NCPA - National Center for Policy Analysis


April 5, 2007

The State Children's Health Insurance Programs (SCHIP) was intended to help only low-income children whose family income is less than double the federal poverty line.  But like so many other government programs, it has become a costly boondoggle, says Dr. Edwin Feulner, president of The Heritage Foundation.

The program seemed to work well enough in its early years.  But that was only because some states didn't spend all the money they'd been allotted, and that money was made available to fund programs in states that went over budget, says Feulner.  But states see no reason to leave federal funding on the table, so they found ways to spend it.  By last year, only $173 million was left over for redistribution.  That's partially because many states started making it easier to qualify for SCHIP:

  • Seven states, however, provide benefits to families earning much more; four of them (Maryland, Massachusetts, Missouri and New Jersey) extend SCHIP coverage to three times the poverty level ($60,000 for a family of four
  • Meanwhile five states (Illinois, Minnesota, New Jersey, Rhode Island and Wisconsin) cover parents and even childless adults; in fact, the federal General Accountability Office says, in the 14 states that went over budget in 2005, more than half of the SCHIP recipients were adults.

Not surprisingly, Washington has been bailing out states that spend too much.  Congress spent $283 million to paper over last year's "shortfall," and will almost certainly have to spend more this year.  The House already voted to add $750 million in "emergency" SCHIP funds and the Senate will more than likely follow suit.

This needs to change, says Feulner. It's time to bring SCHIP back into line and keep it from turning into another entitlement funded on taxpayers' backs.

Source: Edwin Feulner, "It's time for a dose of reality in federal health-care spending,", March 30, 2007.


Browse more articles on Health Issues