The President's SCHIP scheme, and all the heated rhetoric from House and Senate Republicans, is a blindingly hypocritical exercise in political pageantry. The Republican proposals don't merely destroy the flexibility that has been essential to the program's success; they destroy the flexibility that the administration has been praising for more than six years.

From its first year, the Bush administration aggressively expanded, without reservation, the waiver system that allowed states to customize their SCHIP programs to local needs. The administration regularly touted the system's flexibility as the key to its efficiency and a model for other federal health programs. Now the Republicans are attacking SCHIP for that same flexibility.

1. In August, 2001, the President and Secretary Tommy Thompson began the "Health Insurance Flexibility and Accountability Initiative"

Tommy Thompson, "New Flexibility for State Medicaid Plans," Speech at the National Governors Association Annual Meeting August 3, 2001.

So, working with the President, we've developed a new program that will provide better health care for the millions of Americans who lack medical insurance or access to affordable care. The President announced the program a short time ago on his weekly nationwide radio address, and I'm here today to outline to you how it will work.

It's called the Health Insurance Flexibility and Accountability Initiative. This new model waiver program makes it faster, easier, and simpler for states to expand access to health insurance to low-income citizens through Medicaid and through SCHIP demonstrations.

The program is budget neutral, and it's a partnership between Washington and the states. It's not top- down. We want to work with you, in partnership, to expand health insurance to the most vulnerable and needy members of our society, most especially, to those whose incomes are under 200 percent of the poverty level.

You know what works best in your home states. You know the specific needs of your people. We've designed the model waiver program to give you the tools and the flexibility you need to advance benefits and quality care to those back home who need it the most.

"HHS to Give States New Options for Expanding Health Coverage," Press Release August 4, 2001.

As former governors, President Bush and Secretary Thompson have made it an administration priority to make it simpler and easier for governors to submit Medicaid and SCHIP waiver requests and to have those requests considered promptly. This initiative represents the latest step to promote state innovations to strengthen and improve these programs.

The new approach will encourage states to design benefit packages that will best meet the needs of their residents. For example, a state could make different benefits available to various populations, enabling the states to expand health care coverage to more individuals and families who may not be eligible for Medicaid or SCHIP under current law.

This initiative will make it easier for states to operate demonstration projects that are designed to extend health care coverage to currently uninsured residents. As in the past, these projects must be budget neutral, meaning that states would have access to the same amount of federal funding under the demonstration than they would have received under current law.

"State Innovation in Medicaid and SCHIP Since Jan. 22 Expands Access to Health Care Coverage for 800,000 Americans," Press Release August 4, 2001.

As former governors, President Bush and HHS Secretary Tommy G. Thompson recognize that state innovations are critical to reducing the number of Americans without health insurance. In the past, red tape and a slow federal review process delayed or stopped many governors from implementing new approaches to expanding access to health insurance coverage through the Medicaid and State Children's Health Insurance Program (SCHIP).

To reward and encourage state innovation and expand health care coverage, Secretary Thompson launched a major effort at the Centers for Medicare & Medicaid Services (CMS) to speed up the review process and resolve a backlog of pending requests from states for Medicaid and SCHIP state plan amendments and waivers.

2. Continued Touting of SCHIP's Flexibility

"HHS in 2001: A Year of Achievements," Press Release December 31, 2001

HHS issued guidance aimed at providing health coverage to more children in the U.S. The rule gives states increased flexibility under SCHIP to provide coverage and enables states to use streamlined enrollment procedures. Under this new model waiver process, CMS expects millions more children to gain access to needed health services. The SCHIP program covers more than 3 million children who would otherwise not have health insurance. The law pledges $40 billion in federal funds over 10 years to help states find, enroll and insure children whose families earn too much to be eligible for traditional Medicaid, but not enough to afford private insurance plans. The changes promote greater state flexibility in order to encourage states to develop approaches similar to those used by the private insurance industry that address the needs of children and families in their states.

Tommy Thompson, "President's Plan To Assist The Uninsured," Speech at Unity Cardozo Health Center January 30, 2002

Finally, let me talk to you about the subject of waivers. Waivers allow state and local government the flexibility they need to address local problems in a local manner.

When I was governor of Wisconsin, I implemented a waiver for health insurance through our Badgercare program. And I can assure you: it works. Badgercare proved to be more popular than we ever imagined, and tens of thousands of Wisconsinites now have health insurance thanks to this groundbreaking program.

It is a program that has been duplicated in other states, and we are committed to continuing to work with state and local government so they can address their problems in ways that are best for them. New Yorkers should decide what's best for New York, as Wisconsinites were able to decide what was best for Wisconsin.

In particular, waivers give states the flexibility to strengthen their medicaid and schip programs. Extending the availability of state children's health insurance program, or SCHIP, funds is a way to give parents health insurance.

This will make it easier for moms and dads to care for their kids, since they themselves will have access to the care they need to stay healthy.

"SCHIP Covers 4.6 Million Children in 2001; 38 Percent Increase Reflects Increased Flexibility, Expanded Outreach To Help Uninsured," Press Release February 6, 2002

"Working with governors, we've made tremendous progress in our efforts to reach millions of children with needed health coverage under SCHIP," Secretary Thompson said. "Since President Bush took office, we have given states more flexibility and freedom to develop SCHIP plans that best meet the needs of their residents. The numbers released today show our strategy is working for children and families across America."

"HHS Report Shows More American Children With Health Coverage; Progress Reflects Success of State Children's Health Insurance Program," Press Release July 15, 2002

"This report shows that governors have turned SCHIP into a genuine success story, with healthier children all across America. Still, we know we must do more," Secretary Thompson said. "Since President Bush took office, we have given governors more flexibility to use SCHIP to expand coverage in their states. We've also asked Congress to give states more time to use unspent SCHIP funds so we can build on our successes in getting children health coverage."

Mark McClellan, "Testimony on State Children's Health Insurance Program before the Senate Finance Subcommittee on Health Care July 25, 2006.

To provide States with the ability to structure their SCHIP plans to improve coverage and the quality of services available to beneficiaries, the Secretary has the authority to waive aspects of the Federal statute and regulations governing SCHIP. This allows States to amend their programs to increase health insurance coverage and encourage innovation. Using section 1115 of the Social Security Act, States can more effectively tailor their programs to meet local needs and can experiment with new approaches to providing health care services. These demonstrations have been used to provide health insurance to uninsured children, parents, caretaker guardians, and pregnant women. For example, CMS recently extended a demonstration in Minnesota that allows the State to use SCHIP funds to provide coverage to those with incomes from 100 to 200 percent of FPL who are parents and relative caretakers of Medicaid- and SCHIP-eligible children. Extending coverage to parents and caretaker relatives not only serves to cover additional uninsured individuals, but it may also increase the likelihood that they will take the steps necessary to enroll their children. Extending coverage to parents and caretakers may also increase the likelihood that their children remain enrolled in SCHIP. For example, in New Jersey, which covers parents through a section 1115 demonstration, the State found that having one parent enrolled increased the likelihood that a child remains enrolled.

"2008 Budget in Brief; Advancing the Health, Safety, and Well-Being of Our People."

The Administration has promoted the Health Insurance Flexibility and Accountability (HIFA) waiver, one type of section 1115 waiver, for States to develop comprehensive insurance coverage for individuals at twice the FPL and below, using SCHIP and Medicaid funds. The Administration places a particular emphasis on broad, statewide approaches that maximize both private health insurance coverage and employer sponsored insurance. As of January 2007, CMS has approved 15 HIFA demonstration waivers that could expand coverage to nearly one million people.

3. SCHIP as a model for Medicaid

"Bush Administration Will Propose Innovative Improvements in States' Health Coverage for Low-Income American; Would Give States Extra Immediate Funding Plus SCHIP-type Flexibility," Press Release January 31, 2003

"We need to stop tying our own hands in the Medicaid program, letting old rules prevent us from taking actions that would work better for everyone," Secretary Thompson said. "We need to be creative. We could stretch our dollars much further and serve those who need our help better. The states have shown they can do it, and we need to take what we've learned and move forward."

"Statement by The Honorable Michael O. Leavitt on Budget Hearing FY06 before the Committee on Finance, United States Senate," February 16, 2005:

The Department proposes to make sure tax dollars are used more efficiently by building on the success of the State Children's Health Insurance Program (SCHIP) and waiver programs that allow states the flexibility to construct targeted benefit packages, coordinate with private insurance, and extend coverage to uninsured individuals and families not typically covered by Medicaid.

The President proposes to give states more flexibility in the Medicaid program in order to enable states to increase coverage using the same Federal dollars. The tools we have at our disposal today were not available when Medicaid was created. States largely agree that current Medicaid rules and regulations are barriers to effective and efficient management. Over the past ten years, Medicaid spending doubled. At its current rate of growth (7.4%), the Federal share of Medicaid spending would double again in another ten years.

The growth in Medicaid spending is unsustainable. I intend to enter into a serious discussion with Governors and Congress to decide the best way to provide states the flexibility they need to better meet the health care needs of their citizens.

Mike Leavitt, "HHS Secretary Mike Leavitt answers questions at the HHS FY 2006 Budget roll out," Press Conference February 7, 2005

Like community health centers, Medicaid represents American compassion in action. This critical program provides health insurance for more than 46 million Americans. But it is not reaching its potential. It is rigidly inflexible and inefficient. And it is not financially sustainable. Over the past ten years, Medicaid spending doubled. And this year, for the first time ever, states spent more on Medicaid than they spent on education.

The President is committed to resolving the growing challenges facing Medicaid. His approach will build upon the success of the SCHIP and waiver programs to allow states the flexibility to construct targeted benefit packages, coordinate with private insurance, and extend coverage to higher income and non-traditional Medicaid populations.

He would also extend SCHIP and Medicaid benefits to cover uninsured individuals and expand benefits to those already on Medicaid. These extensions include Transitional Medical Assistance, Medicaid premium access, a new Cover the Children program, and others. To support all of these programs, we expect to spend $16 billion over ten years.