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From The Washington Independent:                By MIKE LILLIS 04/22/2008

The Bush administration has no plans to rescind controversial guidelines restricting enrollment in a popular children’s health-care program, despite a recent legal finding that they were administered illegally. The administration’s position could leave the issue to the courts, where several states have already sued the White House over their right to expand coverage under the State Children’s Health Insurance Program, or SCHIP.

It could also lead to a showdown with Congress, though legislative efforts to expand SCHIP were twice vetoed by President George W. Bush last year. Perhaps with that in mind, congressional critics of the enrollment guidelines are clinging to the unlikely hope that the new legal opinion will inspire the administration to scrap the rules voluntarily.

The long-running debate over SCHIP highlights the sharp differences between the White House and a Democratic Congress over Washington’s role in providing health care. With medical costs skyrocketing and employers dropping more and more coverage benefits, many lawmakers are pushing to expand that role into higher income brackets. The Bush administration has fought that push, claiming such expansions nibble away at private insurance markets.

In limbo are tens-of-thousands of kids whose health coverage hinges on their eligibility for the state-federal program.

At issue are controversial eligibility guidelines — issued directly to state health officials in an Aug. 17 letter — that prohibit states from using federal SCHIP funds to cover children in families earning more than 250 percent of the federal poverty level, or $53,000 for a family of four, until they have covered 95 percent of kids living under 200 percent of poverty, or $42,400. Supporters in and outside of the White House say the rules ensure that SCHIP dollars go to the lowest income kids.

But on Thursday, the Government Accountability Office challenged the guidelines, charging that the administration broke the law when it bypassed Congress in issuing them. Under a 12-year-old law, the GAO says, the changes have to be reviewed by both Congress and the GAO before they could take effect.

The legal opinion is being cheered by children’s health-care advocates and state health officials. But they might not want to hold their breath waiting for change: The GAO opinion has no teeth, and the Bush administration has already issued a statement saying it will ignore it. 

“GAO’s opinion does not change the department’s conclusion that the 8/17 letter is still in effect,” Jeff Nelligan, spokesman for the Centers for Medicare and Medicaid Services, said in an Apr. 18 statement.

The issue boils down to a difference in legal interpretations. The Bush administration claims the Aug. 17 letter is just a non-binding statement of general policy — a clarification of existing law. The GAO, on the other hand, argues that the letter constitutes a policy change significant enough to require congressional and GAO perusal under the Congressional Review Act.

“The August 17 letter from CMS to state health officials is a statement of general applicability and future effect designed to implement, interpret or prescribe law or policy with regard to [SCHIP],” GAO writes. “Accordingly, it is a rule under the Congressional Review Act. Therefore, before it can take effect, it must be submitted to Congress and the Comptroller General.”

The Congressional Research Service, another nonpartisan investigative research body, reached a similar conclusion in a January report.   

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