It has long been clear that the Bush administration didn’t have logic on its side as it tried to limit states’ flexibility in extending health insurance to moderate-income children. Now, it turns out, it didn’t have the law on its side either. Rather than wait for the administration to change course, Congress must act to correct the situation and to prevent unilateral cuts in Medicaid-funded services.

After one presidential veto and the threat of another, Congress passed a watered-down bill to ensure continued funding of the State Children’s Health Insurance Program. SCHIP provides federal subsidies, matched with state dollars, to offer health care coverage to children whose parents earn too much to qualify for Medicaid. The program covers about 4 million children a month. Lawmakers had initially hoped to expand the program to cover more children, but the administration stood in the way.

President Bush said he opposed the expansion because he didn’t want the government making decisions for doctors and customers. Patients don’t have their medical decisions made by government under SCHIP; they use private insurers and private doctors, who presumably make their decisions based on their medical expertise.

While Congress was debating an SCHIP expansion, the administration, through the Centers for Medicare and Medicaid Services (CMS), issued a directive limiting the ability of states to enroll new children in the program.

Sens. Olympia Snowe, R-Maine, and Jay Rockefeller, D-W. Va., asked the Government Accountability Office to review the legality of the August directive. Last week, the GAO said the administration overstepped its authority by issuing the directive without congressional review. The Congressional Research Service had earlier come to the same conclusion.

“Rather than work with Congress and the governors in an open, cooperative and transparent manner, CMS chose to circumvent the rules and go their own way,” Sen. Snowe said, adding, “this is clearly the wrong approach.”

The directive, in effect, prohibited states from expanding SCHIP beyond families earning 200 percent of poverty ($35,200 for a family of three) until it proves that 95 percent of eligible children at this level are covered. Maine does not now go above 200 percent of poverty, but 17 states do.

Along similar lines, CMS recently announced rules that would restrict services the federal government will pay for through the Medicaid program. CMS said the changes were needed to comply with the Deficit Reduction Act of 2005, but analyses have shown the cuts go far beyond what Congress intended. The cuts, which will reduce services to children, the chronically ill and the disabled, would reduce Maine’s funding for these groups by nearly $200 million over the next two years. Reduced Medicaid spending would also dampen the economy, according to an analysis of the rule changes by a law firm hired by states, including Maine.

Despite opposition from the administration, Congress has tried to stall the cuts. Legislation to place a moratorium on the CMS rule changes is pending in the House and Senate but continues to face a veto threat from President Bush.

Rather than risk leaving thousands of people without the services they need and further depressing the economy, Congress must strongly support a moratorium on these changes.