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Summary
Strengthening Our States Act (SOS Act) of 2003

Introduced by Representative John D. Dingell and Senator Jeff Bingaman

May 7, 2003

The Strengthening Our States Act of 2003 uses a combination of approaches to improve Medicaid and to help states provide coverage to their uninsured residents in these difficult economic times. First, it provides additional federal fiscal relief for states. Second, it increases flexibility in implementing the program. Third, it creates incentives and provides assistance to avoid cuts to existing coverage, and facilitates coverage expansions in the future. This legislation will simplify Medicaid and enable states to strengthen the program -- without converting it into a block grant that would shift costs to the states and further erode health insurance coverage.

Assistance With the Cost and Care of the Elderly and Persons with Disabilities in Medicaid

  • The SOS Act provides 100% federal financing for Medicare premiums and cost-sharing for low-income Medicare beneficiaries. By requiring the Federal Government to fully meet its obligation to these low-income Medicare beneficiaries, the financial burden on states will be alleviated.
  • The SOS Act helps states provide home- and community-based long term care services to the elderly and persons with disabilities, removing the bias towards nursing home care.

    --  The Act requires the Secretary to consider savings accrued to other federal mandatory spending programs in home- and community-based care waivers to facilitate coverage that encourages individuals to live in the community rather than an institution. This is important because many waivers result in savings to other federal programs, but the Secretary does not currently consider these savings.

--  The Act provides enhanced federal assistance for all home- and community-based waivers. This will establish the Federal Government as a permanent committed partner in assisting individuals with disabilities and the elderly in the transition to the most appropriate community setting for their care. It will also help states achieve the goals outlined in Olmstead, the landmark court decision on caring for individuals with disabilities.

  • The SOS Act also includes three other provisions that facilitate coverage of the individuals with disabilities and their families and provide more flexibility for states to reach out to these families.

-- It provides full federal funding for individuals with disabilities who are waiting to qualify for Medicare coverage. Medicare provides coverage for certain severely disabled individuals after a waiting period. During this time, many of these individuals qualify for and receive their health insurance through Medicaid. This provision assists states who are filling in this gap in Medicare.

-- The legislation allows spouses of working individuals with disabilities who are covered under Medicaid to buy in to Medicaid coverage. This provision will help families get uniform health coverage.

-- The legislation allows states the flexibility to cover disabled children under Medicaid without forcing their family to become impoverished or surrender their child to the state.

Assistance to Weather the Recession and Avert Additional Loss of Health Coverage

  • The SOS Act includes a temporary $30 billion increase in the federal share of Medicaid payments (FMAP). Unlike a block grant or other fixed-dollar programs, Medicaid is responsive to states and beneficiaries in times of economic distress by providing federal funding for each person who becomes eligible. This legislation recognizes that the formula could work more efficiently if it operated in a more timely and situation-specific fashion during difficult economic times when the state revenue base declines and caseloads increase. Also, to help improve the financing formula, the General Accounting Office is directed to study ways to make the formula more responsive to fiscal distress during either a national or state-specific recession.

Simplification of Program Options to Preserve and Expand Coverage

  • The SOS Act improves and expands upon existing coverage options to give states more flexibility in providing coverage for their residents. It gives states the flexibility to expand coverage to low-income adults who are not covered under Medicaid. A few states have chosen to expand to adults through "budget neutral" waivers, but to do so they must cut coverage to other groups like children, the elderly, and pregnant women in order to pay for coverage of adults.
  • The Act makes states eligible for enhanced federal matching funds to cover low-income working parents under Medicaid. Unfortunately, coverage of these parents has been the victim of state budget cuts. This provision helps prevent the loss of coverage that is now occurring throughout the Nation and also promotes family-based coverage. It makes it easier for states to set uniform eligibility levels for families, rather than covering parents and children separately.
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  • States are provided flexibility to cover legal immigrants under Medicaid and the State Children’s Health Insurance Program (SCHIP). After the 1996 welfare reform ban on covering legal immigrants under Medicaid and SCHIP, many states have elected to provide coverage to these families with state-only money. The recession has made it difficult for states to continue providing this critical assistance, and this legislation helps states continue to provide such coverage.

Additional Sources of Fiscal Relief

  • The SOS Act increases federal payments for certain services critical for special populations. It provides enhanced federal funding for Urban Indian Health organizations, translation and outstation services, and emergency services delivered to undocumented individuals who are otherwise eligible for Medicaid.
  • The legislation also restores funds to the State Children’s Health Insurance Program (SCHIP) so that states are not forced to cut children’s coverage as a result of funding shortfalls. This provision is identical to the legislation introduced by Chairman Tauzin and Ranking Member Dingell, H.R. 531. The bill includes a provision that would allow states that are unable to use their SCHIP funds because they already offer comprehensive coverage under Medicaid to use this funding to assist with the cost of certain children under Medicaid.
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  • The legislation restores all scheduled cuts to the disproportionate share hospital (DSH) program and provides additional funding to hospitals in extremely low-DSH states, shoring up the safety net.

Prepared by the Committee on Energy and Commerce
2125 Rayburn House Office Building, Washington, DC 20515