Reverse Robin Hood: Congress’ Regressive SCHIP Expansion Would Tax Poor to Fund Health Insurance for Middle and Upper-Middle Class

Washington, D.C.A successful effort by Congress to expand the State Children’s Health Insurance Program (SCHIP) by $35 billion over five years over White House protests would require low-income Americans to subsidize health insurance for children and young adults in the middle and upper-middle classes, says a September 2007 paper by David Hogberg, Ph.D. published by the National Center for Public Policy Research.

If SCHIP is expanded as Congress now proposes, says the paper, people making under 200 percent of the poverty line will subsidize health insurance for children and young adults in families over 200 percent, perhapos as high as 400 percent, of the poverty line:

Both SCHIP bills passed by Congress take the tax revenues from those under 200 percent of the poverty level and give it to those children who live in families above 200 percent of poverty, likely all the way up to 400 percent of the poverty level…  It is not inconceivable that a parent with one child with an income of $13,690 will be funding benefits for two children in a family of four with an income of $82,600.  In short, SCHIP expansion would result in families whose income puts them in the bottom 15 percent of households funding benefits for children who are in families close to the top 25 percent of households.

The paper also notes that Congress supports reimbursing states for SCHIP expenses for middle and upper income children and young adults at a higher rate than it reimburses Medicaid expenses spent on the poor:

SCHIP is supposed to insure children for families that make too much money to qualify for Medicaid.  Presumably, then, children on Medicaid are in families that are poorer than are children on SCHIP.  Yet the federal government matches the dollars states spend on SCHIP at a proportionally higher rate than it does Medicaid.  In 2006, states spent a total of about $132 billion on Medicaid, while the federal government matched that with $165 billion.  That means, on average, the federal government spends 1.2 dollars on Medicaid for every one dollar the states spend.  For that same year, states spent almost $2.4 billion on SCHIP and the federal government sent the states $4.8 billion in matching funds.20   Thus, the federal government spends two dollars on SCHIP for every one dollar the states spend.  In short, the federal government spends proportionally more on the children in SCHIP than it does on the poorer children in Medicaid.

The paper, “SCHIP Expansion: Socialized Medicine on the Installment Plan,” by David Hogberg, Ph.D., is available online at

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