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President Vetoes SCHIP Bill — Again

December 13, 2007

On December 12, President George W. Bush vetoed Congress's second attempt at to passing the controversial 2007 version of the State Children's Health Insurance Program (S-CHIP), a program which would dramatically expand government-provided health insurance for children.

The slightly modified second version of the bill would have made nearly four million additional people eligible for government-funded health insurance. The cost of the expansion would have been $35 billion over five years, which Congress largely sought to pay for with new taxes on cigarettes. Nearly six million people are already on the rolls of the existing program.

President Bush returned the slightly modified bill to the House, admonishing legislators with the admonition that "our nation's goal should be to move children who have no health insurance to private coverage -- not to move children who already have private health insurance to government coverage."

Massive Crowd-Out
If The latter would be a likely outcome of the latest version of Congress's passing S-CHIP were to become law, the most likely result would be massive crowd-out of private insurance, in its current form, according to the Heritage Foundation, a free-market group based in Washington, DC.

“SCHIP expansion would encourage families in that income range with current private coverage to switch their children to the "lower-cost" or "free" public SCHIP coverage -- a phenomenon known as "crowd-out," said Edmund F. Haislmaier and Greg D'Angelo, of Heritage's Center for Health Policy Studies, in a December 6 report entitled “Expanding SCHIP: Not the Best Option for States.”

“Indeed,” the report continued, “ in estimating the federal costs of such an expansion, the Congressional Budget Office (CBO) assumes that for every two children that gain coverage through the expansion, one will have previously been uninsured and one will have previously had private coverage--a 50 percent crowd-out rate.”

Michael F. Cannon, director of health policy studies for the Cato Institute, a libertarian think tank in Washington, DC, agreed, saying that the proposed S-CHIP expansion would serve to "make private insurance more expensive for everyone else."

Faced with the options of voting immediately to override or sustain the presidential veto or postponing that vote until a particular date certain (NOTE: “date certain” is the actual language in House rules), Democratic House leaders -- who went on record in late autumn about the need for to expand SCHIP immediately -- decided after Bush’s early December veto to postpone the vote until January 23, five days before the President's 2008 State of the Union address.

Jeff Emanuel is a research fellow in Health Care policy at the Heartland Institute and managing editor of Health Care News.


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