The Middle-Class Welfare Kid Next Door

COMMENTARY Health Care Reform

The Middle-Class Welfare Kid Next Door

Jul 26th, 2007 3 min read

Commentary By

Greg D'Angelo

Former Policy Analyst

Robert E. Moffit, Ph.D.

Senior Fellow

Greg D’Angelo

Senior Research Fellow

Imagine three families with something surprising in common.

Matt and Elizabeth Cuneo and their two children live in Hartford, Conn. Matt makes $38,290 a year as a private investigator; Elizabeth, a state legislator, earns $32,730.

The Wilsons own a house outside Washington, D.C., in the suburb of Derwood, Md. Charlie's job as a presidential speechwriter at the White House pays $60,000 a year; wife Lindsay, a home health aide, makes $20,100. They have four kids.

Finally, Joe and Eileen Bailey and their three children reside in a Nassau County suburb of New York City. Joe sells insurance, Eileen works part time as an administrative assistant in a doctor's office. Together, they pull in about $75,000 a year.

It's not just being middle class that makes these families -- fictional, but based on labor statistics -- alike. Some in Congress say the Cuneo, Wilson and Bailey kids all ought to be entitled to "free" government-run health care intended for poor children.

Sounds preposterous. Yet that's exactly what the straight-faced proponents of vastly increased spending and eligibility for the State Children's Health Insurance Program intend.

Liberals aim to turn SCHIP, up for reauthorization in Congress, into a taxpayer-funded entitlement for the middle class. In fact, if Sen. Hillary Rodham Clinton (D-N.Y.) gets her way, nearly three out of every four children would be eligible for taxpayer-subsidized health care.

SCHIP was created in 1997 to help states cover medical expenses for children in low-income working families who didn't qualify for Medicaid health benefits for the truly poor and couldn't afford private insurance. The original budget for this federal block-grant program: $40 billion over 10 years.

Eligibility was targeted for households at or below 200 percent of the federal poverty line. That's a $40,000 income for a family of four. Over the years, state officials found ways to enroll better-off kids. About 25 percent of all children were covered by Medicaid or SCHIP in 1998; by 2005 that number had jumped to an estimated 45 percent.

Now liberals are floating proposals to nearly quadruple SCHIP spending by budgeting $75 billion over five years. Some, Sen. Clinton among them, want to double eligibility levels to four times the poverty line.

If they prevail, Uncle Sam would pay the medical bills of kids whose parents earn as much as $82,600 a year. The cap would be much higher for families larger than four -- $110,440 in the case of the six Wilsons.

Already, on July 19, the Senate Finance Committee voted 17-4 to extend SCHIP eligibility to families making up to three times the poverty line. Officials in states such as Connecticut and Maryland, where that's already the cap, or New York, where the cap is four times poverty, could continue to cover better-off children by gaming the system. (Hint: It depends on what the definition of "income" is.)

If the names Joe and Eileen Bailey ring a bell, incidentally, it may be because the Long Island couple was dreamed up by Chuck Schumer, New York's senior senator, to help him understand the concerns of typical constituents. Schumer popularized the Baileys in his recent book, "Positively American: Winning Back the Middle-Class Majority One Family at a Time." He describes the Baileys as "middle class by New York standards," but he's part of the Finance Committee majority that voted to put kids like theirs on the dole.

Joe Bailey, being in insurance, probably would shake his head in disbelief at the idea of Schumer crowding out his industry and its clients by having the government provide "free" care to middle-class kids at the doctor's office where Joe's wife, Eileen, works.

Paradoxically, the government soon would consider thousands of families to be both so "rich" that they must pay the Alternative Minimum Tax (originally designed to target the wealthy) and so "poor" that their children are entitled to subsidized health care.

Twisting SCHIP's original purpose like this creates a Trojan horse to conceal the ultimate agenda: imposing universal, government-run health care -- one middle-class child at a time.

A better policy would refocus the program on low-income kids and make private coverage more accessible to others through premium assistance. Policymakers also should look to reforming tax treatment of health insurance that discourages portability and ownership of coverage; offering tax credits to make insurance more affordable; and allowing interstate commerce to nourish real competition.

If liberals succeed in expanding a targeted "safety net" program like SCHIP to cover real-life Cuneos, Wilsons and Baileys, it will be that much easier for them to justify marching on to full-blown government-run health care.

It's time for common sense to stop the march in its tracks.

Robert E. Moffit, Ph.D. is the director of The Heritage Foundation's Center for Health Policy Studies, where Greg D'Angelo is a research assistant.

First appeared the McClatchy wire

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