HealthBeat FYI: The SCHIP Revelation

August 09, 2007

Last week, both the House and the Senate passed their own versions of legislation to renew and expand SCHIP. The debate rages on as President Bush has vowed to veto any expansion over his proposed $5 billion.

Commentary in the Review and Outlook section of today's Wall Street Journal explores Congress's motivations for passing these controversial SCHIP expansions, and the excerpts below discuss the far-reaching impact of such misguided policies:

To finance its Schip largesse, the House would eviscerate Medicare Advantage, an innovative 2003 program that allows seniors to choose among various private health plans. It's growing rapidly and currently serves some 8.3 million seniors, or about 18% of the eligible population. According to the Centers of Medicare and Medicaid Services, most are the urban poor, seniors in rural areas and minorities.

Democrats claim that Medicare Advantage is "overfunded," but the program is available because of a deliberate subsidy, which is being phased out over time. It was designed in part so the program could penetrate rural regions. And part of the subsidy is returned in the form of increased benefits and supplemental coverage that seniors would otherwise have to pay for as "medigap" insurance.

The Democratic goal isn't cost-saving in any case. Their hostility to Medicare Advantage is because it allows for competition in the private sector, and is an experiment that could serve as a model for reforming Medicare in the future. Democrats are trying to repeat what the Clinton Administration did to Medicare+Choice in the late 1990s, starving that private experiment of funds until seniors fled.

Read the full commentary here: http://online.wsj.com/article/SB118662306308792513.html?mod=opinion_main_review_and_outlooks (subscription required).

The NCPA recently released a report discussing the proposed SCHIP legislation and how its Robin Hood policies would do more harm than good. NCPA experts are available to discuss these issues.

SCHIP Expansion: Robin Hood in Reverse

http://www.ncpa.org/pub/ba/ba589/

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