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Health Care and the FY2009 Bush Budget: Steps in the Right Direction, but an Olive Branch in the Wrong One

February 11, 2008

In his budget for Fiscal Year 2009, though at $3.1 trillion still far too large, President Bush made several steps in the right (government-limiting) direction. Overall, is this effort “too little, too late” for the nearly-lame-duck President?

Perhaps. There is still reason to be encouraged, though.

Of particular significance in the health care field was his recommendation that runaway spending on entitlement programs such as Medicare and Medicaid be checked, and their rate of growth slowed from 7.5% to 5% -- something that caused Rep. Pete Stark (D-CA) to preemptively declare the Bush budget "dead on arrival" in the House.

Regardless of the expected resistance to this "cut" from the Left side of the aisle, the move is a sound one. While the 7.5% to 5% reduction in growth still represents an increase in the overall size of these programs – despite the claims of alarmist commentators that the programs are being "slashed" – the move represents a welcome downturn in the inflated growth of these programs, and should be applauded by all who prefer government and its relationship to health care as it should be: limited in both size and scope.

More troublingly included in this budget, though, was an attempt to meet the Democrat Congressional leadership in the middle on the subject of expanding the State Children’s Health Insurance Program (SCHIP), a topic that had been a hot-button issue last year before the majority's epic cave-in (to the tune of a 411-3 vote) on what they had been touting as a signature plank in their platform.

Rather than sticking to his guns and refusing to authorize the expansion of an inefficient government program until the states receiving funding under it had -- at the very least -- enrolled all of their citizens who are currently eligible, Bush offered his customary (and customarily ignored) olive branch to the opposition, recommending in his FY2009 budget a $19 billion expansion of SCHIP -- halfway between the standard annual increase he had last year maintained was the limit of what he would approve, and the $35 billion expansion Democrat leaders had fought tooth and nail for in 2007.

It is possible that this allowed expansion of $19 billion will be accepted by Congressional leaders and passed in its own bill. However, the far more likely course of action that Democrats will take on SCHIP is that of the proverbial "when given an inch, take a mile." It would not be surprising in the least if Democrats take this olive branch and demand the tree, as it were, and return to insisting on the full expansion that they agitated for so vigorously last year.

Regardless of this potentiality, the President’s FY2009 budget is a step in the right direction in the field of health care. His support for further deregulation of the market, and for common-sense reforms like increasing the availability of Health Savings Accounts , the prevalence of telemedicine, and other innovations that increase consumer choice and decrease the need – and excuses – for excessive governmental involvement in the health care market, show that at least one key figure in the American government understands that less governmental involvement is a positive for consumers and for the economy, not a negative.

If more lawmakers can be convinced of this truth, the health care crisis that America is currently facing can be greatly alleviated -- and President Bush can win greater support for his better (though still far from perfect) 2009 budget . This would be a winning situation for all involved – especially the American people.

Jeff Emanuel is Research Fellow for Health Care policy at The Heartland Institute and is managing editor of Health Care News.


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