The following editorial ran in the Bend Bulletin on Sept. 30.


Rep. Greg Walden, R-Ore., voted last week against a bill reauthorizing and expanding the State Children's Heath Insurance Program, also known as SCHIP. Get ready to hear all about Walden's indifference to the plight of poor kids. After all, who but the most callous lackey of the cigar-and-Mercedes crowd could possibly cast such a vote?

A perfectly reasonable person, that's who. Even one who does care about poor kids. SCHIP funding happens to be a much murkier issue than it might seem at first glance.

The SCHIP program was created back in 1997 with the intention of helping families with too much money to qualify for Medicaid but too little to pay easily for health care for their kids. Congress has spent almost $40 billion on the program in the ensuing decade. SCHIP, however, will expire this fall unless Congress reauthorizes it.

But reauthorization, which almost everyone supports, isn't the reason people are fighting over SCHIP. People are fighting, rather, over a proposed expansion of the program. This week's House bill would boost funding to $60 billion over the next five years, though Walden says the actual cost - hidden by budgeting gimmicks - is likely to top $100 billion.

People like Walden and the 158 other House members who voted against the bill are worried mostly about the effect of such spending on a phenomenon called "crowding," which the non-partisan Congressional Budget Office examined in a May report. The CBO found that SCHIP "has significantly reduced the number of uninsured children in low-income families," and that's undeniably a good thing. But that hadn't been its only effect.

The bill has also crowded many kids who had private insurance onto the public insurance rolls.

Measuring this shift isn't particularly easy, but the CBO estimates for every 100 kids who sign up for SCHIP coverage, between 25 and 50 drop from the private insurance rolls. This is a significant shift, yet the CBO believes "available estimates probably understate the total extent to which SCHIP has reduced private coverage." States have tried to discourage this migration by mechanisms like mandatory waiting periods - three months after dropping private insurance, for instance. But these don't seem to be particularly effective.

If this is what SCHIP does now, what would happen if spending were increased by the huge sums the House has approved? Because states would almost certainly respond by expanding eligibility to families making more and more money, the crowding effect would become more pronounced. The bill allows states to enroll families of four making up to $60,000 per year before reducing funding, according to The Wall Street Journal. The Bush administration, meanwhile, says the bill's terms make it virtually impossible to deny requests from states such as New York, which caps SCHIP eligibility at 400 percent of the federal poverty level, according to The New York Times. That equates to roughly $83,000 for a family of four.

Moving the eligibility line in this fashion would enroll more uninsured kids in SCHIP. But the crowding cost would be tremendous, if the CBO's numbers are to be believed. In 2005, the CBO estimates, 50 percent of kids in families between 100 percent and 200 percent of the poverty level had private coverage. For families making between 200 percent and 300 percent of the poverty level, 77 percent of kids had private insurance. Between 300 percent and 400 percent of the poverty level, 89 percent of kids did. And above 400 percent, 95 percent of kids had private insurance.

So the more you expand the SCHIP program, the greater the public cost to help genuinely needy kids. At some point, the program becomes almost entirely an opportunity for middle-class families to dump their private insurance in favor of publicly subsidized insurance. It comes to look surprisingly like universal health care for middle-class families. If you don't think government should spend billions of dollars doing things it doesn't need to - and we don't - this approach doesn't make much sense.

That isn't to say Uncle Sam should brush side those genuinely needy kids who have no health insurance. This country has a moral obligation to help them, and to that end SCHIP ought to be reauthorized at roughly its current level. To help uninsured kids in wealthier families, however, Congress should find a sensibly targeted mechanism that doesn't violate its obligation not to abuse or mislead American taxpayers.

Last week, 159 House members, including Walden, risked being characterized as ogres for doing the right thing. They deserve credit. Doing the right thing often takes more courage than going along with the crowd.

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