Politics & Policy


Last week the House and Senate voted, over the Bush administration’s objections, to expand the State Children’s Health Insurance Program (S-CHIP). Congress initially created the program to cover kids whose parents were doing too well to qualify for Medicaid but not well enough to buy their own insurance. The expansion Congress is seeking now would go even further, extending coverage to families earning up to 300 percent of the federal poverty level (just over $60,000 for a family of four) and “children” up to 25 years old. The Bush administration is correct to call this “a welfare benefit for middle-class households,” and if the final bill emerges from conference looking anything like the current versions, Bush should make good on his promise to veto it. 


The House version of the S-CHIP reauthorization would spend significantly more than the Senate version — $50 billion over the next five years as opposed to $35 billion — but both versions would spend more than is necessary to provide adequate funding for S-CHIP. The Congressional Budget Office estimates that an increase of $14 billion would cover current S-CHIP obligations, and the Bush administration argues that an expansion of just $5 billion, or a 20 percent increase over the current baseline, would suffice.


The Senate version passed by a veto-proof margin of 68 to 31; in the House, the efforts of conservatives (including, notably, Drs. Tom Price and Phil Gingrey) ensured that the vote was much closer, 225 to 204. Speaker Nancy Pelosi and Senate majority leader Harry Reid will want the final bill to have a good chance of withstanding a veto, so the Senate version is more likely to land on Bush’s desk.


As mentioned above, that bill would increase spending on S-CHIP by $35 billion in order to give benefits to more families. Under the existing statute, which expires on September 30, families earning up to 200 percent of the poverty level could qualify for S-CHIP. In addition to raising that to 300 percent, the Senate bill would grant exceptions to states such as New Jersey that have already expanded their programs to cover families making even more. Some families earning up to $83,000 a year will qualify for S-CHIP if this legislation becomes law.


As we argued last month, a pattern of bailouts and waivers for more generous states has encouraged them to expand S-CHIP beyond its original mission. Instead of remaining a safety net for children of the working poor, the program is turning into a taxpayer-funded health-care system for ever greater numbers of middle-class children and even adults. Almost 700,000 adults were enrolled in the program last year, and adults receiving coverage through S-CHIP outnumbered children in three states.


The program’s expansion would be a big victory for advocates of single-payer, government-run health insurance, because it would encourage millions of families to switch from private insurance to the government’s plan. According to CBO estimates, there is a one-to-one match between newly eligible children who are currently uninsured and those who will drop private insurance to enroll in S-CHIP. For liberal proponents of the expansion, all that matters is the net increase in insured children. But there are better ways of making health insurance affordable, and they require making the private health-insurance market more competitive.


The Bush administration has proposed one such alternative, and it deserves support: Reform the tax code so that individuals who buy health insurance for themselves can get the same tax break that employer-provided health insurance gets. Charles Grassley, the Senate bill’s chief Republican enabler, told the Washington Post that such a tax reform is “badly needed,” but that “there’s no Democratic support for it in the S-CHIP debate.”


That’s no excuse for backing legislation that undermines private-insurance markets, increases spending to provide coverage for millions of people who already have it, and enacts a highly regressive new tax on tobacco to pay for it all. The Senate bill would raise taxes on cigarettes by 61 cents, to $1 a pack, and it would raise taxes on cigars from 5 cents to as much as $10 per cigar — an increase of 20,000 percent.


The president has staked out a firm and utterly justifiable position on S-CHIP; so have House conservatives and those Senate Republicans who held strong in the face of Democratic demagoguery. (Apparently, anyone who opposes them is trying to throw sick kids into the street.) The real fight, however, is still to come. President Bush and his allies on the Hill will have to hold firm this September.



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