Friday, October 12, 2007

When The SCHIPs Are Down

One of the most pathetic stories of the SCHIP battle is the conservative loonies who decided to take out their frustrations over the SCHIP bill on a 12-year-old boy. E.J. Dionne, who has been on a bit of a cold streak with his columns lately, issues a truly awesome smackdown of the right-wingers' attacks on Graeme Frost and his family.

Anyway, the argument over the SCHIP bill is a lot more nuanced than the talking heads on either side of the issue would have you believe. Republicans don't hate children for opposing the expansion (as the left would have you believe) and Democrats don't want to forget about poor kids (as the right would claim), nor do they want Big Brother to control your health care budget (another claim bordering on lunacy).

The idea behind SCHIP is this: the federal government pays states to provide health care for children whose families are too well-off to qualify for Medicaid but not well-off enough to afford health insurance on their own. The states themselves determine who is eligible, what benefits the eligible kids receive, and how much each family needs to pay in premiums. The federal government currently allows states to insure children in families that make up to 200% of the federal poverty line, or $37,700 for a family of four. States may insure up to a higher income level with Administration approval (the Bush administration has approved NJ's 350% insurance level but rejected NY's 400% level).

Currently, SCHIP insures about 6.6 million kids nationwide, and is widely regarded as a successful program. The problem is this - with health care costs rising, states with high costs of living such as NJ and NY are seeing the need to raise eligibility levels to cover the gap between those who qualify for Medicaid (100% of poverty) and those who can afford the cost of private employer-offered insurance (which averaged around $11,500/year for a family of four). Alas, this costs more money than the SCHIP program currently has.

Both President Bush and the Democratic/moderate Republican coalition in Congress want to boost funding for SCHIP - the argument is about how much the funding should be increased by. Bush wants a $5 billion bump; Congress wants $35 billion.

Thanks to increasing health care costs, though, the $5 billion increase isn't really much of an increase. The best-case scenario here is that the amount of federal aid to states keeps pace with the rising cost of health care, keeping most of the current enrollees insured but not allowing any additional enrollees. As such, states that want to expand SCHIP - say, to keep up with population increases - will have to fund such an increase themselves. Democrats claim that their plan will enable states to increase the number of kids insured from 6.6 million to around 10 million. The Democratic plan pays for the SCHIP expansion by raising the current excise tax on cigarettes to $1/pack (it is currently $0.39/pack).

Unsurprisingly, I side with the Democrats on this one. If SCHIP is not expanded to allow states to expand their coverage levels, more and more families in high cost-of-living areas will be forced to make the decision to forgo health insurance. This will have the perverse effect of costing governments and states (not to mention hospitals) more as these kids end up receiving only emergency-room care that their families can't afford. There is a legitimate concern that private insurers could suffer from losing current clients who are at the margins of affordability; however, that's a sacrifice I'm more than willing to make if it means more insured kids.

Ideally, I would like to see a program that offers a progressive subsidy to families who purchase portable (non-employer-based) private health coverage. Of course, this would require nuking our current health care system and replacing it with something completely new and more costly, and we have neither the political will nor the money to do so right now. As I understand it, Sen. Clinton's new health-care proposal aims to do something like this with a mandate-and-subsidy program (based, ironically, on something done by Massachussetts under Gov. Romney), so stay tuned if she wins the White House in '08 and Democrats get larger working majorities in both houses.

Update: The Republicans in the Energy and Commerce committee - one wonders why that committee is dealing with this bill - put out this completely inexplicable press release saying... something or other. I'm not sure what. (Via Wonkette)


Jacob said...

Jeff, why do you say that a portable, subsidized insurance program would be more expensive than what we have now? If we got rid of the tax advantages that allow employers to offer untaxed insurance, consumers could drive down the costs of insurance by opting for less comprehensive plans and enforcing fiscal discipline on providers when they pay for care. From what I've read, breaking the employer-insurance link is just about the best thing we could possibly do to lower the costs of healthcare.

Jeff said...

I agree that breaking the employer-insurance link is important, but a portable, subsidized insurance program shifts the burden of paying for health care from companies to the government. Somehow, I think the tax breaks we give companies for buying insurance will end up being less than the cost of subsidizing health insurance for the large chunk of Americans who would need it.

Now I'm more than willing to have my tax dollars go to such a program, but how many Americans agree with me, and can we get such a program past the insurance companies and their political power? That's the $50 billion dollar question...