Government Health Care?

Here is the deal. When I lost my job I tried to get insurance for my kids. It took over 3 months. I got the insurance in May. It was government run Medicaid. I tried for the SCHIP but didn't make enough. They denied me cause unemployment was too little and I ended up with Medicaid. I have a 5 week job coming up. Since I have to report the change I called to see what the rules were. The lady took my info and said the kids will have their account terminated on the last day of the month. Then I can apply for the SCHIP insurance and at the end of Nov reapply for Medicaid. Does this sound like people and rules we want running our insurance. I agree that my 5 week job will pay over the amount allowed by Medicaid. But temp jobs must be treated different. The problem is it discourages people from taking these types of jobs. So because I took this job my kids go off insurance and if one has a problem during this time I could easily lose more money than I made. How long till my kids get covered again? I want insurance and premiums based on income, but it needs to be based on tax returns. renewable annually. This is a big issue.