POLITICS: Forgotten children and unopened bills By Eric Novack

On October 18th, the US House of Representatives will try to override the President’s veto of a greatly expanded State Children’s Health Insurance Program (SCHIP).  As is so often the case, political rhetoric serves as a fog that obscures what the SCHIP legislation really is and who is most affected.

The Democrats believe that they win by losing. Republicans shout “socialized medicine”.

But the Democrats went even lower this past week by bringing out a 12 year old boy and his family to be the ‘poster child’ for SCHIP expansion.

Nancy Pelosi is incensed and explains- by accident- why they chose a
12 year old to headline the program: “I think it’s a sad statement
about how bankrupt some of these people are in their arguments against
SCHIP that they attack a 12-year-old.”  In other words, how dare anyone
question what we are doing?    

Republicans could be focused on the fact that the program has almost
ZERO funding after the first 5 years. Republicans could be focused on
the hundreds of millions of dollars that are given to favored hospitals
in certain legislative districts around the country.  But they cannot
and do not because both parties are equally guilty of promoting
policies and spending that are more at home at the gambling table than
at the dinner table.   

Government spending on the proposed SCHIP expansion violates a very
simple principle stated by philosopher/ economist Adam Smith over 200
years ago: “what is prudence in the conduct of every private family,
can scarce be folly in that of a great kingdom.” 

In other words, wildly spending on a credit card you cannot ever repay
is just as destructive for you personally as it is for the country as a
whole.  But back to the 12 year old boy who has been marched out to
show who benefits from the expanded SCHIP program.

Instead of attacking his family personally, which rings hollow and just
plain mean to most Americans, opponents ought to bring out the children
living in poverty who might really go hungry or cold because of the
$222 per year tax that was just added to their single parent who
happens to smoke a pack per day. What do you mean?  Remember that the
program is partly financed with a 61 cent per pack cigarette tax—a tax
that disproportionately impacts low income adults. 

I suspect that most Americans would suddenly be less inclined to
support the SCHIP expansion when they see several children negatively
affected for every 1 child helped. However, given that most government
programs ignore both “the children” and common sense financial
planning, we are likely to see the SCHIP debate played out with them
tucked away and forgotten.

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8 replies »

  1. You know, the arguments against funding an SCHIP expansion using a cigarette tax are the stupidest and most morally bankrupt I have ever heard. Enough all ready. It’s crap. Call it.
    In fact, parsimonious regulation using subtle and natural market incentives is exactly what the Republicans would want had they not lost their moral compass.
    The real problem is that smoking is declining overall and any funding mechanism based on a cigarette tax is not a long-term solution.
    Please, put the party dogma away and argue with logic and integrity.

  2. “I would prefer to see reform in the insurance market and a mandate to obtain coverage. I doubt that family pays much in taxes, and would favor a credit or premium subsidy to encourage them to obtain coverage.”
    Certainly that’s what the insurance industry sees as a solution protecting their profits. And of course it protects profits of providers as well. That 20% of GDP gets closer and closer.
    “In a telephone interview, the Frosts said they had recently been rejected by three private insurance companies because of pre-existing medical conditions.”
    If this is true then we can see another example of why the private sector got us here and why it can’t/won’t/don’t want to solve these affordability problems.

  3. I read the articles about the Baltimore family and think it’s an excellent example of how gov’t incentives drive the decisions families make.
    Property is favored under our tax code, so our not very well off family owns some. Insurance is difficult to buy if you don’t get it through an employer — so our family skipped that.
    With six people, even with a small mortgage, $40-50K a year does not go far. Even a cheap policy of 300-500 a month would be a stretch, particularly if they exclude existing problems which you’d still have to pay for.
    Insuring children is a wonderful idea, but what if the father/mother in that family gets injured at work and runs into debt being off of work/medical bills or doesn’t seek care for his health and dies or becomes unable to work?
    The SCHIP program still doesn’t address the needs of working people, just their children.
    I would prefer to see reform in the insurance market and a mandate to obtain coverage. I doubt that family pays much in taxes, and would favor a credit or premium subsidy to encourage them to obtain coverage.

  4. Neither side of the SCHIP fight wanted to enact the legislation; they were playing to their bases and positioning for next year’s campaign. The Democrats went out of their way to craft a bill Bush was sure to veto- from funding it w/ a tax increase instead of spending cuts, hiding the outyear costs and larding it up with favors (rural Wisconsin hospitals suddenly part of Chicago for higher Medicare payments, a bailout for ProCrit- previously discussed in this blog, etc.) They created a bill Bush could not sign to force Republican Congressmen they want to defeat next year to override, enabling them to run against the “kid hating, thoughtless Republican cretins” in 2008. The Republlicans were equally meretricious, raising the shabby “socialized medicine” canard and pretending to be tough on spending after six years of shovelling public dollars into their friends pockets. Sad to say, for a person who detests most of what Bush has done domestically, he was right to veto this bill. His Republican colleagues will pay for it next year.
    While I don’t have a problem with the cigarette tax, I have a big problem with the idea that the children of parents w/ $60-80 thousand a year incomes have a higher claim on public subsidy than, say, that homeless Vietnam vet sleeping on a grate, or the widow whose husband’s death left her stranded withough health coverage ten years short of Medicare. The 10 million plus boomers who lack health coverage face far larger health and financial risks than relatively well off children; they just don’t make such heart breaking subjects of tawdry political campaign commercials. Our politicians should be ashamed of themselves.

  5. Eric, I’m a little confused by your post. Are you in favor of a tax to FULLY fund SCHIP as an act of fiscal responsibility or are you against SCHIP expansion? Would you be in favor of a tax to fully fund the Iraq War and the coming war with Iran? Would you be in favor of a tax to fight global warming?
    Here’s some background on that 12 year old boy and his family from the NY Times.
    “The critics accused Graeme’s father, Halsey, a self-employed woodworker, of choosing not to provide insurance for his family of six, even though he owned his own business. They pointed out that Graeme attends an expensive private school. And they asserted that the family’s home had undergone extensive remodeling, and that its market value could exceed $400,000.
    One critic, in an e-mail message to Graeme’s mother, Bonnie, warned: “Lie down with dogs, and expect to get fleas.” As it turns out, the Frosts say, Graeme attends the private school on scholarship. The business that the critics said Mr. Frost owned was dissolved in 1999. The family’s home, in the modest Butchers Hill neighborhood of Baltimore, was bought for $55,000 in 1990 and is now worth about $260,000, according to public records. And, for the record, the Frosts say, their kitchen counters are concrete.
    Certainly the Frosts are not destitute. They also own a commercial property, valued at about $160,000, that provides rental income. Mr. Frost works intermittently in woodworking and as a welder, while Mrs. Frost has a part-time job at a firm that provides services to publishers of medical journals. Her job does not provide health coverage.
    Under the Maryland child health program, a family of six must earn less than $55,220 a year for children to qualify. The program does not require applicants to list their assets, which do not affect eligibility.
    In a telephone interview, the Frosts said they had recently been rejected by three private insurance companies because of pre-existing medical conditions. “We stood up in the first place because S-chip really helped our family and we wanted to help other families,” Mrs. Frost said.
    “We work hard, we’re honest, we pay our taxes,” Mr. Frost said, adding, “There are hard-working families that really need affordable health insurance.”
    Eric, do you support the liquidation of assets just to pay healthcare costs? Let’s drive families down to Medicaid level before we start helping them, is that your position? And the expansion to 400% of FPL is just about $82,000/year for a family of four. Sounds like a lot but I hardly think this will be the bulk of SCHIP families, and not a lot of income when you have severe health problems.
    But I also disagree with using cigarette taxes to fund SCIP as I think we all should help fund programs like this. But politicians are cowards and voters always want use of the other guys taxes but don’t want to pay their own. By the way Eric, people don’t just “happen to smoke a pack a day”, they choose to smoke and can choose to stop as well. I think Medicaid will even help them won’t it (not sure)? Anyway, aren’t you for personal responsiblity? Maybe this will force a little personal responsibility on smokers.
    Because we have turned politics into a cash for hire, two party system of sound bites, gotchas and grand standing (hooray for our side) you get little boys paraded around for the cameras. I think the real money behind opposition to SCHIP is the insurance industry afraid of crowding out and lost premiums, while having to look over its shoulder for universal single-pay coming up the rear.

  6. Eric,
    I think both parties have a lot to answer for on the fiscal responsibility front. While I haven’t studied the bill in detail, from what I’ve read about it, I thought the veto was appropriate, though Bush’s original proposal was inadequate. Like I said in my original comment, I think funding should be sufficient to cover children in families up to 300% of the FPL. Children with significant health issues whose parents earn above 300% of the FPL should be dealt with by improving the state high risk pools. States that want to extend subsidies beyond 300% of the FPL should look to their own taxpayers (not national taxpayers) to cover the cost.
    The 90% funding dropoff in year six is political hackery intended to satisfy the budget scorers. Hopefully, a more sensible health insurance system will be in place by then in any case.

  7. barry- so you are against the bill as passed by Congress and vetoed by the President?
    SCHIP has limited funding as it is proposed— the funding drops 90% in year 6— which of course will never happen in a presidential election year… thus my point that fiscal responsibility from both parties is nearly equally lacking.

  8. Sorry Eric, but I think the increase in the cigarette tax is warranted for two reasons. First, the well established harmful health effects of smoking suggest that it is good public policy to tax cigarettes at a high rate so their price more fully reflects the full social cost of producing them. Second, perhaps the higher price will be the catalyst that finally drives smokers (especially low income smokers) to quit smoking. If everyone quit and drove cigarette tax collections to zero, that would be a great outcome even if we have to look to other taxes to replace the lost revenue.
    With respect to SCHIP specifically, my understanding is that this is a program with limited financing (as opposed to an entitlement). States receive block grants to finance health insurance for children from very low income families. Some states also use some of the money to pay to insure low income adult men and non-pregnant women. Why is this sound policy when resources are limited and the very name of the program is State CHILDREN’S Health Insurance Program?
    Politically, children are the most sympathetic sub-group when it comes to health insurance, and they are cheap to insure compared to adults. As a taxpayer, however, I don’t like to see the income eligibility limit rise so high that we start to bring children into the SCHIP who are already well insured privately. If liberal states like NY and NJ think it’s such a great idea to publicly insure children from families with incomes up to 400% of the FPL, they should call on state taxpayers instead of federal taxpayers to pay for them. I think 300% of the FPL would be an adequate cutoff for now. For children with significant health issues from families with incomes above 300% of the FPL, better access to a state sponsored and subsidized high risk pool could provide relief to those most in need without creating a new open ended entitlement.