Socialized Medicine on the Installment Plan

This article appeared on Cato​.org on February 11, 2009
  • Related Content

The withdrawal of Tom Daschle as President Obama’s nominee for secretary of health and human services is generally viewed as a setback for the president’s health care reform plans. Even so, the Obama Administration is already well on its way toward putting the government in charge of our health care system.

Less than two weeks into his administration, President Obama has already signed a massive expansion of the State Children’s Health Insurance Program (SCHIP). The bill is ostensibly designed to provide health insurance to children from poor families. The language of the bill, however, will allow states to increase SCHIP income eligibility to 400 percent of the poverty level – amounting $83,000 for a family of four. Furthermore, the bill allows states to disregard some household expenses, like mortgages, in determining eligibility. Consequently, some families earning as much as $100,000 could receive government provided health insurance.

More than three quarters of these newly eligible children are from families that already have health insurance – 77 per cent according to the Congressional Budget Office. As a result, the SCHIP expansion will not so much increase the number of insured children as it will shift children from private health insurance plans to the taxpayer‐​funded system. A Robert Wood Johnson Foundation survey of 22 studies of the relationship between government insurance programs and private coverage concluded that substitution of government for private coverage “seems inevitable.” But, then, that may well be the idea. In pushing for the SCHIP expansion, Sen. Richard Durbin (D-IL) said he supported the bill, in part, because he didn’t want to “trap people into private health insurance.”

And if that wasn’t enough, the SCHIP expansion will also continue and even expand states to use the clearly misnamed State Children’s Health Insurance Program to cover adults. Already, eleven states use S-CHIP funds to provide taxpayer‐​funded insurance for adults. Indeed, in Minnesota more than half of S-CHIP recipients are actually adults. In New Jersey, 48 percent of program participants are adults, not children, while in Illinois, 45 percent of the SCHIP recipients are adults. According to the state’s own projections, Illinois will soon spend more SCHIP money on adults than on children. Under the new bill, even more states will be able to take advantage of this loophole.

Equally significant are several provisions in the proposed economic stimulus bill now making its way through Congress. For example, the bill would allow states to extend Medicaid coverage to unemployed workers and their families, with the federal government pay 100 per cent of the costs. And there would be no income or asset limits whatsoever on eligibility. As a result, still more of the middle‐​class would be shifted into government health care.

Nor is the extension of eligibility limited to just the middle‐​class. A Republican amendment to bar millionaires from the program was stripped out before final passage in the House.

For the unemployed who don’t go directly into government‐​run health care, the stimulus bill would extend COBRA coverage, and have taxpayers pick up 65 percent of premium costs.

It is not just a question of extending government programs either. Another provision of the stimulus bill would spend $400 million to create a Comparative Effectiveness Council, so that the federal government can decide on whether medical treatments are worth the money. This idea was a favorite of the now‐​departed Sen. Daschle, who saw it as a method of controlling health care costs by denying reimbursement for treatments that the government deems as not being cost‐​effective.

The stimulus would also spend some $20 billion for the federal government to muscle its way into the growing market for electronic medical records.

Government already pays for 48 percent of health care spending in this country. According to the CBO, the combined changes under SCHIP and the stimulus would shift some 10 million more Americans into government‐​run or taxpayer‐​funded health care. All this would take place under the radar, without committee hearings, or even any real debate.

There is no doubt that health care in this country needs reform. It is too costly, too many people lack insurance, and quality is too uneven. But before we turn one‐​seventh of the U.S. economy and some of our most important and personal decisions over to the tender mercies of the government, shouldn’t we at least talk about it?