NCPA - National Center for Policy Analysis


February 5, 2009

After a long, uphill battle and two presidential vetoes, a bill extending health coverage to millions of low-income children was signed into law by President Barack Obama Wednesday.

  • The bill would use an additional $32.8 billion in funds from a cigarette tax increase to expand the State Children's Health Insurance Program (SCHIP) to cover 4.1 million more children by 2013 (the program currently covers about 7 million kids).
  • Families with incomes of up to three times the federal poverty level would qualify.
  • It also reauthorizes the 12-year-old program, which was scheduled to expire on March 30.
  • It eliminates an earlier provision that barred newly arrived legal immigrants and pregnant women from enrolling for five years.

Critics argue that it shifts too many children from private to public insurance.  John C. Goodman, president of the National Center for Policy Analysis, says the cigarette tax disproportionately hurts poor people, who are more likely to smoke.  He also argues that expanding the number of children in public programs results in lower reimbursement rates for doctors and a higher burden on taxpayers.

"We think this a very bad thing to do," says Goodman.  "It will encourage people to drop private insurance and enroll in a public program that in most places pays little better than Medicaid rates to providers.  The more people you put into a public program, the more difficult it becomes."

Source: Jenny Marder, "After SCHIP Bill Signing, Major Health Challenges Will Persist for Kids,", February 4, 2009.

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