New Jersey has joined seven other states suing the U.S. government over plans to restrict eligibility for the federally subsidized State Children's Health Insurance Program, which could result in denial of insurance coverage to an estimated 10,000 children in the state.
The suit, filed Monday in federal court in Manhattan, charges that the government improperly initiated the change by letter rather than using the administrative rulemaking process.
The other plaintiffs in the suit are Arizona, California, Illinois, Maryland, New Hampshire, New York and Washington.
The SCHIP program, begun in 1997, provides health coverage for children in families unable to afford private insurance if they meet certain criteria. The program covers 6.6 million children nationwide and about 122,525 in New Jersey, where it is called Family Care.
In August, the Centers for Medicare and Medicaid Services, which runs the program, told states they would no longer receive reimbursements for children in families whose income is more than 250 percent above the poverty level.
States had been permitted to extend eligibility to families with somewhat higher incomes through waivers granted by the Centers. In New Jersey, where medical costs are high, families whose income is 350 percent above the federal poverty level are eligible. New York had sought a waiver, unsuccessfully, to admit families who earn 400 percent more than the poverty level.
The Centers' directive in August revoked waivers previously granted, which the suit contends is beyond the Centers' authority under Title XXI of the Social Security Act.
The Centers also announced a "crowd out provision" that would require children to wait a year without coverage before becoming eligible. New Jersey now requires that a child be without coverage for three months.
Congress voted last week to appropriate $35 billion for SCHIP, which would allow the current regulations to stay in place and permit an additional 4 million children nationwide to enroll. The appropriation would be funded by higher taxes on tobacco products.
But President Bush has said he would veto the legislation, arguing that the expansion is a move toward taking people out of the private insurance market and putting them into government-funded plans. Congress' vote is not veto-proof.
Gov. Jon Corzine's administration estimates it would cost the state at least $70 million a year to maintain enrollment at current levels if the proposed regulations are allowed to go into effect.
"SCHIP is an unqualified bipartisan success in New Jersey and in states across the nation, and the Bush administration's determination to pursue a course of action that will harm our children's health is incomprehensible," Corzine said during a press conference at the East Orange Primary Care Center on Monday.
Corzine threatened litigation over the proposed regulations in a Sept. 10 letter to the president. "Although the [proposal] purports to clarify existing requirements, the simple fact is that it sets forth entirely new and unreasonable conditions for the SCHIP program," Corzine wrote. "Not only are these onerous conditions contrary to the existing statutory and regulatory framework, but there can be no doubt that the imposition of these conditions will curtail the ability of New Jersey to design and operate health care programs to best serve our children."
Telephone messages left with the U.S. Department of Health, which oversees the Centers for Medicare and Medicaid Services, were not returned.