Quinn: The Kids Aren't All Right

The hit job on SCHIP—the State Children's Health Insurance Program—has been so professional that the slurs may never wash off. Until recently, SCHIP had staunch, bipartisan support. Now it has become an innocent victim of the ideology wars. This 10-year-old program primarily insures lower-income kids from families that earn too much to qualify for Medicaid. About half the states set the income cutoff at twice the poverty level, or $41,300 for a family of four. Eighteen states and the District of Columbia go higher, nine enforce lower ceilings. SCHIP is expected to cost $6.3 billion in 2007.

Last month Congress voted to add $35 billion to the program over the next five years. President George W. Bush vetoed the bill, and last week House Republicans sustained the veto. To make that OK with the public, SCHIP's opponents unleashed a vicious attack on its aims. Some of the questions they raised, and my answers:

IS SCHIP "government run"? No. Like Medicare, it's government funded but privately run. The states contract with insurance companies (usually HMOs). Many patients have a choice of plans, and pay premiums and co-pays.

Does it cover illegal aliens? No, although this is the wing nuts' nastiest slur. SCHIP doesn't even cover legal immigrants until they've been here for at least five years.

Did the bill squander taxpayers' money on the undeserving middle class? No again. It financed coverage for 3.2 million lower-income kids, including 2.5 million who are eligible but haven't been included yet. It could have paid for 600,000 more kids from families earning up to triple the poverty level ($61,950, for four). That's the income group losing health insurance today, mainly because fewer companies offer the benefit or the premiums cost too much.

Is SCHIP funding more adults than kids? NO way. Adults make up fewer than 10 percent of the SCHIP population. They're insured under waivers approved by the Bush administration, back when the president supported the program. Eleven states cover pregnant women. Eleven cover low-income parents (family coverage gets more kids signed up). The bill that Bush vetoed prohibits new waivers for parents and phases single adults out of the program.

Are parents dropping private coverage to go on the government program? Some parents switch, but that can't be helped. "It's like fishing for tuna," says MIT economist Jonathan Gruber. "When you let down the tuna nets, you catch some dolphin, too."

The data on switching: Among new kids enrolled, 28 percent had insurance at some point during the preceding six months. Half had already lost it, mainly due to a parent out of work. An additional 7 percent dropped it because they couldn't afford the premiums. Five percent of the cases were unclear. Only 2 percent canceled private coverage to join SCHIP—a substitution rate that's as good as it gets. Public programs are the most cost-efficient way to cover the uninsured, Gruber says.

Bush's offer on SCHIP is $4.77 billion—not enough to maintain the program as is. Monthly enrollment of children and some pregnant women would have to drop by 840,000 over five years, the Congressional Budget Office says—that is, unless the president ups his bid.

Bush favors a different program entirely—tax deductions for people, at all income levels, who buy their own group or individual coverage. An analysis of his proposal by the Lewin Group, a health-care consulting firm, found that 80 percent of the money would go to people already insured. Seventy percent would benefit families earning more than $50,000, with most of the gains in the highest brackets. Call me a wing nut, but that's really squandering money on people who can afford to pay.

Quinn: The Kids Aren't All Right | Business