Why SCHIP Enlargement Is Winning (Update)

The debate over enlargement of the federal SCHIP program -- which adds funds to enroll more children and adults in government programs through relaxing income standards -- has not engaged a core issue that should be addressed: Differences in costs of living do vary widely, in large part due to state government actions. But, higher than federal poverty level costs of living are so widespread that the Bush administration is on the losing side of the argument, as evidenced by the large majority of Congress supporting the enlargement.

The administration’s arguments have correctly revolved around budget affordability, subsidizing a shift of many who ostensibly can afford it from self-responsibility for coverage to subsidized government-care, and the intent of many supporters to use SCHIP as a step toward nationalized health care. However, these more technical points pale compared to the more rousing argument by SCHIP enlargement proponents that many in America are economically struggling at working and even middle class income levels, while facing escalating health care premiums.

The detail at issue is whether those families earning 200%, 250%, 300%, or 400% of poverty level should be included in the federal SCHIP program, which provides about two-thirds of SCHIP’s funding. In most states, 200% or 250% of federal poverty level is a minimally adequate income level for a family. However, the substantially higher cost of living in coastal California, the Northeast corridor, and some other cities requires a higher minimal income, and these areas contain most of our population. Although some higher-cost states can and have received dispensation for a higher cut-off, the SCHIP enlargement proponents want all states to have a higher cut-off. The administration is left holding the bag for a drier accountant’s posture based upon national averages that is overwhelmed by the number of Americans in higher-cost areas.

In the face of federal spending on many other domestic programs increased significantly during the past decade, including for health care, and other middle and upper-class tax subsidies, as for the mortgage deduction, the accountant’s posture is further weakened. The matter of state responsibility for increased costs of living is barely mentioned in the debate, and probably wouldn’t get much resonance, as the causes are many and often technical. The vastly enlarged role of the federal government in more and more spheres of our lives hasn’t been a serious issue among our politicians for the past generation.

Too late in the debate, and weakly, the administration’s supporters pushed less excessive remedies, more targeted to those actually in need. They are, again, correct, and there may be just enough members of the House – 1/3rd – to sustain a presidential veto.

Nonetheless, the Bush administration and Republicans in Congress were not focused or united earlier in pushing these remedies, and now Republican electoral prospects and our national economics are to pay the price to the opportunity for irresponsible grandstanding by ascendant Democrats and pass-the-buck governors.

UPDATE:
See David Brooks NYT’s column, “Leave it to the entitlement people,”

The S-chip bill takes money from these relatively poor, politically immobilized people and shifts it to those making up to $62,000 a year. Nobody is raising a tax on wine consumption or gasoline consumption to pay for this benefit. Instead, Congress is taxing the weakest possible group in order to shift benefits to others, some of whom are middle class.

There’s always been trickery in budgeting and sin taxes are far from new, but somehow over the decades there’s been a revolution in morals. Deficits, obfuscations and trickeries that were once unthinkable are now the norm.