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Out of Touch: A Status Report on CMS's August 17th Directive

On August 17, 2007, the Centers for Medicare and Medicaid Services (CMS) sent a letter to state health officials sharply restricting the ability of states to cover uninsured children through the State Children’s Health Insurance Program (SCHIP). The policy, known as the “August 17th directive,” affects states’ ability to cover children with family income above 250 percent of the federal poverty level (FPL), the equivalent of $44,000 annually for a family of three. In short order, the policy was criticized by 30 Governors and numerous members of Congress and was the subject of lawsuits brought by affected states and families. It was issued just as a number of states had enacted expansions in SCHIP coverage over 250 percent of the FPL, using the flexibility that states always have had to decide the income level of children who need help securing affordable coverage through SCHIP.

The directive already has forced several states to delay, scale back, or state fund their efforts to cover uninsured children, even as the weakening economy has created more strain and hardship for moderate-income families seeking affordable coverage for their children. In the months ahead, children in even more states will be affected by the policy at a time when there is a growing recognition that the economic downturn will be adding to the numbers of children who lack private employer-based coverage and whose families will need affordable coverage alternatives through SCHIP and Medicaid. In earlier issue briefs on the August 17th directive, the Center for Children and Families (CCF) provided an in-depth analysis of the requirements of the directive and a status report on its impact as of December 2007.1 More recently, new data and analyses regarding the directive (see below) have been released by state officials, resear chorganizations, and policy experts. These new data, reports, affidavits, and analyses raise significant questions about the policy basis for and the potential adverse effects of the August 17th directive, as well as the process by which CMS issued the policy. This issue brief provides an update on the impact of the directive as of April 2008 drawing on these new resources.

Download file: "Out of Touch: A Status Report on CMS’s August 17th Directive"