kyl said some estimates suggest that 2.4 million people might leave their private health insurance plans because “obviously, the businesses that are paying for that today would not have to pay for it if their employees go to this Government-run program. It, obviously, makes sense for them, therefore, to drop the coverage.”

“So I think my colleagues and I have two choices here, either a budget buster that does not protect SCHIP coverage for low-income children, represents an open-ended burden on taxpayers, and takes a significant step toward Government-run health care, or a fiscally responsible SCHIP reauthorization that preserves coverage for low-income children and is fully offset without a tax increase, and minimizes the effect on employer-sponsored health coverage,” Kyl said.

Max Baucus, D-Mont., said statistics show that about one-third of the new children who enroll in SCHIP had private health insurance; the other two-thirds had no insurance whatsoever.

“The real answer to the dilemma is to make sure that the people in our country have good private health insurance at premiums they can afford, benefits that make sense. The Children’s Health Insurance Program has good benefits. So, clearly, a mother whose income is quite low, not quite as low as Medicaid levels, but quite low, will probably want her child to enroll in the Children’s Health Insurance Program,” Baucus said.  “But, more importantly, as we worry about crowd out, I do not think it is that much of a worry, frankly. We should keep our eye on the ball, which is how do we get more low-income kids insured. That is what the underlying bill does.”

The amendment was rejected by a vote of 42-56.  Every Republican present voted for the amendment.  All but one Democrat present voted against the amendment.  The end result is that the measure went forward without language that would have required states to detail how they will prevent large-scale “crowding out.”