NCPA - National Center for Policy Analysis


September 24, 2007

President Bush and the Department of Health and Human Services (HHS) announced recently that before states could further expand their State Children's Health Insurance Programs (SCHIP) beyond 250 percent of poverty; they would have to enroll 95 percent of children below 200 percent of poverty, says the Wall Street Journal.

The usual liberal precincts claim to be enraged:

  • Governor Jon Corzine declared that New Jersey would unilaterally disregard the HHS rules and "vigorously continue" to enroll at 350 percent of poverty -- the highest ceiling in the country.
  • And he'd do so even though about 119,000 New Jersey children under 200 percent of the poverty line remain uninsured -- although the state spends 43 percent of its yearly SCHIP grant insuring adults.

For several years the number of uninsured New Jersey children under 200 percent has held steady, while New Jersey's SCHIP rolls have grown by about 10 percent a year, says the Journal.  One major reason is that the state continues to enroll families with incomes up to $72,275.

What's more, this public coverage is mostly substituting for the private variety. According to the National Bureau of Economic Research:

  • The crowd-out effect for SCHIP is estimated to be at 60 percent, meaning that in order to cover four new kids the government is paying for six more who already had private insurance.
  • This effect is even more pronounced at higher income levels; nationally, 89 percent of children between 300 percent and 400 percent already have private coverage.

Governor Corzine could always tax his own residents to pay for this largesse.  Then again, New Jersey already has one of the worst tax burdens in the country.  For the governor, the political beauty of SCHIP is that it allows New Jersey to finance its spendthrift ways on the backs of more responsible states.

Source: Editorial, "Garden Statism," Wall Street Journal, September 24, 2007.

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