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by Gary Galles | Malibu
Twice, Congress has passed a State Children’s Health Insurance Program (SCHIP) expansion that was vetoed by George Bush.  Now, with a new President who will sign it, House Energy and Commerce Committee chair Henry Waxman said “We want to get this to the President as quickly as possible; therefore we’re going to rely on the [2007] bill pretty much as it passed”.  Unfortunately, the arguments made then for SCHIP expansion were both misleading and unconvincing, and they remain so now. Advocates cite widespread endorsements by state politicians, who would get more federal dollars, and medical providers and families, who would directly benefit from the spending, to demonstrate SCHIP’s value. But that its beneficiaries like the idea says nothing about whether those subsidies, necessarily at others’ expense, are good policy.  I would like to take your money for myself, but that is robbery, and robbery doesn’t become good policy just because the robbers like the results. SCHIP cheerleaders then typically ignore or dismiss many of the real issues in their “analysis.” Backers ignore the fact that not having health insurance is different from not getting health care, just as not having food insurance does not mean one will not eat.  The uninsured have access to emergency rooms, charitable aid and low-cost clinics.  Further, uninsured children can often be retroactively insured for up to 90 days in many cases. Backers ignore that while SCHIP’s imagery is of young children, some states already have more adult recipients than children and the proposed expansion does not focus any better on young children Backers ignore that SCHIP would be expanded well beyond low income families.  Expanding coverage to those with three times the federal poverty line (over $60,000, for a family of four), with proposals to expand it even further, goes far beyond assistance to low-income children  In fact, that income is above the median income in over a dozen states.  Those earning that amount do not need to force others to help fund their children’s health care. Backers ignore that the cigarette tax increases proposed to fund SCHIP’s expansion would redistribute income from poorer people to those who are better off.  Tobacco taxes are regressive, taking a substantially larger proportion of income from lower income people than others, so using them to expand subsidized insurance for families with annual incomes into the $60,000-plus range actually harms many with low incomes. Backers sometimes admit in passing that SCHIP’s expansion will cover some families who could afford private health insurance, but assert the effect is small.  However, leading academic studies have estimated the crowding-out rate at as much as 60% for further expansions in the income cutoff for eligibility. That would mean a majority of beneficiaries replace coverage they would have had anyway with coverage subsidized by others, dramatically undermining claims of how many added people an expansion would insure. After ignoring or misrepresenting such real issues, SCHIP proponents focus on rejecting opponents’ claims that SCHIP expansion will be “socialized medicine.”  But focusing on rebutting one poorly phrased argument (the proposed expansion in government intervention is not the same as socialism, even if it could be considered a move in that direction) does not establish the validity of proponents’ assertions.  When there are multiple powerful arguments against something, rebutting only the least convincing one does not rebut them all. The other arguments need to be seriously addressed, as well. Those favoring expanding SCHIP trumpet their compassion for children and attack opponents as inexcusably mean.  But the Scrooge versus Tiny Tim imagery is neither accurate nor complete.  Instead, it crowds out rational consideration of an extremely questionable policy, especially when combined with urgent “we must act now” rhetoric.  And if the strongest arguments supporters can make for it require both substantial misrepresentation and high pressure, they have a poor case. CRO copyright 2008 Gary Galles Mr. Galles is a professor of economics at Pepperdine University.

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