Saturday, February 7, 2009

More Criticisms of SCHIP

Photo by GeckowithCanon

Following up on Wednesday's story about SCHIP, I want to discuss SCHIP, what it does, and why it doesn't work.

What is SCHIP?

SCHIP is a multi-billion dollar Federal entitlement program which was passed in 1997 as a measure to purchase health insurance for households with children who do not qualify for Medicaid. It was authorized for 10 years and needed reauthorization to continue in 2007.

In a politically risky move, George W. Bush vetoed the reauthorization bills twice, concerned that they would expand SCHIP into higher income families, and thereby smuggle in universalized health care. (If Bush was concerned about socialized medicine, I have no clue what he was thinking when he signed the Medicare drug benefit program, which was the biggest expansion of Federal spending at the time since Lyndon B. Johnson).

After winning election in 2008, Barack Obama went on to sign SCHIP into law in early February 2009. This one amounted to a 115 billion dollar ($115,000,000,000) expansion of Federal spending.

Does SCHIP work?

Short answer? No. For one thing, many of its funds are used to purchase health insurance for adults, not just children, as the name and intention of the legislation would suggest:

Moreover, some of the projected FY 2007 shortfall states use SCHIP funds to cover adults. Five of the 14 shortfall states—Illinois, Minnesota, New Jersey, Rhode Island, and Wisconsin—cover parents, pregnant women, or childless adults. According to the General Accountability Office, "Adults accounted for an average of 55% of enrollees in the shortfall states" in FY 2005.

Additionally, the majority of children it enrolls were already insured privately:

SCHIP’s great expense stems from the fact that in many cases, it simply enrolls children who were already insured privately. Economists Jonathan Gruber and Kosali Simon estimate that out of every ten children added to the SCHIP rolls, six already had private coverage. Only in government is a program deemed to “work” when it covers four uninsured children for the price of ten.

The current proposal will only exacerbate this problem. Congressional Democrats want to expand SCHIP to children in families of four earning up to $80,000 per year. The Congressional Budget Office reports that 77 percent of such children already have private health insurance.

SCHIP's regressive cigarette tax.

The CDC and Gallup have both documented that smoking is inversely proportional to household income, meaning that generally, poorer people smoke more than wealthier people in the United States. Says a 2008 Gallup study:

Among those making $6,000 to $11,999 per year, 34% say they smoke, while only 13% in the top two income brackets (those with incomes of at least $90,000 per year) say the same -- a 21 percentage-point gap.

So SCHIP's current incarnation, which raised the cigarette tax from sixty-one cents to a dollar to fund its operations, is a regressive tax which falls disproportionately to the poor. I love the irony of a Democratic Congress along with a Democratic White House voting for (and gushing over) legislation that taxes the poor to provide government benefits to families with household incomes over $80,000 per year, who already have insurance for their children. How liberal and progressive they are!

With his record as a Senator, and even with his very short record as President, how can anyone take seriously the notion that Barack Obama is out to help the little guy?

Spread the Word!


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