Tuesday, October 09, 2007

Schip debacle

I have been reading various articles about the SCHIP expansion that President Bush vetoed.

SCHIP is a program that was put into place about 10 years ago to provide health insurance to many children. Here are some generalizations about the current program:

1. There are about 4 - 5 million people on SCHIP currently (The exact numbers are unknown).
2. About 11% of those on SCHIP are adults, some of these adults do not even have children.
Most of the adults are either pregnant females or are parents of kids on SCHIP.
3. The program ran from 1997 - 2007. The Federal Government spent about 40 billion on the
program to date.
4. The money is given to the States and each state creates its own program. Each State
program must comply with broad Federal Guidelines.
5. The program was originally designed to provide health insurance to children who are not
covered by Medicare. This is often children whose parents make more then the Federal
poverty level but less then twice the Federal poverty level.
6. Some States have expanded the program to cover more adults and some states have
expanded the program so that you can qualify if you make three times the Federal poverty

Things that are good about the SCHIP program:
1. The Federal Government just creates broad guidelines and each state makes its own program as it sees fit.

Things that are bad about the SCHIP program:
1. Adults should NOT be covered by this program. This program was designed to cover children...
2. Some States have already allowed a family of four making three times the Federal poverty level to enroll their kids in the SCHIP program.
3. Per the GAO one of the bad things about the program is "Crowding Out." As SCHIP has expanded many companies have dropped their private health insurance and this has forced government subsidies to pay more of the health care costs. Per the CATO Institute "Crowding Out" has caused a large number of companies to drop their health insurance and "allow" the government to pick up the tab.

The SCHIP program has to be reauthorized and the Democratic majorities in both the Senate and Congress are trying to expand the program. Some Republicans support this expansion as well...

Some of the key items in the SCHIP expansion are:
1. Adding 35 billion in additional funding over the next five years. The purpose of this is to
allow more kids and adults to be covered by the program.
2. Change the Federal guidelines so that those who earn three times the Federal poverty level
would qualify per the Federal guidelines. Note this would allow a family of four making
$62,000 per year to qualify for the program. Basically it would extend the program into the
middle class.
3. The SCHIP expansion is expected to be revenue neutral. It is revenue neutral by penalizing
smokers. The Federal cigarette tax would increase to 61 cents per pack and the tax on
cigars would more then double.

President Bush issued his fourth veto and vetoed the expansion of SCHIP.

The hardest thing to kill or curtail is a Federal program. I think that a compromise is needed between President Bush and those who support and expansion of SCHIP. I do not think the SCHIP program is a good idea; however, I could live with it if the following changes to SCHIP:

1. I think the Federal Government should only contribute to the State plans as long as the State plans limit the parents income to twice the Federal poverty level. This program was intended for the poor; not the middle class.
2. I think the Federal government should change their requirements so that adults are not covered under the program.
3. I think the Federal Government should strengthen the rules that exist that require each State to prove that their program is not "Crowding Out" private health insurance.

If the above three items were done then I could see allowing SCHIP funding to increase over the next five years at the same rate as inflation.

What do you think?

Mike Sylvester


Tim Zank said...

Not only would I like to see this expansion quashed, I'd be all for repealing the original program.

Robert Enders said...

Yes, this program is just a steaming pile of SCHIP.