October 30, 2007 | WebMemo on Health Care
The House congressional leadership has failed, once again, to amass enough votes for the SCHIP expansion (H.R. 3963) to override the President's veto. That bill, like the earlier version that the President vetoed, would displace existing private health insurance coverage for millions of children in middle-class American families. Members of Congress are trying to tinker with the bill and enact the same health policy.
Congress has a chance to accomplish the same level of health coverage, however, without disrupting the existing coverage of families with children. Senators Mel Martinez (R-FL) and George Voinovich (R-OH) have co-sponsored The More Children, More Choices Act of 2007 (S. 2193). Representatives Marilyn Musgrave (R-CO) and Tom Price (R-GA) have introduced companion legislation (H.R. 3888) in the House, along with 46 co-sponsors, including House Minority Leader John Boehner (R-OH).
A Dual Approach
The legislation would reauthorize SCHIP for all currently eligible children; promote innovative state efforts to expand coverage for the uninsured through federal grant money; and provide middle-class tax relief (up to $1,400 per child) in the form of a health care tax credit, available to families with children between 200 percent ($41,300 for a family of four) and 300 percent ($61, 950 for a family of four) of the federal poverty level (FPL).
The tax credit would help middle-class families offset the rising cost of health insurance, enabling them to keep their existing coverage or to secure health coverage in the non-group market if they cannot get it through an employer. The combination of SCHIP reauthorization and middle-class tax relief for health care would provide coverage for approximately 10.5 million children, including for the bulk of those already covered by private insurance. For example, a tax credit to help families pay for kids' health care would cover an estimated 602,532 in Florida; 246,332 in Georgia; 457,541 in Illinois; and 312, 637 in Michigan. 
This concept-a dual approach of combining SCHIP reauthorization and state experimentation with a health care tax credit for middle-class children-was endorsed in January 2007 by the bipartisan Health Care Coverage Coalition for the Uninsured (HCCU), a bipartisan coalition of major health, hospital, insurance, and policy organizations that included the AARP, the AMA, the Catholic Health Association, and Families USA.
The Need for Middle-Class Tax Relief
According to the Congressional Budget Office (CBO), 77 percent of all children between 200 percent and 300 percent of the FPL already have private health insurance. The professional literature on health policy also shows that expanding public health programs up the income scale progressively displaces existing private coverage. A recent analysis by The Heritage Foundation's Center for Data Analysis, for example, projects that for every 100 children covered under an SCHIP expansion, between 54 and 60 of those children would lose private health insurance in the process. Meanwhile, these middle-class families and the businesses that employ them are often struggling with rising health care costs. Direct help in the form of tax relief would both shore up existing coverage for dependents and expand access to coverage for children without employer-based health insurance.
Benefits of Middle-Class Tax Relief
The More Children, More Choices Act of 2007 would have the following salutary effects:
Instead of re-fighting over the same ground on SCHIP, Congress could adopt a policy alternative that would ensure the reauthorization of SCHIP while expanding, rather than contracting, private health insurance coverage for children. This would consist of a straight reauthorization of SCHIP for all children at 200 percent of the FPL ($41,300) and below, with appropriate provision to expand outreach for all eligible children in those families who are not offered employment-based coverage or who do not have private health insurance coverage. It would also include serious health care experimentation at the state level, allowing different approaches to coverage expansion by state officials. Finally, it would assist children by giving working families between 200 percent and 300 percent of the FPL direct tax relief to help them maintain or secure affordable health insurance coverage.
Embodied in The More Children, More Choices Act of 2007 are innovative policy alternatives that have the broad support of the health policy community.
Robert E. Moffit, Ph.D., is Director of the Center for Health Policy Studies at The Heritage Foundation.
 Heritage Foundation calculations from the March 2006 Current Population Survey, U.S Bureau of the Census.
 Health Coverage Coalition for the Uninsured, "Expanding Health Care Coverage in the United States: A Historic Agreement," at /static/reportimages/9602A54E97CD463075AE0DCA34F6FD26.pdf..
 The Heritage estimate is based on the crowd-out effect of families in the income range of 200 percent to 400 percent of the FPL ($41,300 to $82,600). For a more detailed discussion of this crucial issue, see Paul L. Winfree and Greg D'Angelo, "SCHIP and Crowd-Out: The High Cost of Expanding Eligibility," Heritage Foundation WebMemo No. 1627, September 20, 2007, at www.heritage.org/research/healthcare/wm1627.cfm.
 Health Coverage Coalition for the Uninsured, op. cit., p. 2.