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Sinking SCHIP
A First Step toward Stopping the Growth of
Government Health Programs
by Michael F. Cannon
No. . 99
No 99
September 13,,2007
September 13 2007
Executive Summary
states for making more Americans dependent
Federal lawmakers are considering legisla-
on government for their health care.
tion that could result in millions more middle-
Rather than expand SCHIP, Congress should
income families obtaining health insurance
(1) make private health insurance more afford-
from government. Unfortunately, the debate
able by allowing consumers and employers to
over expansion of the State Children's Health
purchase less expensive policies from other states,
Insurance Program is divorced from the reality
and (2) fold federal Medicaid and SCHIP funding
of who truly needs assistance and the forces that
into block grants that no longer encourage states
are making health insurance increasingly unaf-
to open taxpayer-financed health care to non-
needy families. With more Americans able to
SCHIP and its larger sibling Medicaid cur-
afford private insurance and no incentive for
rently enroll many people who do not need gov-
states to expand government programs beyond
ernment assistance, including some families of
the truly needy, federal and state governments
four earning up to $72,000 per year. That is a
could reduce spending on those programs.
direct result of federal funding rules that reward
Michael F. Cannon is director of health policy studies at the Cato Institute and coauthor of Healthy Competition:
What's Holding Back Health Care and How to Free It, 2nd ed. (forthcoming).
Cato Institute 1000 Massachusetts Avenue, N.W. Washington, D.C. 20001 (202) 842-0200