Congress is hell-bent on passing a massive expansion of the
State Children's Health Insurance Program (S-CHIP). The program was
originally designed to help children in low-income working
families, but lawmakers would push eligibility for this form of
public assistance higher into the upper reaches of the
middle-income scale. President Bush, meanwhile, has pledged to hold
the line against a massive spending increase that will displace the
existing private health coverage for millions of families, add to
current and future tax burdens, and transform -- over time -- a
limited welfare program into the equivalent of another middle-class
entitlement.
The congressional leadership and its liberal allies are trying
painting him as mean-spirited, stingy, and insensitive to the
pressing health needs of children.
But the president is right. We should target public assistance,
fueled by hard-earned tax dollars, to the neediest Americans -- not
use it to destroy existing private coverage or shift ever-higher
health costs onto the taxpayers, who are already footing roughly
half of America's entire health-care bill through Medicare and
Medicaid payments.
Nobody disputes the need to help poor children. That isn't the
issue. The problem is that Congress would push eligibility for
public assistance for children with family incomes at roughly
$42,000 per year upward into the middle class, among families
making $62,000 per year. But in that category, 77 percent of
children already have private health coverage. Congress would also
"grandfather in" eligibility for even higher income families in New
Jersey and New York, including families making approximately
$83,000.
The results of a growing body of health-policy research are clear:
When government officials expand public health programs, private
health-insurance coverage contracts. Moreover, this "crowd-out" of
private coverage gets worse the higher you go up the income scale
with public program expansion.
An independent Heritage Foundation analysis shows that for every
100 children in middle-income families ($41,300 to $82,600 per
year), between 54 and 60 of those children would lose private
coverage. For employers who cover dependents, the incentives are
powerful: Why cover the kids in a family policy if the government
will pick up the tab? Dump them.
Undermining existing family health-insurance coverage, and thus
shifting even higher costs to the taxpayers, is bad public policy.
But for patients, the quality and timeliness of care is even worse.
According to the Centers for Disease Control, patients in public
programs like Medicaid and S-CHIP are four times more likely to end
up getting care in an emergency room than patients with private
insurance. A sound public policy would reverse these ugly dynamics,
not further burden already crowded emergency rooms.
There's no reason why Democrats and Republicans in Congress cannot
forge a sensible compromise. First, all agree that S-CHIP should be
continued for kids in low-income working families, with an
increased financial commitment to cover these children. Second, all
agree that many middle-class families struggle with health-care
costs and that many employers have trouble maintaining coverage for
family members. Finally, there's an emerging consensus that health
care tax credits can expand health coverage for middle-class
families, while allowing them to keep what they have or get better
health coverage if they wish.
Sen. Mel Martinez (R., Fla.) is proposing a sensible compromise
that reflects this consensus. It would continue the S-CHIP program
to fulfill its original purpose, focusing on kids in working
families with an annual income under $42,000. But the compromise
would add a middle-class child health-care tax credit, worth
$1,200, for families with children enrolled in either
employment-based coverage or coverage purchased outside the
workplace. The tax credit would be available to all families with
incomes between $41,300 to $61,950, reaching as many as 10.5
million children in those income categories. This would be far more
effective than the flawed bill the president vetoed, which would
have added only 1.2 million children to the rolls.
Such middle-class tax relief would also help to stabilize health
insurance among middle-class families, encouraging employers to
retain dependent coverage.
Sound policy is also sound politics. If Democrats and Republicans
can act upon the elements of a workable compromise, they both win.
But the kids will be the biggest winners.
Robert E.
Moffit is director of the Center for Health Policy Studies at
the Heritage
Foundation.
First appeared in the National Review Online