In 1977, Star Wars opened in theaters, Apple released its first computer, and Orrin Hatch entered the U.S. Senate. Senator Hatch arrived in Washington, D.C., with a reputation as a fiery, pugnacious conservative. He still insists that “by any measure, I’m considered one of the top conservatives in the history of this country.” What explains, then, his continued devotion to the State Children’s Health Insurance Program, which he helped create?
SCHIP was written into the Balanced Budget Act of 1997 to “provide funds to States to enable them to initiate and expand the provision of child health assistance to uninsured, low-income children.” This would be accomplished through a mixture of private and public health plans. It sounds innocuous, but his program has distorted the market and increased the size of government.
During the original debate over SCHIP, Senator Hatch insisted that his bill “relies on the marketplace, with coverage provided through private insurance and the existing network of local community health centers.” In practice, however, SCHIP has hurt the marketplace. Two leading economists, MIT’s Jonathan Gruber and Cornell’s Kosali Simon, have found that SCHIP has crowded out private insurers. According to their data, over 60 percent of those who were privately insured before enrolling switched to public plans. The state plans, funded with taxpayer dollars, offered more benefits than did the traditional private plans, and private insurers could not compete.
Despite Hatch’s assurances that “this legislation clearly represents a free market approach at solving an important national problem,” it is nothing of the kind. Responding to incentives provided by SCHIP, many Americans have shifted from private health-care plans to government-run programs. States could afford to spend increasing amounts on children’s health insurance because the states paid only 31 percent of the bill. The federal government paid the rest. And when states exceeded the federal government’s cap on spending, which they routinely did, they were rewarded with extra funds, lest Washington be accused of allowing children to suffer.
Not surprisingly, states have abused the system, expanding insurance programs beyond the original intent of the bill. New York, for example, has extended insurance to families of four earning up to $92,200 a year. The federal government and, indirectly, the other 49 states were required to fund Albany’s largesse. Government’s increasing involvement in health insurance increases the cost of medical care when there is no incentive to contain costs. Private health insurers can’t compete with government programs, whose fees are hidden in higher taxes, and which seem to pay for everything no cost.
In 2007, Hatch doubled down on his mistake, proposing the Children’s Health Care Quality Act, which would have expanded SCHIP’s mandate. President Bush vetoed the bill twice, and Hatch bemoaned the “bad advice” he says Bush took. President Obama has drastically expanded SCHIP. The cost of the program over the next four years will more than double, to approximately $65 billion. Hatch insists that he never meant for the program to expand so dramatically, but a conservative would have known the risk for dangerous growth inherent in any entitlement program.
In 1976, Orrin Hatch attacked an incumbent senator, Frank Moss, for serving too long in the Senate. He asked, “What do you call a senator who’s served in office for 18 years? You call him home.” Senator Hatch has now sat in the Senate for over 35 years and is pursuing his seventh term. His unapologetic championing of SCHIP, an expansion of government, suggests that it’s time for this senator, too, to go home.
— Nathaniel Botwinick is is an editorial intern at National Review Online.