SCHIP Reauthorized and Expanded

Yesterday, the House passed the reauthorization of the ?State Children's Health Insurance Program in a largely party line vote. As passed, this bill is not only unnecessary, but foolhardy in its scope and plans.

No one, not even the most callous anti-big government libertarian can sensibly argue against the original purpose of the program--to provide health insurance for poor children, those with families up to 200 percent of federal poverty level, or about $40,000 per year for a family of four. But as the Arizona Republic points out, SCHIP has expanded far beyond its original purpose:

The problem is that SCHIP has expanded beyond its original scope, as so often happens with federal programs. In the early years, many states couldn't use all their SCHIP money, so the feds permitted excess funds to be used by other states to extend coverage to children beyond 200 percent of the poverty level and even adults.

In Arizona, the SCHIP plan is called KidsCare. A Government Accountability Office study found, however, that 56 percent of the people enrolled in "KidsCare" were actually adults.

Fifteen states now provide SCHIP coverage for children above 200 percent of the federal poverty level, and 14 states cover adults.

Congressional Democrats propose not only to fund these existing expanded programs but provide enough funding for other states to substantially expand eligibility, as well. In all, Democrats are proposing to more than double SCHIP funding, allowing universal coverage up to 300 percent of the federal poverty level, as Gov. Janet Napolitano has proposed for Arizona.

That would provide coverage up to a family income of about $60,000 a year. Since the median family income in the United States is just over $46,000, this reaches well into the middle class.

Now there are a fair number of Americans without health insurance, around 45 million according to most published reports and that number fluctuates a fair bit, between 43 million and 47 million depending on the year and employment conditions. A not insignificant number of these, indeed most, of these Americans without health care are working poor. Most states provide a method by which these working poor can buy into Medicaid for health insurance purposes.

Expansion of the program essentially doubles up the health care spending and places a burden upon the states. Granted, SCHIP money is provided by the federal government in grants to the states, but expansion of the program to cover people up to 300% of federal poverty level

The problem with the whole matter, of course, is paying for it. The Arizona Republic points out that the program is funded by stupidity:

To pay for the SCHIP expansion, Democrats are proposing to raise tobacco taxes by up to 61 cents a pack.

Tobacco taxes are highly regressive. So, basically, Democrats are proposing to tax the poor to pay for the health care of the middle class.

Tobacco taxes are also highly uncertain. Health-care advocates like them because the evidence is that they do reduce consumption. However, states and the federal government have already loaded up various programs, many involving health care and children, on their backs. The odds are very strong that tobacco taxes will not produce the revenues being obligated.

Increasing the tax on cigarettes does several things over the long haul. First, it is a disincentive for younger people to start smoking and keep smoking--it is simply too expensive a habit. If fewer people are buying cigarettes, there are fewer cigarette taxes collected. Thus there is less money for programs like SCHIP.

Second, higher taxes achieves one of the government's other efforts--reducing smoking. Some people who smoke now may make the calculation that it is too expensive and attempt to stop smoking, with the same attendenat consequences.

Third, higher cigarette taxes disproportionately affect poor people, the same people who Congress is trying to cover. A $.61 increase in cigarette taxes can be absorbed by richer people without a great deal of impact, but not poor people.

But has anyone in the Democratic party ever tried to reconcile their taxation of tobacco and the reliance on the continued sale of tobacco with their goal of stopping smoking for the health reasons? Sounds to me that they are of two minds about this.

The expansion of SCHIP to cover poor adults was an abomination in and of itself. Increassing the eligibility to 300% of poverty level is unnecessary and wasteful given the fact that other options exist. To fund it with already overburnened cigarette taxes is simply shortsighted.