Friday, September 28, 2007

If the $35 Billion Expansion of SCHIP is About Moving to Government-Run Health Care Why Does the Insurance Industry Support It?

Both the House and Senate have now passed the $35 billion expansion of SCHIP. The House by 265-159 and the Senate by a vote of 67-29. The Senate bill got exactly the two-thirds it needs to override the expected Bush veto and the House fell 25 votes short of the 290 it will need.

Opponents of the bipartisan compromise to renew and expand the State Children's Health Insurance Program primarily argued that this expansion was really about a big step toward government-run health care.

But the whole of the insurance industry supports it--both America's Health Insurance Plans and the Blue Cross Association.

Opponents have said that the program has grown well beyond its original intent to cover only children below 200% of poverty. That is correct. But SCHIP is a block grant program. The feds give the states a chunk of money and then give them a great deal of flexibility in how they use it. In fact, the Bush administration has approved many of these exceptions. While New Jersey has really pushed things by covering kids in homes up to $80,000 (four times the poverty level) that is an aberration. In fact, the bipartisan bill reduces federal funding for states that enroll children above 300% of poverty, prohibits the feds from approving any more states from covering parents, and phases-out state coverage of childless adults--pretty much all of the things opponents are complaining about.

Opponents also argue that we still haven't covered all of those below 200% of poverty and therefore shouldn't be covering anyone above that level. But, the bipartisan bill calls for states not meeting enrollment goals to begin losing money for those covered above 300% of poverty by 2010.

Block grants are a Republican idea. When the Bush administration tried to reform Medicaid a few years ago by employing block grants they thought it was a good idea and a lot of Democrats didn't like it.

Block grants are a way to give states a lump of money and encouragement to find the most imaginative way to use the money.

But here is George Bush now telling all of these states--most of which his administration gave the go-ahead to--that he's from Washington and he knows better!

Yes, it will cost another $35 billion--the President favors $5 billion more. But he had no trouble finding almost $200 billion this week to fund the war.

Critics argue that the 61 cent tax on tobacco can't be trusted to fund the program because it will lead to a reduction in smoking and revenue falling short of projections. Now there's a problem--the tax results in a reduction in smoking. They argue that it is an unfair tax on the poor. Well it's a tax on behavior that costs the rest of us tons of money when they become uncompensated care or fall back on Medicaid. Looks to me like if there ever was a fair tax on the poor this is it.

SCHIP is not perfect and New Jersey is an example of a state that has gone well beyond the original intention--although they might tell us they have made the money go further than anyone else.

But in this frustrating area of health care it is also an example of:
  • Something that has worked for 6 million kids.
  • Doing what all of those Republican presidential candidates support--giving states more flexibility to find local solutions that are not "one size fits all health care."
  • A bipartisan deal when Democrats and Republicans don't otherwise seem to agree on anything.
The White House says this is about drawing a line in the sand over the expansion of government health care and a chance to take a different direction by passing the President's proposals to use the tax code to enable the near poor to buy their own coverage in the private market. But the fact is George Bush made no effort to do that in the six years his party had the White House, the Senate, and the House. To think he can do it now with Dems in control of the Congress is simply foolishness.

Then there is the fact that he says this is government-run health care but the whole of the insurance industry supports the bipartisan bill.

A big reason the insurance industry supports the bill is because the states are using private insurance to deliver the SCHIP benefits to children! The Republicans have started the privatization of government health care--Medicare Advantage, Part D, Medicaid in many states, and SCHIP.

SCHIP is largely a government-run program provided through private insurance companies.

In the end, President Bush is going to compromise. He will likely go along with funding that will at least maintain the program at current levels--albeit nowhere near the $35 billion.

But on the way to doing that he, and the conservative Republicans, are politically shooting themselves in the foot going into an election-year in ways that are just unfathomable.


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