SCHIP: A better diagnosis

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The Article

The only thing worse than being against baseball, Mom or apple pie is being “anti-kid.”

Liberals, of course know this—so they frequently resort to the childish tactic of name-calling. Right now, anyone who opposes their massive government expansion of the healthcare program known as SCHIP (State Children’s Health Insurance Program) is the equivalent of a monster.

As a mother, I know how persuasive it can be to hear someone argue for a certain policy because it’s “for the kids.” And we all know the number of uninsured children out there represents a serious problem. So when a lawmaker such as Senate Finance Committee Chairman Max Baucus says that a vast expansion of SCHIP “helps low-income kids,” well, who can say no? Some cold-hearted ogre?

No, actually. All it takes is someone who’s taken a closer look at what’s being sold here. Let’s put the emotional appeals on hold for a few minutes and look at the facts.

First, some background. SCHIP was enacted a decade ago to help low-income uninsured children whose families earn too much to qualify for Medic­aid but not enough to buy private coverage. The program defines low-income children as those whose family income is at or below 200 per­cent of the federal poverty level (or $40,000 for a fam­ily of four). SCHIP today covers about 6.7 million children.

Why, you may ask, is this issue coming up now? Because SCHIP is set to expire by Sept. 30. Congress must reauthorize it before then—and congressional liberals sense a perfect opportunity not simply to reauthorize the current program but to move the country closer to their dream of one-size-fits-all, government health care for all. And how can we refuse? It’s “for the kids”—and poor ones at that.

Or is it? A Heritage report on the SCHIP bill passed by the House of Representatives on Aug. 1 notes that:

  “The authors of the House bill repudiate the original intent of the program: SCHIP is no longer limited to low-income persons or to children. … As another attempt to expand welfare dependency, the House bill would allow persons up to age 21 to be recognized as ‘children’ for purposes of the law. Under certain provisions, program funds may be used to cover non-pregnant, childless adults.”

So much for helping poor kids. It sounds more like a stealth program to get more middle-class Americans, many of whom hardly qualify as “kids,” on government-run health care. It strikes me as “HillaryCare” on the installment plan—a step toward the socialized-medicine utopia that the New York senator failed to push through while she was first lady.

If this sounds like a stretch, consider how the House bill would undermine private insurance. “Rather than designing subsidies in an innovative way to encourage private health insurance among families, the bill’s sponsors displace it,” Heritage analysts write. “Recent studies indicate that people with private insurance will likely drop eligible dependents in favor of welfare-style health coverage—a phenomenon economists refer to as ‘crowd out.’” According to CBO estimates, the House bill would move nearly 2.4 million people off private insurance and onto taxpayer-supported health care.”

Even if this approach was sound—and it’s not—the House-passed version of SCHIP reauthorization would be expensive. According to the Congressional Budget Office, it would effect a major change in direct government spending of more than $47.4 billion over five years. And—get this—the backers of this approach in the Senate plan to get part of that funding by hiking cigarette taxes 61 cents per pack. “The only way the tax would raise the required $35 billion would be to get 22.4 million more folks puffing away over the next decade,” Heritage President Ed Feulner recently wrote. “Encouraging smoking—now there’s a sure way to improve children’s health.”

Small wonder that President Bush is promising to veto any major expansion of SCHIP.

OK, you may say, the prognosis for the SCHIP legislation is dire. But shouldn’t we do something for the kids that fall through the insurance cracks?

Indeed we should. It just shouldn’t involve the notoriously inefficient arm of government-run health care. There are better ways to get our children covered, many of which are outlined by my colleagues at How about providing a refundable federal health care tax credit or voucher to make it easier for families to get private-sector coverage? Or letting them buy insurance across state lines? Or creating state-based insurance exchange mechanisms that facilitate the purchase of individual, portable coverage?

Simply enlarging SCHIP may sound appealing. But if we want to cover more children—and their parents—there’s a much more affordable, efficient way to do it: by establishing a consumer-driven health insurance market that empowers families and individuals—not federal bureaucrats.


Rebecca Hagelin
Latest posts by Rebecca Hagelin (see all)

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