Sailing on a SCHIP of Debt
When he takes the oath of office,
President Barack Obama will be faced with a variety of tough problems.
Looking for an easy victory, it's likely one of the first bills he will
sign into law is one that expands government-run health care. It will
be touted as being "for the kids" but in reality "the kids" don't need
it. Like much of what goes on in Washington, it is a victory of style
over substance. As is always the case, though, your tax dollars are
paying for this style. Or, to be more accurate, more debt will pay for
this program, meaning our children and grandchildren will be left to
clean up the mess.
The issue at question is the reauthorization of the State Children's Health Insurance Program (SCHIP). Last week the U.S. House to expand the program and the Senate will soon follow suit. A final version of the bill should be on the President's desk before the end of the month.
SCHIP helps fund state government health care programs. Originally intended for children of the working poor, it has evolved to pay for adult health coverage (in some states more adults than children are served by the program) and health care for middle class kids. Now, if this legislation becomes law (as it almost certainly will), states will get even more money to provide health care coverage and, in a reversal of the 1996 welfare reform law, children of legal immigrants will be allowed to enroll. To pay for these new government services, smokers will be forking over another 61 cents for every pack of cigarettes they buy.
What this all means is that states will be tempted to expand spending during a time where they should be cutting spending. Sure, proponents say it's "for the kids," but in reality most of the kids being covered by this program expansion would have had health insurance anyway. For many (up to 60% of recipients), all it does is move children (and adults) off private insurance onto insurance paid for by your tax dollars.
It is easy to see why this is the case when one considers the incomes of families which will be eligible for coverage, which will extend well beyond the working poor. The bill would allow states to cover children who live in families that have income up to 400% of the federal poverty level. If you live in a family of four, you can make around $85,000 a year and receive government-funded health care. The vast majority of people in this income group have private insurance. The uninsured rate for their children is very low. There is no compelling reason to offer this type of program to these middle class families.
And anyone who thinks the cost of this program will be funded by the cigarette tax contained in the bill is deluded. Spending on government health programs like Medicaid and SCHIP increases annually. In poor economic times, such as we are in now, spending skyrockets. During the recession earlier this decade, the cost of Medicaid in Ohio went up by 11% every year. But cigarette tax revenue usually decreases. There is no way that a declining revenue source like cigarette tax revenue will pay for the ever-increasing burden this SCHIP expansion will place on the federal government. So where will the government get the rest of the money? From everyone else who pays taxes or from borrowing.
With the explosion of federal spending in D.C., we are already placing tremendous burdens on our children. The looming funding problems for entitlement programs such as Social Security, Medicaid, and Medicare threaten to overwhelm future generations. Now is not the time to add to that burden by expanding a government health care program to middle class families.
SCHIP is a bad program that makes little fiscal or policy sense. But, hey, it's for the kids, so it takes a brave politician to oppose it. After all, a program's intentions are more important than the actual content of the legislation, right?
Marc Kilmer is a policy analyst with the Buckeye Institute for Public Policy Solutions, a research and educational institute located in Columbus, Ohio.
