Granted, the issue of marginal cost vs. marginal benefit is an important part of this story. But not as important as the issue of who decides.

And the headline is priceless.

In a letter to Senate Finance Committee Chairman Max Baucus (D‑Mont.), the Congressional Budget Office estimates that President Bush’s proposed “standard health insurance deduction” would reduce the number of uninsured Americans by a net 6.8 million, including a net reduction of 0.5 million children without health insurance. That’s a net figure, since the CBO expects some uninsured people would gain coverage while others would lose coverage because some employers would stop offering health benefits.

Not too shabby.

No doubt the Church of Universal Coverage will still condemn a standard health insurance deduction because it wouldn’t cover enough children or adults. In their catechism, nothing matters as much as a paper guarantee of health insurance. 

My own heretical view is that government should not even be trying to achieve universal coverage. Nevertheless, today’s CBO letter is a nice reminder that there are ancillary benefits to doing the right thing.

Can someone please explain to me why this is news?

Last night, I debated Andy Stern on the Jim Bohannon radio show. Stern is president of the Service Employees International Union, which represents 1.8 million nurses, health care workers, janitors, security officers, and public employees. He is definitely not a member of the Anti-Universal Coverage Club.

I was pleased to find that we agree that the employment-based health insurance system cannot last. What I found most interesting, though, were two weaknesses in the case he makes for universal coverage.

First, Stern argues that unless we have universal coverage, American firms won’t be able to compete with foreign firms. To me, that claim is economic nonsense, as I explained in our debate and in Health Care News:

Employers don’t need the government to save them from the rising cost of health benefits. Just as Dorothy always had the power to return to Kansas by clicking her heels, employers have always had the power to pare back their health benefits…

All else being equal, firms that contain their labor costs this way will beat the firms that don’t. Those companies that support ‘universal coverage’ want to increase the labor costs of their competition, whether through higher taxes or health premiums. Universal coverage won’t make America more competitive — it will cripple America’s most competitive firms to protect its least competitive firms.

And, of course, that’s the entire point.… Companies that support ‘universal coverage’ never bother to mention that covering all the uninsured would cause health spending to explode, because they don’t really care about overall health spending. All they care about is that their competitors spend as much as they do.

Nor does Stern seem to mind if health spending explodes. I think that may be because…

Second, Stern argues that we could get a better deal on prescription drugs if Medicare were allowed to negotiate with drug companies. But seeing as how he represents so many health care workers, I don’t think he’s going to be leaning on Medicare to be that tough a negotiator. During our debate, I invited him to discuss SEIU’s role in helping Medicare set the payment rates that affect his members. He didn’t take the bait.

My latest post reminded me that back in 1997, I actually produced a number of papers surrounding the creation of the State Children’s Health Insurance Program — also known as SCHIP, but which I prefer to call MediKid.

One of those papers is a two-pager titled, “Congress Can’t Help Uninsured Kids If it Doesn’t Understand Them.” The data are old, but the argument is still relevant to the current debate over MediKid reauthorization.

But what I really wanted to share was this paper: “Top Twelve False Claims Made about the Hatch-Kennedy Children’s Health Coverage Bill.” You see, Sen. Orrin Hatch (R‑Utah) was a principal sponsor of MediKid, which was enacted by a Republican Congress. (That’s right. MediKid — like Medicare Part D — is a Republican health care entitlement.)

In that paper, you will find documented refutations of the following claims supporters made about the Hatch/​Kennedy/​MediKid/​SCHIP bill. Some of the claims may seem familiar to those watching the current reauthorization debate. See if you can guess which one was made by Sen. Hatch himself:

1. “This is not an entitlement.”
2. “It’s fully financed.”
3. “The [tobacco] tax is a user fee.”
4. “It will not create massive new bureaucracies.”
5. “It relies on the marketplace, with coverage provided through private insurance and the existing network of local community health centers.”
6. “This legislation clearly represents a free-market approach at solving an important national problem.”
7. “The fact is that this bill is a far cry from the Kennedy-Kerry bill.”
8. “Children that are not covered should be covered, and that is what the Hatch-Kennedy bill will do.”
9. “This is going to be a state program, run through the private sector.”
10. “It gives the states the flexibility to decide whether to participate and how to target benefits.”
11. “The states set their own eligibility.”
12. “It’s about as moderate to conservative a bill as you can get.”

Have you made your guess? If so, click here:

Aha! Trick question! All claims came from the conservative Sen. Hatch, except for #3, #8, and #9.

My insincere thanks to Sen. Hatch for moving America that much closer to socialized medicine. And my sincere thanks to the Heartland Institute for giving those old papers a home on the web.

Last October we estimated that unfunded costs for state and local government health care plans were about $1.4 trillion nationwide. That is the amount that taxpayers will be hit unless governments cut excessive benefits for teachers, firemen, and other workers.

Some new estimates have been released since our report, and it appears that we were conservative.

• Credit Suisse has put nationwide unfunded costs at $1.5 trillion.
• We estimated New Jersey at $20 billion, but the NYT reports today that unfunded costs for the state are now estimated to be $58 billion.
• San Francisco has reported a $4.9 billion cost, Los Angeles County $16 billion, and the LA School District $10 billion
• In December, Pennsylvania reported a $34 billion cost, which is one of the highest figures we’ve seen for the states.

That was the name I gave the State Children’s Health Insurance Program (SCHIP), before it even had a name, 10 years ago this month.

It appeared in a paper I wrote for Citizens for a Sound Economy Foundation titled “MediKid: Whose Idea Was This, Anyway?” At the time, I foolishly hoped the paper would head off this Orrin Hatch/​Ted Kennedy love-fest. CSEF issued the paper just as the House and Senate were about to go to conference on different versions of the program.

Ten years later, MediKid is about to expire. As Congress and the president are trying to figure out just how much more to spend on this ill-advised program, I thought it would be fun to share a few gems from my 1997 paper:

Congress is about to cast one of its most damaging votes ever against children’s health. Taking a page from the Clinton administration’s playbook, Congress will soon vote to expand government-run health care for children and continue the slow march toward imposing government-run health care on everyone. Instead of wasting over $8 billion on “MediKid” proposals, Congress should help parents protect their children’s health by providing additional tax relief to families…

Congress has debated the issue of uninsured children under the premise that 10 million American children are unable to obtain health coverage — a premise that is utterly false. In fact, fewer than two million children in the U.S. are chronically uninsured.

Acting on this false premise, Congress has designed new government programs to give health coverage to low-income children. Over five years, these programs will waste more than $8 billion duplicating services already provided by the private sector. Worse, MediKid will actually harm children’s health by making parents less able to meet their children’s basic health needs.

In 1993, the Clinton administration’s Health Care Interdepartmental Working Group conceived of a strategy to nationalize health insurance by providing government coverage to children first and later phasing in the adult population. Ironically, a Republican Congress’ MediKid proposals are now implementing that strategy.

About the number of uninsured children:

This poor understanding of the dynamics of the health coverage market has led to inane solutions. The Senate MediKid proposal targets children too affluent to be eligible for Medicaid yet below 200 percent of the poverty level. The [Census Bureau’s Survey of Income and Program Participation] reveals there are only 1.4 million chronically uninsured children in this income category. Nevertheless, the Senate designed a program to cover 2.8 million such children.

About the slow march toward government-run health care:

Congress’ MediKid proposals are a step toward nationalized health coverage. In 1993, the White House Health Care Interdepartmental Working Group devised a number of strategies for nationalizing health insurance. What the task force called “Option 3: Kids First Coverage” was a plan to move children out of the private health insurance market into government-run coverage as “a precursor to the new system” of national health insurance. The task force wrote:

This proposal is designed in two parts which will be implemented simultaneously: 1) The quick coverage of children — “Kids First”; and 2) the development of structures for transitioning to the new system and the phasing in of certain population groups.

Does anyone actually doubt that that’s the whole point?