Can the Democrats Take the Health Care Agenda Back? S-CHIP is the First Test and the Test is On

The debate over how the State Children's Health Insurance Plan (S-CHIP) will be reauthorized is really about whether the Democrats can finally take the health care agenda back from the Republicans.

If the Congress cuts private Medicare plan payments to pay for a bigger S-CHIP, it will be a double whammy--a bigger government health plan and potentially a smaller private Medicare program.

Congress is returning today for a critical few weeks before the August recess and we expect to see action in both the Senate and the House on S-CHIP.

The Democrats will attempt to reauthorize and expand the State Children's Health Insurance Plan (S-CHIP), which is scheduled to expire on September 30th if it is not reauthorized.

S-CHIP was a 1996 effort to build on Medicaid, state by state, for children. Because of that bipartisan legislation, 7.5 million children are covered.

Many, on both sides of the aisle, laud the program as having made a very positive step at a time the uninsured were otherwise growing. However, many conservatives believe too many of the states have taken the program further than the Congress originally intended by covering children above 200% of the poverty level, and even some adults, and want to rein it back in to its original scope.

The latter group includes President Bush who sees S-CHIP's current level as having gone further then it should have and Democratic efforts to expand it as a back door attempt at a government-run health care system.

At the heart of this is an ideological question: Should we expand the private market's involvement in health care or government's?

Conservatives like President Bush want to develop a primarily private health insurance program based on individual choice and responsibility. This would include vouchers for people to buy private plans including health savings accounts.

Many Democrats want to see the expansion of existing public and private health plans that emphasize large pools of people like employer plans, traditional Medicare, Medicaid, and S-CHIP.

Democrats want to add an extra $50 billion to the S-CHIP program over the next five years--something President Bush has labeled a "massive expansion" in government-run health care. The President would increase spending by $5 billion--a level that would likely force states back to eligibility levels closer to 200% of poverty.

So, the battle lines are set.

S-CHIP is really about whether Democrats will be able to begin to move their vision of health care reform forward or whether conservatives still have enough clout--including the Bush veto--to hold them off.

The S-CHIP battle will also impact a number of other big 2007 health care issues including Medicare provider payments--most notably the pending 10% physician fee cut--and payments to private Medicare plans.

To come up with the money to reauthorize S-CHIP at any level, Democrats will need money. Paying for S-CHIP, offsetting some or all of the coming doctor cuts, and maintaining payment levels for other Medicare providers are all going to cost a bundle--perhaps as much as $100 billion.

It is possible that the Congress will stalemate over S-CHIP reauthorization before the program's funding expires on September 30th. Democrats will need 60 votes in the Senate and that could be a real problem if they want to spend $50 billion. A stalemate would likely lead to an agreement to continue the program temporarily until the Congress can work out the issue--likely as part of the year-end budget process.

If S-CHIP gets lumped into the final omnibus budget bill that will be a big help to Democrats who would then be less susceptible to a Bush veto or the Senate 60-vote rule if an S-CHIP deal is just one cog in a final comprehensive budget bill.

So just how S-CHIP will be reauthorized is the first test for the new Democratic majority and their ability to move a Democratic health care agenda.

That makes the next few weeks an especially critical period for American health care reform.