It's All About the Money

The State Children's Health Insurance Program (SCHIP) is up for renewal in Congress this year, opening the floodgates for policies to take advantage of this policy window. The Center on Budget and Policy Issues recently published several reports that examine SCHIP funding. Though there is a growing realization that SCHIP should expand its program to cover the insurance costs of all uninsured low-income children, issues of funding has been at the keystone of passing the reauthorization.

First off, the President’s 2008 fiscal budget report proposed a decrease in federal funding of SCHIP. According to the report, SCHIP would receive$ 7 billion less of any funding necessary to sustain the current programs. However, the current program clearly needs to receive either an increase in budgeting or a program reform since 8.4 million American children (11% of all American children) are uninsured. Moreover, nearly six million of them are eligible for Medicaid or SCHIP, but remain uninsured, largely due to lack of funding. The budget under the President’s proposal will force states to reduce eligibility and benefits, unless states--in the true manner of federalism--can find the fiscal means to cover the loss.

On the other hand, SCHIP calls for a significant increase in funding. If it were to expand its program to cover the eligible 6 million children, then federal funding would increase from the current expenditure of $7.9 billion over 5 years, to nearly $50 billion over 5 years. Studies show, however, that options exist to offset these costs of extending health coverage to uninsured children. Yet, most of these, while ideologically sound, are realistically implausible. For example, one of them calls for an increase in raising federal tobacco and/or alcohol taxes. Judging from the political clout that the concerned special interest groups have in this matter, it is still highly unlikely that those on the Hill will have any incentive to overcome their personal alliances and relationships with these groups to aid a politically powerless community—uninsured, low-income children.