Governor Perdue Testifies Before U.S. Senate on PeachCare
| Thursday, February 1, 2007 |
Contact: Office of Communications 404-651-7774
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Likens the program to a marriage that must be saved
WASHINGTON, DC – Governor Sonny Perdue testified today before the U.S. Senate Committee on Finance about the State Children's Health Insurance Program (S-CHIP), called PeachCare in Georgia.
"Georgia's successful implementation of S-CHIP has left us, unfortunately, with a $131 million federal funding shortfall and put the program in jeopardy," Governor Perdue said. "Without additional federal matching funds, the PeachCare program will be out of federal funds by March – just a few weeks from now. Georgia stands ready to meet its obligation to this program, but we simply cannot go it alone."
Governor Perdue added that children must be the priority population for S-CHIP. He expressed concern that some states are covering adults, a population Congress never intended to cover when it created the program, while other states, like Georgia, do not receive the funds needed to serve the target population, children.
"I like to think of this program as a marriage – Georgia engaged quickly, in fact we got engaged so quickly, we got married to our federal partners," Governor Perdue said. "Our faithful union produced over 270,000 children. Now we're concerned that we're talking about divorce, and we don't know what will happen to the healthcare of those children."
U.S. Senate Finance Committee Chairman Max Baucus of Montana replied to Governor Perdue's marriage analogy by saying, "Thank you, Governor – we're going to work to help make sure this marriage works."
The Governor also spoke about the formula flaw that punishes Georgia for effectively implementing PeachCare. The funding formula takes into account the number of low-income children and the number of uninsured low-income children. Because Georgia has successfully implemented the S-CHIP program, the number of uninsured children has decreased, which results in a decrease in funding while the needs remain the same.
In his testimony, Governor Perdue also stressed the importance of Congress allowing states to maintain flexibility in their implementation of S-CHIP. This flexibility allows governors to increase program efficiencies.
Governor Perdue appeared before the committee representing the Southern Governors' Association, which he chaired in 2005. More information about SGA can be found at http://www.southerngovernors.org .
A copy of Governor Perdue's testimony follows:
Testimony of Governor Sonny Perdue to the U.S. Senate Committee on Finance regarding the S-CHIP program, Feb. 1, 2007:
Good morning, Mr. Chairman, and members of the Committee. Thank you for the opportunity to come before you today as you consider the reauthorization of S-CHIP, the State Children's Health Insurance Program it is an honor to provide this perspective as a Governor.
I am pleased to be here today representing the 16 states and two territories of the Southern Governors' Association. As you may know, the South has been especially successful in implementing S-CHIP – a program Congress created 10 years ago to give children the same healthy start in life that we all desire for our own children.
Georgia – which is the ninth-largest state in the Union – has the fourth largest enrolled population in the country. In fact, more than 41 percent of the S-CHIP population is enrolled in southern states.
Now, in our jobs we're usually presented with ideas in terms of their big-picture impact –the argument that nationwide, there are more than 6 million kids enrolled in S-CHIP. In Georgia alone, we have more than 270,000 children. These are large, impressive numbers, but we often get lost in the big picture – forgetting about the human impact.
Ladies and gentlemen, these are children… they are the Joe Bedfords and his family, his siblings… and, they need our help. These are mostly families, moms and dads and many times single mothers, with two children, with household incomes in Georgia of just slightly more than $26,000 annually. These families are not on welfare – 93% of these parents go to work everyday.
They simply want for their children what we all want for our children – to have an annual check-up, to get basic immunizations, to get regular screenings. They want to be able to get a cough treated before it turns into pneumonia – they want to catch asthma before it becomes a hospital stay. The families on S-CHIP are working for a small income, and they need our help in keeping their children healthy.
Without question, states have made dramatic progress in reducing the number of uninsured low-income children through this wonderful program. Governors look to your reauthorization of S-CHIP as assurance that we will continue in our partnership to provide a safety net for our children.
Reauthorization gives Congress the opportunity to evaluate the current program and refocus on our common goals. As Governors, we are responsible for achieving the goals set forth in the program. In that role, we have learned some lessons and established some principles that I'd like to pass along to you as you consider the future direction of the program.
Now, I want you to keep in mind that today I am representing 16 states. And, so you can imagine, these priorities must be pretty important for over a third of the states in this union to come to a consensus.
The key principle that we agree on is that children should be the priority population for S-CHIP, as the name implies. This means that our resources must be focused first on children. This is not the case in every state now, as you know.
Some states have expanded their programs to include health insurance coverage for pregnant women, adults with children and, in some states, even childless adults. The problem here is that these states are paying the same federal match rate as states like Georgia, who are struggling just to cover our uninsured children.
As Governor of a state with a constitutional requirement for a balanced budget, I recognize that we simply don't have unlimited funds for S-CHIP. We are going to meet our state's obligations for S-CHIP.
We are asking you, our Federal partners, to join us in that commitment. The hard fact is that if you don't, 15 states – including Mr. Kerry's State of Massachusetts, Mr. Lott's State of Mississippi, Mr. Grassley's State of Iowa, and Mrs. Snowe's State of Maine are going to run out of federal funds this year, and very soon.
If that happens, we won't be able to cover even our low income, eligible children, while other states have so much excess funding that they will be covering populations S-CHIP never intended to cover.
This leads me to important lessons we learned over the last ten years of implementing S-CHIP. The Southern states have run into two main problems in the funding formulas: one is "State Cost Factor" and the second is the calculation for "Number of Children."
The "State Cost Factor" falsely equates wages in the health services industry to health care costs. But there's not a real correlation between these two measures – this factor just ends up reducing funding to states with low wages. This works directly against the core mission of directing S-CHIP funds to low-income uninsured children.
The "Number of Children" factor calculation is equally flawed. Today, for example, Georgia insures over 70,000 more children than the formula says should even be eligible in our state. And in fact, we believe we have another 100,000 children that are currently eligible for the program now. There is a gross mismatch between reality and what the formula allows.
Allotments are based on data that is sometimes three or four years old. And in a state like Georgia, the fourth-fastest growing state in the country, this kind of lag has serious, serious consequences.
The method of calculating the "Number of Children" factor has proven ineffective in Southern states – this has resulted in the most severe funding shortfalls in the country. This number counts half of our state's low-income children and adds to it half of the state's uninsured low-income children.
This means the better you are at implementing S-CHIP... the fewer children are uninsured … and the less funding you receive for them. If a state's S-CHIP program is 100 percent successful, then the next year's funding will be drastically cut because no children would be uninsured. This just doesn't make good sense. How can we keep these children insured if we are penalized for insuring them?
The most egregious examples of these shortfalls have been in North Carolina and in Georgia. North Carolina was successful at implementing S-CHIP – successful enough that their funding became insufficient to cover the number of enrolled children. North Carolina was forced to shift infants and toddlers to Medicaid, reducing S-CHIP payments to providers and limit enrollment growth.
Georgia's experience with our S-CHIP program, called PeachCare, further highlights the challenges that must be addressed in reauthorization. As I indicated, Georgia has the fourth largest enrollment in the country – we have spent over the period $432 million in state funds and are now covering more than 270,000 children in PeachCare. Georgians trust and value this program. Monthly enrollment has increased 19% in over two years. And we are committed to keeping these kids covered.
Let me tell you, we run a tight ship in Georgia thanks to the flexibility allowed under this program. We only cover children. 95 percent of our Peaare population make less than 200 percent of the Federal Poverty Level. We employ a sliding scale premium, so that families that make more pay more. We don't guarantee continuous eligibility. Families must report changes in income or status, and we verify that.
Further, families have a two week grace period to pay their premiums – our grace period is half the length of other states. Families who don't pay on time, just like with regular insurance programs, are locked out of the program for a period of time. We make it clear that this is not a hand-out – if Georgians don't demonstrate personal and financial responsibility, their children do not benefit from this program.
This emphasis on personal responsibility, I believe, has contributed to our success. Flexibility is what has allowed states to continue covering these children when they would have been dropped from other programs during difficult budget times. In fact, when I became Governor four years ago, we faced two years of back to back revenue decreases, we had to cut out a lot of things but we remained steadfast in our funding share of S-CHIP. S-CHIP's flexibility is a critical element that should be maintained in reauthorization.
In closing though I have to tell you that Georgia's successful implementation of S-CHIP has left us unfortunately with a $131 million federal funding shortfall and put the program in jeopardy. Without additional federal matching funds, the PeachCare program will be out of Federal funds by March – just a few weeks from now. Georgia stands ready to meet its obligation to this program but we simply cannot go it alone.
I like to think of this program as a marriage – Georgia engaged quickly, in fact we got engaged so quickly, we got married to our federal partners. Our faithful union produced over 270,000 children. Now we're concerned that we're talking about divorce and we don't know what will happen to the healthcare of those children. In fact as you know in federal law and state law, we believe we are the custodial parents and usually the healthcare responsibility falls to that non-custodial parent.
America is a compassionate nation, and we must continue to take care of our most vulnerable citizens. You heard from an S-CHIP family, the Bedfords, just a few minutes ago. It's important to realize the individual, human impact of this program. Remember that we're not just talking about numbers, we're talking about families and children.
As we focus on new ways to reach the nation's uninsured children, I ask each of you, distinguished members of Congress, to preserve and secure the State Children's Heath Insurance Program – a program that is already meeting their needs.
We're all familiar with the story of the Good Samaritan, where two pious men walk by, turn their hearts and heads away, and walked away. While the Samaritan reached down, took that person to the innkeeper, what today would be known as a hospital. Gave the innkeeper the money and said take care of this man. And when I return, if it costs more, I'll pay you more then. Why can't we all be good Samaritans?
I hope that you find these principles and lessons learned to be helpful. On behalf of southern governors, we hope you will use us as a resource as you consider reauthorization and the future of our children. Thank you.