SCHIP: A Better Way to Expand Children's Health Coverage

The Heritage Foundation - Just the Facts:
Expanding SCHIP is NOT the answer. There's a better way to extend health coverage to children.
The State Children's Health Insurance Program (SCHIP) should be reauthorized, but it should remain focused on covering children in lowincome families—those that earn no more than twice the federal poverty level (FPL), or $41,300 for a family of four.
• A health care tax credit for families earning two to three times the FPL (or up to $61,950 for a family of four) will extend and preserve coverage to more children than simply expanding SCHIP to the middle class.
• This approach to expanding children's health coverage will also let those families select the coverage that suits them best, rather than limit their options to a government-sponsored program.

The tax credit approach has several advantages over making SCHIP coverage a new, middle-class entitlement.
• It will help 1.3 million uninsured children get the type of health insurance their parents think is best for them. Families would use the credit to shop for "best available" coverage, purchasing it either through the workplace or on their own.
• It will help another 9.2 million children keep the coverage they already have. Some 77% of the children in families earning two to three times FPL already have private health coverage. Estimates show that a tax credit could help approximately 9.5 million families struggling with rising insurance costs keep the coverage—and the doctors—they already have.

Converting SCHIP into a middle-class entitlement is an inefficient way to expand health coverage.
• The bill approved by Congress would make government health care available to families earning three-times the FPL—that's up to $62,000 for a family of four.
• The lure of "free" SCHIP coverage will reduce the number of children with private-sector insurance and increase Americans' dependency on government-chosen coverage.
– Many families will jettison their current family coverage for the government-sponsored health care program.
– The Heritage Foundation projects that about half (45–51%) of the millions of children made newly eligible for SCHIP under the proposal will drop off their private sector coverage and receive government health care.
• The plan to finance SCHIP expansion hurts the very people it is supposed to help.
– Congress proposes paying for it with a $0.61 per pack hike in the tobacco tax. Even with that big increase, Congress will also need to get 22 million non-smokers to develop a packa- day habit to cover costs of the expanded program.
– If Congress can't find enough new smokers by the sixth year of the program, they will have to kick three-quarters of the kids out of the program.
State by State Chart Also Recommend: The “C” in SCHIP Stands for “Children”!

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