SCHIP Funding Vetoed; Medicare Physician Reimbursement Talks Resume

October 5, 2007

On October 3, President Bush vetoed a bill to reauthorize funding for the State Children's Health Insurance Program (SCHIP). The bill would increase funding for SCHIP by $35 billion over five years and would double the number of children covered from 4 million to 8 million per year (600,000 adults also receive SCHIP coverage). The expansion would be funded by an increased federal tax on tobacco.

Backers of the bill claim its expansion of SCHIP would help close a key gap among the uninsured and would bring states into line on income limits. Critics who support a $5 billion increase say the vetoed bill spends money on children and adults who should be given tax credits to seek insurance through the private sector.

The outcome of the SCHIP veto override remains unclear. While the Senate has the votes needed to override the President's veto, the House is roughly 20 votes short. The override vote is currently scheduled for October 18.

Medicare Reimbursement Reform Still Under Consideration

Though the temporary fix to Medicare physician payments was removed from the SCHIP reauthorization bill, the issue continues to be debated on Capitol Hill.

House leaders plan to stand by their earlier proposal to replace the Medicare physician payment cuts of 15 percent over the next two years with 0.5 percent increases. These increases would be paid for by reductions in overpayments to Medicare Advantage plans. The Senate has yet to act on this issue: Senate Republicans objected to the use of Medicare Advantage funding to support a Medicare reimbursement fix.

The AAN remains strongly committed to Medicare payment reform and is working to raise support for both short-term and long-term solutions to this problem.

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