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Obama Signs CHIP Bill; Medicaid Expansion Pending Recovery Bill

On February 4, 2009, President Obama signed an expansion of the Children’s Health Insurance Program Reauthorization Act of 2009 (H.R. 2) into law. Key provisions of the legislation include allowing states to cover children in families whose income is up to 300% above the federal poverty level (FPL) and the creation of a contingency fund for states that cannot provide the funds for newly eligible children. The bill will provide coverage for approximately 4 million additional children who are currently uninsured, bringing the total to 11 million children. Funding for the program expansion, estimated at $33 billion,  will come primarily from an increase in the federal tobacco tax, including a 61-cent per pack increase in cigarette taxes.

Congress is also working on an expansion of Medicaid through H.R. 1, the American Recovery and Reinvestment Act of 2009, an  economic recovery package  referred to as the stimulus plan. Versions of the legislation have already passed in the House and Senate, and both include a significant increase to the funds given by the federal government to the states for Medicaid. This increase should avert at least some of the Medicaid cuts currently planned by states with a budget deficit.

However, some significant differences between the House and Senate versions of the legislation still need to be worked out. For example, both versions of the legislation offer subsidies for Consolidated Omnibus Budget Reconciliation Act (COBRA) premiums to allow newly unemployed individuals to continue their health insurance. However, the House bill covers 65% of the premium during the first 12 months and provides additional funds to make Medicaid temporarily available to those whose COBRA has expired. The Senate version covers only 50% of the premium and does not include the Medicaid provision.

Congress is working feverishly to reconcile the differences in the two bills. It is expected that a final version of the legislation will be passed and signed into law by next week.


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