May 21, 2007 | WebMemo on Health Care
The reauthorization of the State Children's Health Insurance Program (SCHIP) has brought the issue of health care coverage, especially for children, to the forefront. Recent proposals by House Energy and Commerce Committee Chairman John Dingell (D-MI) and Senator Hillary Clinton (D-NY) and by Senators John Rockefeller (D-WV) and Olympia Snowe (R-ME) would expand the role of government in the delivery of health care by allowing more of America's children to qualify for government-run health care. This would be a big mistake, chipping away at private coverage and placing a great burden on taxpayers. A better solution would be to address the displacement of private coverage and growing dependence on the government for health care. Reform should embrace the advantages of the private sector and empower families to make their own health care decisions.
Expanding the Government's Role
The Children's Health First Act (Dingell/Clinton, H.R. 1535 and S. 895) and the Children's Health Insurance Program Reauthorization Act (Rockefeller/Snowe, S. 1224) share a similar philosophy and approach to expanding coverage through SCHIP. Underlying the bills are three broad policies:
The Dangers of Expanding SCHIP
The policy implications of expanding SCHIP eligibility, benefits, and financing are significant. In addition to ultimately creating a pathway to a government-based health care system, these proposals would:
Moreover, if recent pleas from so-called shortfall states-states that have exceeded their federal SCHIP allotments-for another federal bailout of their SCHIP programs are any indication, states will likely continue to turn to the federal government for additional funding above and beyond original allotments. 
Designing an Alternative
Members of Congress should devise an alternative to counter the heavy-handed government solutions offered in Dingell/Clinton and Rockefeller/Snowe. This alternative should provide a consumer-driven, market-based solution that reinforces private coverage and puts families in control of their health care decisions. There are three key components to such an alternative:
The SCHIP proposals put forth by Chairman Dingell and Senator Clinton and Senators John Rockefeller and Snowe would be a step toward establishing a government-run health care system. These incremental approaches would increase dependency on the government for the delivery of health care, chip away at private coverage, and burden taxpayers.
Policymakers must decide whether to place more of the health care system under government control or to preserve and improve the private sector system. Federal policymakers should enact a low-income health care tax credit, convert SCHIP to a defined contribution program, and encourage market-based reforms at the state level. The alternative-ever-larger expansions of government health care-would further stifle private coverage and reduce Americans' ability to exercise choice in health care.
Nina Owcharenko is Senior Health Policy Analyst in the Center for Health Policy Studies at The Heritage Foundation.
 The Dingell/Clinton bill goes further by creating a new "buy-in" option for non-eligible populations.
Dingell/Clinton also raises the actuarial equivalence test for additional benchmark plan services from 75 percent to 100 percent.
 Dingell/Clinton also establishes a new employer subsidy scheme to persuade employers to keep coverage, but that coverage must contain benefits comparable to those in SCHIP.
 Centers for Medicare and Medicaid Services, "The State Children's Health Insurance Program," Presentation, March 5, 2007, p. 19.
 Ibid, p. 20.
 The Honorable Michael Leavitt, Secretary, U.S. Department of Health and Human Services, Remarks at the American Enterprise Institute, April 24, 2007, at www.hhs.gov/news/speech/2007/sp20070424a.html.
 Private coverage includes employer-based coverage and the direct purchase of coverage. These numbers are based on Paul Fronstin, "Sources of Health Insurance and Characteristics of the Uninsured: Analysis of the March 2006 Current Population Survey," Employee Benefit Research Institute, Issue Brief No. 298, October 2006, p. 14 at www.ebri.org/pdf/briefspdf/EBRI_IB_10a-20061.pdf.
 See Congressional Budget Office, "The State Children's Health Insurance Program," p. 12.
 Ironically, under proposals like Dingell/Clinton, some of the same families struggling under the Alternative Minimum Tax (AMT) could qualify for SCHIP coverage. See Mike Franc, "States' Addiction to Welfare Corrupts Federalists System," Heritage Foundation Commentary, March 3, 2007, at www.heritage.org/Press/Commentary/ed030307a.cfm.
 Congressional Budget Office, p. 14.
 Edwin Park and Robert Greenstein, "Options Exist for Offsetting the Cost of Extending Health Care Coverage to More Low-Income Children," Center on Budget and Policy Priorities, April 12, 2007, at www.cbpp.org/3-8-07health.htm.
 See House Committee on Energy and Commerce, "Children's Health First Act, Legislative Summary," at /static/reportimages/866001546062C06B9EEDFA98A1456633.pdf.
N. Edwards et al., "The Erosion of Employer-Based Health
Coverage and the Threat to Workers' Health Care: Findings from The
Commonwealth Fund 2002 Workplace Health Insurance Survey," Issue
Brief, Commonwealth Fund, August 2002, p. 7, at www.commonwealthfund.org/usr_doc/edwards