Congress Extends, Does Not Expand, SCHIP

Published February 1, 2008

By a nearly unanimous vote, the U.S. House of Representatives approved a measure extending the current State Children’s Health Insurance Program (SCHIP) until March 31, 2009.

At press time, President George W. Bush had not yet signed the measure but was expected to do so.

Just two weeks earlier, on December 12, Bush vetoed Congress’s second attempt to pass a dramatic expansion of the program.

The proposed expansion would have made nearly four million additional people eligible for government-funded health insurance. The cost of the expansion would have been $35 billion over five years, which Congress largely sought to pay for with new taxes on cigarettes.

The SCHIP extension is projected to costs $1.6 billion. Nearly six million people are already on the rolls of the existing program.

Bush returned the expansion bill to the House, admonishing legislators, “our nation’s goal should be to move children who have no health insurance to private coverage–not to move children who already have private health insurance to government coverage.”

Massive Crowd-Out

If the proposed expansion had become law, the most likely result would be massive crowd-out of private insurance, according to a report from The Heritage Foundation, a think tank based in Washington, DC.

“SCHIP expansion would encourage families in that income range with current private coverage to switch their children to the ‘lower-cost’ or ‘free’ public SCHIP coverage–a phenomenon known as ‘crowd-out,'” wrote Edmund F. Haislmaier and Greg D’Angelo, of Heritage’s Center for Health Policy Studies, in a December 6 report titled “Expanding SCHIP: Not the Best Option for States.”

The authors note, “in estimating the federal costs of such an expansion, the Congressional Budget Office (CBO) assumes that for every two children that gain coverage through the expansion, one will have previously been uninsured and one will have previously had private coverage–a 50 percent crowd-out rate.”

Cost Increases

Nina Owcharenko, The Heritage Foundation’s senior policy analyst for health care, said SCHIP expansion only “sets the program on a path toward becoming an entitlement, adds additional fiscal burdens on states and federal taxpayers, and crowds out existing private coverage.”

Michael F. Cannon, director of health policy studies for the Cato Institute, a Washington, DC think tank, argued in a September 24 article in the New York Post the proposed expansion would “make private insurance more expensive for everyone else.”

Jeff Emanuel ([email protected]) is The Heartland Institute’s health care policy research fellow.

For more information …

H.R.976: Children’s Health Insurance Program Reauthorization Act of 2007:

“Expanding SCHIP: Not the Best Option for States,” by Edmund F. Haislmaier and Greg D’Angelo, The Heritage Foundation, December 6, 2007:

“Sink this SCHIP,” by Michael F. Cannon, Cato Institute, September 24, 2007: