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Maintaining
Congressional Budget Office estimates that
Introduction
maintaining existing SCHIP benefits for the
SCHIP would
next five years would require an additional $8
force taxpayers to
Federal lawmakers are considering legisla-
billion of federal funding above and beyond
existing funding levels.5 President Bush has
finance health
tion that could result in millions more mid-
proposed increasing spending by $5 billion
dle-income families obtaining health insur-
insurance for
over five years.6 Democrats in Congress have
ance from government. Congress created the
many families
State Children's Health Insurance Program
proposed increasing federal SCHIP spending
by as much as $60 billion over five years,7
in 1997. That program provides federal
who are capable
grants to states that provide federally defined
which would allow states to open SCHIP to
of obtaining it
health insurance coverage to eligible chil-
far more non-needy families.
themselves.
dren.1 In 2006, SCHIP spent approximately
Expanding SCHIP or even maintaining
$8 billion to cover 7.4 million individuals.2
current enrollment levels would force taxpay-
ers to finance health insurance for many fam-
SCHIP's original goal was to provide health
ilies who are capable of obtaining it them-
insurance to children whose family income is
selves. A better strategy for providing health
too high to qualify for Medicaid yet too low
to afford private health insurance. Medicaid
care to those in need would use deregulation
to make private health insurance more
is the much larger federal-state health insur-
affordable for middle- and low-income fami-
ance program targeted presumably at the
lies, thereby allowing government health pro-
poorest Americans. Medicaid spends far
grams to focus on those patients who most
more than SCHIP (see Figure 1) and covers
60.9 million people.3
need assistance. This paper proposes a two-
part strategy for improving health care access:
SCHIP has grown well beyond its original
(1) block-granting federal Medicaid and
purpose. The program currently enrolls 6.6
million children,4 many from families that
SCHIP funding to encourage states to reded-
icate those programs to the truly needy and
are neither needy nor even low-income. The
Figure 1
Total Spending (2006): SCHIP vs. Medicaid
350
317
300
250
200
150
100
50
8
0
SCHIP
Medicaid
Source: U.S. Congressional Budget Office, "Detailed Projections for Medicare, Medicaid, and State Children's Health
Insurance Program," March 6, 2007, pp. 89, http://www.cbo.gov/ftpdocs/78xx/doc7861/m_m_schip.pdf; and author's
calculations.
2