Socialized Medicine by Stealth: Panel Calls SCHIP Expansion ‘Bad for Kids, Families, and Taxpayers’

The Senate Finance Committee moved this week to expand the role of government in our health care system by expanding SCHIP (the program that gives government health care to children in families with too much money to qualify them for Medicaid) to families with higher incomes. Our Ryan Balis provides a timely report on a conference sponsored by two conservative organizations about SCHIP — and why spending an additional $35 billion on it funded by a tax on dispropropriately lower-income people is a bad idea:

Proposals before Congress to radically expand the State Children’s Health Insurance Program (SCHIP) are the camel’s nose under the tent on the way to establishing universal, government-run health coverage in America. This was the central message at a luncheon Friday on Capitol Hill co-sponsored by The American Legislative Exchange Council (ALEC) and The Heritage Foundation.

Congress authorized SCHIP in 1997 to provide health coverage for poor, uninsured children whose families cannot qualify for state Medicaid coverage (because their earnings are above Medicaid’s income limits) but who also cannot afford private insurance. Present reauthorization efforts in Congress would massively increase eligibility and access to cover millions more children, thus expanding the role of the federal government and creating a new federal entitlement program. (See specifics regarding current federal proposals.)

On hand to discuss the pitfalls of expansion were U.S. Rep. Marsha Blackburn (R-TN), Maryland House Del. Adelaide “Addie” Eckardt (R-Eastern Shore), Nina Owcharenko of The Heritage Foundation and Christie Raniszewski Herrera of ALEC, who moderated the discussion.

The reauthorization of the SCHIP has given those in Congress favoring government-managed health care an opportunity to establish a new federal entitlement. “[SCHIP] was designed to be a block grant program with a money transfer – a block grant transfer to the state – to fill a designated, defined and specific need,” said Rep. Marsha Blackburn. “Now what we have is the liberal left push to implement Medicare for everybody or universal health care or what certainly is a socialistic health care system. So, what they’re trying to do is say well let’s just make SCHIP an entitlement.”

Blackburn explained that making SCHIP an entitlement has long-term implications: “Ronald Reagan has told us everything we need to know about an entitlement. His comment was there is nothing so close to eternal life on Earth as a federal government program. Once you got it you got it, and it ain’t going away.”

If SCHIP reauthorized includes expanded coverage, Blackburn warned, private health insurance rates would increase. “As more things are made free, somebody else is paying the cost: it is the taxpayer and it those that are buying private health insurance,” she said. Expanding SCHIP “walks us closer to socialized medicine.”

Maryland Del. Addie Eckardt talked about her state’s response to SCHIP. Echoing Rep. Blackburn’s warning about costs, Del. Eckardt said, “If we continue to expand the children’s health program… you take more of the people that are eligible… in the private market and, thus, we increase the cost.”

Eckardt also spoke about long waiting lists in her state and the many people who are unable to get the kind of care they need. The lesson to consider when thinking of expanding government health coverage is: “You are again creating a situation where some people get access to health care and others will not,” warned Eckhardt.

Picking back up at the federal level, senior policy analyst Nina Owcharenko of The Heritage Foundation outlined the major implications of expanding SCHIP and presented market-based alternatives for increasing health insurance coverage.

If Congress adopts many of the provisions now under consideration in SCHIP’s reauthorization, some 71 percent of U.S. children would be eligible for coverage. Owcharenko argued this will “increase dependency on the federal government for health care. There is no doubt.”

Owcharenko continued: “71 percent of children being eligible for a government health care program seems a lot to me. And I think it’s staggering to think about the implications that… in the future that once these children are 18 they know nothing else but a government run health care program. So what are they going to expect when they’re 25, when they’re 40?: To have a government-run health care program.”

The other major implication is that the bills would displace private health coverage. By expanding eligibility, the “crowd-out” effect concerning private health coverage could be 25 to 50 percent. “That’s significant,” argues Owcharenko. “That means that for the children that have private coverage that now enroll in SCHIP, somebody is going to lose private coverage because of it.” Moreover, “With fewer people in the private market, the more expensive it’s going to be for us to have private health insurance.”

Finally, at the macro level, expanding coverage will burden taxpayers. “This isn’t free lunch. Taxpayers are going to have to pay for it,” said Owcharenko. “When…the mission of the program is to find every eligible child and enroll them you certainly are going to break the bank on that.”

Owcharenko continued: “The worry is that these proposals are talking about we need to find and enroll all eligible children. That seems to be the big bumper sticker now… But when on Earth did we decide that we’re going to seek out every child that may be eligible and then force them on a government health care program and then pay for it in a vacuum?”

Instead of expanding a federal health care program, Owcharenko suggested moving away from government dependency and toward a consumer-oriented and market-based health care system. Suggestions include cost-sharing arrangements in which recipients pay for a portion of the coverage and a tax credit for low-income families to afford private coverage.

As Owcharenko points out, flexible market-based reforms would give “families the power and control to say ‘I want to take this much from SCHIP and enroll my kid in my private plan. I don’t care what the state thinks about the private plan. This is the plan that works for my family, and I want my kid on it.'”

To contact author Ryan Balis directly,
write him at [email protected]


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