ACRU

Peter Ferrara: Support President Bush’s SCHIP Veto

This article originally appeared in Human Events on October 17, 2007

THE BILL EXTENDING THE STATE CHILDREN’S HEALTH INSURANCE (SCHIP) program that President Bush just vetoed would have increased spending on the program by 140%, costing $60 billion over just the next five years. About 60% of the additional children covered by that spending increase already have private insurance coverage today. So mostly what the taxpayers will get for that spending increase is to move millions of children from private insurance coverage to government coverage.

Moreover, many of those children reside in families with incomes as high as $82,000 a year. This doesn’t sound like a bill that was aimed at helping poor children.

What it really would have done was serve the interest of left wing Democrat ideologues, who favor government coverage paid for by the taxpayers over private coverage paid for through the private sector. This is why President Bush did the country a big favor by having the courage to veto this nonsense.

Democrats think voters are too stupid to understand any of this. They think the voters will just hear that the Republicans voted against a program for health insurance for lower income children.

The nation already has a program to provide health coverage to those too poor to pay for it themselves: the Medicaid program. That program already costs Federal taxpayers around $250 billion a year, with more from the states.

Moreover, that program, and the senior entitlement programs Social Security and Medicare, are already projected to explode the Federal budget in the coming years. Federal spending as a percent of GDP has actually been stable at around 20% for over 50 years now. But the latest projections show that, primarily because of these big entitlement programs, Federal spending will explode over the next 40 years to close to 40% of GDP, or more. Add in state and local spending and over half the income of taxpayers will be going to the government.

That means that all Federal taxes, not just income taxes, would have to double relative to GDP to pay all the promised benefits. Imagine what it will feel like to pay double all the Federal income taxes, double all the Federal payroll taxes, double all the Federal tobacco, alcohol, and other excise taxes, right now today. That is how it will feel in the future relative to the economy of the time.

Does it sound like we should be expanding existing programs by 140%, and adding new entitlement programs, so that children will be covered by government health insurance rather than private health insurance, in families with incomes as high as $82,000 per year? Shouldn’t Congress be fixing the pending explosion in Federal entitlement spending instead?

Republicans should call the Democrats’ political bluff and instead go on the offensive on the whole entitlements issue. The real Republican/conservative alternative to the SCHIP expansion should be to block grant both Medicaid and SCHIP back to the states, using the model of the highly successful 1996 reform of the old Aid to Families with Dependent Children (AFDC) program. Under those reforms, the welfare rolls under the old program declined by about 60% nationwide.

Send the Federal funds now spent on both of these programs back to the states in a finite block grant for each state, with the money to be used for a new program designed by each state for its own citizens. Each state would decide at what level of income assistance would be provided, and what would be covered. Each state can then decide if government financing of health insurance for children, which is not expensive and which the vast majority of Americans in truth can really afford, is really the most urgent priority.

Because the block grant is finite, any increased costs for the new state programs would have to be financed by the state itself. And any innovative savings the state achieves would be kept by the state.

The Federal financing should be kept level for several years, and then limited to grow no faster than the rate of growth of GDP. That would solve the exploding entitlement problem for these programs.

Conservatives and Republicans can then present this question to the nation, do you really want to see total Federal taxes double relative to the economy?