State to sue feds over children's health insurance

OLYMPIA — Washington and at least three other states will sue the Bush administration over restrictions it has imposed on state efforts to expand children's health coverage, Gov. Christine Gregoire announced Monday.

Gregoire said a lawsuit to block the new restrictions — which she called "draconian" — will likely be filed within the next week in federal court in New York, one of the states joining the suit. The two others are Maryland and Illinois.

So far, all four governors who have signed onto the lawsuit are Democrats. Gregoire said she expects other states to join.

New Jersey filed a similar lawsuit on Monday.

"I'm not one who believes in a lot of lawsuits," Gregoire said. But, she added, "I think the [Bush administration] policy is just dead wrong."

The Bush administration is worried that, as states expand government-funded coverage, some families will opt to drop affordable private insurance and enroll their kids in less expensive government-subsidized care.

Washington has long been at the forefront of efforts to expand health coverage under Medicaid, a joint state-federal program that provides health-care coverage for poor children, elderly and disabled people.

Earlier this year, for instance, Gregoire and the Democrat-controlled Legislature set a goal of providing coverage to all children by 2010.

As part of that, they approved legislation to dramatically expand Washington's participation in the State Children's Health Insurance Program (SCHIP).

The federal program was created in 1997 to help states cover children whose families earn too much to qualify for standard Medicaid but who can't afford private insurance. The states and federal government share the cost of SCHIP.

Washington presently covers about 555,000 children under Medicaid, including SCHIP. An estimated 73,000 other kids are uninsured.

Under the legislation approved this year, starting in 2009, Washington would offer coverage to children in families with annual incomes between 250 and 300 percent of the federal poverty level — about $52,000 to $62,000 for a family of four.

State officials estimate that change would provide coverage to about 8,100 more children.

About 20 states have adopted or are considering similar expansions.

But in August, the federal Centers for Medicare and Medicaid Services announced tough new restrictions on those expansion efforts.

Under the restrictions, before states can start enrolling kids above 250 percent of the poverty level, they must make sure they are covering at least 95 percent of kids at or below 200 percent of the poverty level.

Gregoire said no state has been able to reach that mark. She said Washington has one of the nation's highest coverage rates, at about 91 percent.

"We just do not believe that is achievable and in fact was put in place to guarantee that we couldn't go above 250 percent of poverty," she said.

The restrictions also require new enrollees above 250 percent of the poverty level to go a year without insurance before they could enroll in SCHIP.

Rep. Doc Hastings, R-Pasco, opposed a federal bill that would expand SCHIP and nullify the new restrictions.

"We should first help the poorest kids we promised to 10 years ago, not expand the program to the point that families ... switch from private insurance to taxpayer-funded health care," Hastings said last week.

"Rather than making certain the poorest children get care, Democrats are pursuing a Canadian-style, government-run health-care system," he added.

Congress approved the $35 billion SCHIP expansion last week. But President Bush has vowed to veto the measure and supporters don't appear to have enough votes to override the president.

"We have to turn to the courts," Gregoire said.

The lawsuit will challenge the new rules on the grounds they conflict with the current SCHIP statute and were issued without public comment as required by law, New York Gov. Eliot Spitzer said.

Jeff Nelligan, spokesman for the Centers for Medicare and Medicaid Services, defended the agency's new rules and predicted they will be upheld in court.

"Our chief goal with SCHIP is to ensure that the poorest kids and those with no health insurance are placed at the front of the line," he said.

Information from Reuters and Bloomberg News is included in this story. Ralph Thomas: 360-943-9882 or rthomas@seattletimes.com