SCHIP Reauthorization Bill Moves Forward

Published July 26, 2007

On July 19, the U.S. Senate Finance Committee voted 17-4 to approve a 61 cents per pack cigarette tax hike to fund expansion of the State Children’s Health Insurance Program (SCHIP) by $35 billion over the next five years–despite the threat of a presidential veto.

Finance Committee Chairman Max Baucus (D-MT) told the Associated Press after the vote the tax is necessary because “there are more kids without health insurance than there are kids in the first and second grades.” The 10-year-old program, which subsidizes insurance for children and some adults who earn too much to qualify for Medicaid but not enough to afford private coverage, will expire on September 30 unless it is reauthorized.

The only committee members to vote against the bill–Sens. Trent Lott (R-MS), John Ensign (R-NV), Jim Bunning (R-KY), and Jon Kyl (R-AZ)–agreed with analysts who have been saying for weeks that expanding the program is a faulty idea at best and is worsened by trying to accomplish it through a cigarette tax.

Instead, the analysts say, the bill is a thinly veiled attempt to move toward a socialized health care plan, since children raised on the government dole today will know no better methods once they reach adulthood.

“Since when is it OK to raise taxes to force socialized medicine on the middle class?” asked Ryan Ellis, tax policy director at the Washington, DC-based group Americans for Tax Reform. “Why should taxpayers be required to pay for health insurance that most of these new recipients can afford to pay for themselves?”

Bad Policy

According to the U.S. Census Bureau, between 1997 and 2005 the number of uninsured children nationwide declined. A major reason SCHIP needs more money is that 10 percent of its recipients are adults, and 14 states have used the program to offer subsidized health care to people earning up to 400 percent of the federal poverty limit–as much as $60,000 a year for a family of four.

“Government health care programs should be limited to the poor,” said Marc Kilmer, a policy analyst at the Buckeye Institute, a free-market research group in Ohio. “Unfortunately, the Senate Finance Committee has given its sanction to state efforts to expand SCHIP well into the middle class. It is amazing that the Finance Committee would support raising tobacco taxes, which disproportionately hit the poor, to pay for health care for wealthier individuals.”

Grace-Marie Turner, president of the Galen Institute in Virginia, noted the SCHIP bill proposes reimbursing states 70 cents on the dollar, rather than the average 57 cents per dollar Medicaid pays back.

“That means the federal government will continue to pay a higher percentage of the costs for wealthier SCHIP kids than for poorer Medicaid kids,” Turner noted. “This is bad policy.”

Too Dependent

The White House promised earlier this month to veto any SCHIP reauthorization bill that greatly expands citizens’ dependence on government-subsidized health care. President George W. Bush supports expanding the program by $5 billion over its current budget–not the $50 billion the Senate Finance Committee originally wanted over the next five years, nor the $35 billion compromise the committee reached on July 19.

Health and Human Services Secretary Michael Leavitt said if the children who currently depend on SCHIP for their health care no longer have it on October 1 because the program could not be reauthorized, the fault will lie with legislators.

“We are ready to renew our commitment to low-income children today, but we cannot agree to a gradual government takeover of health care,” Leavitt told the Associated Press on July 19, “and neither will the American people.”

The bill is pending in the House Ways and Means Committee.

Karla Dial ([email protected]) is managing editor of Health Care News.