Obama’s sinking SCHIPWritten by Maggie Thurber | Toledo Free Press Writer | firstname.lastname@example.org
Last week, President Barack Obama signed the new SCHIP bill (H.R. 2) into law. SCHIP, the State Children’s Health Insurance Plan, is a federal-state welfare program designed to provide insurance to children in families with incomes too high to qualify for Medicaid but too low to afford private health insurance. H.R. 2 was both a renewal and expansion of the program.
The estimated cost of the bill is about $33 billion and it is supposed to extend health coverage to between 4 million and 11 million uninsured children (depending on which news report you read). In reality, it is likely to move children with insurance into a government-run program.
Under the old law, children were eligible for coverage if the family earned less than 200 percent of the poverty level. Gov. Ted Strickland welcomed the passage of the legislation because it increased the eligibility limits to 300 percent of poverty — an increase he’d been seeking for Ohio.
According to 2005 census data, the top 25 percent of income earners make more than $62,000. The top 50 percent of income earners earn $31,000. In Toledo, the median income (half earn more and half earn less) is about $32,500.
For a family of four, 300 percent of poverty level is around $62,000, which means the new law will cover almost all of the “middle” class. Interestingly, many public employees, including teachers, would qualify for this expanded coverage, even though they have very good medical coverage through their employers.
But if you’re paying a portion of your children’s health coverage through your employer and you are now eligible for “free” coverage from the taxpayer-funded SCHIP, wouldn’t you switch over? In fact, a study in the March 2008 issue of the Journal of Health Economics found that approximately 60 percent of the increase in SCHIP coverage between 1996 and 2002 came from families that dropped the private health insurance they already had when they became eligible for SCHIP.
And that’s part of the problem.
Depending on which study you examine, significant portions — up to two-thirds — of uninsured children are currently eligible for SCHIP or Medicaid but are not enrolled. Much of the opposition to this expansion legislation was predicated on making sure that poor kids not signed up actually get enrolled in the program and receive the health coverage before making others eligible.
Because that was not the focus of the final version of the bill, it is reasonable to ask if we will continue to have poorer kids go without while the “richer” families rush to enrollment.
Hawaii found this scenario before ending its universal coverage for kids. Gov. Linda Lingle said it was unwise to spend public money to replace private coverage children already had. Apparently, no one in Washington, D.C., was able to learn from Hawaii’s example.
That isn’t the only problem with the expansion. Many states cover adults under this program and the new legislation protects their ability to continue to do so. So a program designed to ensure that kids get health insurance — and which needs more money because too many kids are going without — pays for adults to have coverage.
Additionally, some states received waivers, like Ohio was seeking, and already have eligibility levels above the 300 percent of poverty level. New Jersey is at 350 percent, or about $72,000 per year for a family of four. New York voted to increase eligibility to 400 percent of poverty, or $84,000 a year, though that has yet to be approved by officials in Washington.
But the larger and longer-term problem is the funding. A significant portion of funding for SCHIP comes from taxes on tobacco, and this expansion is no different. The legislation is funded by an increase in federal cigarette taxes from 39 cents to $1 per pack. That’s a 156 percent increase. It also raises taxes on cigars, rolling papers and other tobacco-related products.
At the same time, however, the federal and state governments have been spending a fortune trying to convince people to stop smoking. In fact, the House version of the stimulus bill included $75 million for smoking cessation programs.
As eligibility levels increase and government seeks to cover more people through the SCHIP program —and as they continue to spend millions to reduce smoking they are working to eliminate the source of revenue they rely upon “for the children.”
It doesn’t make sense, but that didn’t stop them from doing it.
Former Lucas County Commissioner Maggie Thurber blogs at http://thurbersthoughts.blogspot.com.