By vetoing the SCHIP reauthorization and expansion bill, the president has impeded 6 million children's access to health care. After reviewing this plan, however, you'll recognize how it does a disservice to not only children, but to the poor and to seniors, as well.
To understand the dynamics of the issue, we must first have a full grasp of what SCHIP is. SCHIP stands for State Children's Health Insurance Program. It originated in October 1997, with a $40 billion budget over 10 years. This program provides matching federal funds to the states for administration of a health insurance program.
The states individually determine, under broad federal guidelines, the eligibility groups, benefit packages, payment levels for coverage, and administrative and operating procedures. The spirit of this program is to provide support for children whose parents don't qualify for Medicaid but can't afford employer-sponsored or private insurance.
In 2007, Congress passed legislation to expand the program by $35 billion and cover approximately 4 million more children. The president vetoed this legislation. The proposed changes in the vetoed legislation contained both good and terrible details.
The expansion itself would have taken the financial qualification for participation in the program up to 400 percent of the federal poverty level in some states. In case you're wondering, that's $84,800 for a family of four. Although it did allow for some of the funds to be used to purchase private coverage or subsidize employer-sponsored plans, it also left language that would extend this benefit to non-citizens and adults.
You read it correctly: Without the president's veto, your SCHIP tax dollars may have subsidized health care for illegal aliens and adults.
After all of the beltway backbiting and political punditry, SCHIP was extended, as is, under what is known as a "continuing resolution." This is a mechanism used by Congress by which neither side of an issue can get the changes (which, in Washington, means "funding") they want. When this happens, Congress will pass a resolution to keep things running under current funding.
So how does this affect our industry and our lives? Let's look at just a few scenarios.
One of the biggest problems facing the health care financing industry is that of the hidden tax on private policy owners. This tax filters through both the individual/family and employer-sponsored markets. The root of this problem lies in Medicaid and Medicare reimbursement rates. Right now, the average reimbursement rate for Medicaid and Medicare is about 50 percent of the normal cost. The providers have to make this cost up by charging private-pay policyholders the difference.
Hence, the more people we move to an underpaying government plan, the more the providers have to charge the private policyholders until the private policyholders give up and call for the government to help. I call this the "socialized medicine self-fulfilling prophecy."
We also must be aware of the reimbursement difference between SCHIP and Medicaid. As stated, Medicaid is reimbursing about 50 cents on the dollar for health care costs. Currently, SCHIP is averaging a 70 percent reimbursement rate. In a time when it's increasingly difficult to find qualified doctors who are willing to accept our nation's poorest, we are arguing about increasing the funding to a lower-middle-class program. Who will end up with a better doctor -- the Medicaid, Medicare, or SCHIP patient? One has to wonder: Why not make SCHIP available for all these classes? This may very well be the intent.
James Madison, the country's fourth president, said in his 1788 speech to the Virginia Ratifying Convention, "Since the general civilization of mankind, I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations."
Expanding SCHIP is exactly that -- a silent, and gradual encroachment -- and I'm throwing in the flag. Pulling the healthiest individuals from risk pools all over the country damages those pools. Replacing private finance with public welfare is nothing short of a move toward socialized medicine.
Former President Ronald Reagan noticed this strategy in a 1961 speech, stating, "One of the traditional methods of imposing statism or socialism on a people has been by way of medicine."
If the representatives of a private health insurance marketplace sit back and allow this gradual oozing of socialist control to overtake their industry one small battle at a time, they will be sure to get a large dose of something good government can always provide -- unemployment.
Brian Urban is the state legislative chairman of the Nebraska chapter of the National Association of Health Underwriters. He can be reached at 402-397-2112.
