NCPA - National Center for Policy Analysis


July 30, 2007

The State Children's Health Insurance Program (SCHIP) sounds like the epitome of good government: Who could be against health care for children?  The answer is anyone who worries about one more middle-class taxpayer entitlement and a further slide to a government takeover of health care, says the Wall Street Journal.

  • SCHIP was enacted in 1997 to help insure children from working-poor families who make too much to qualify for Medicaid.
  • In the intervening years, the program reduced the rate of uninsured kids by about 25 percent but has also grown to cover the middle class and even many adults -- and it gets bigger every year.
  • The program expires in September without reauthorization, and congressional Democrats want to enlarge its $35 billion budget by at least $60 billion over five years.

Like all government insurance, SCHIP is "covering" more children by displacing private insurance.  According to the Congressional Budget Office, for every 100 children who are enrolled in the proposed SCHIP expansion, there will be a corresponding reduction in private insurance for 25 to 50 children.  Although there is a net increase in coverage, it comes by eroding the private system.

This crowd-out effect is magnified moving up the income scale, says the Journal:

  • In 2005, 77 percent of children between 200 percent and 300 percent of the poverty level already had private insurance, which is where the Senate compromise wants to move SCHIP participation.
  • New York State is moving to 400 percent of poverty, or some $82,000 in annual income.

All of this betrays the fact that the real political objective of SCHIP is more government control -- HillaryCare on the installment plan, says the Journal.

Source: Editorial, "The Newest Entitlement," Wall Street Journal, July 30, 2007.

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