September 25, 2007 10:20AM

SCHIP’s Bootleggers and Baptists

Today’s Washington Post seems impressed that the State Children’s Health Insurance Program has made strange bedfellows:

A broad coalition — including liberal health policy advocates and their usual foes, the health insurance lobby — endorsed the SCHIP bill, urging House Republicans to get on board and the president to sign it…

The White House is looking increasingly isolated on the issue. America’s Health Insurance Plans, the largest insurance lobbying group, endorsed the measure yesterday, undercutting Bush’s contention that the bill is a step away from private insurance and toward government‐​run health care.

“It repairs the safety net and is a major movement toward addressing the problems that states and governors have been trying to address, which is how to get access for children,” said Karen Ignagni, the group’s president.

In a recent paper on SCHIP, I explain why the health care industry is lining up in support of a massive expansion:

Support for SCHIP (and Medicaid) expansion comes from an alliance of “bootleggers and Baptists.” Economists often explain support for government policies (e.g., restrictions on alcohol sales) in terms of those who truly believe in the merits of the policy (i.e., Baptists who oppose alcohol consumption) and those who benefit financially from the policy (i.e., the bootleggers who sell illicit alcohol).

The “Baptists” behind SCHIP expansion are those who believe that the way to increase health care quality and access is for government to finance and control the delivery of care. An example would be left‐​wing advocacy groups such as Families USA. Expanding SCHIP and Medicaid to enroll more and more Americans serves their goal of eventually enrolling all Americans in government health care programs…

The “bootleggers” behind SCHIP expansion include those who stand to gain financially from greater government subsidies for health insurance and health care. They include several lobbying groups: America’s Health Insurance Plans, and the insurers it represents; the Pharmaceutical Research and Manufacturers of America and the drug manufacturers it represents; the American Medical Association and the physicians it represents; and the Federation of American Hospitals and the for‐​profit hospitals it represents. State officials who support SCHIP expansion, such as California’s Governor Schwarzenegger and the rest of the National Governors Association, also belong in the bootleggers category because increasing federal SCHIP spending benefits them politically: it enables them to provide new subsidies to voters at a fraction of the cost.

It would be nice if serious media outlets like the Post could acknowledge that the health insurance lobby has a financial interest in the legislation it supports.