What The Senate Bill Does Better, Part 4: Maintaining SCHIP

The House bill will eliminate the SCHIP program once the majority of reforms start in 2013. The children in the SCHIP program will either be covered by the expansion of Medicaid or with wraparound coverage if their parents are getting insurance through the new exchange. Thanks in large part to the efforts of Sen. Jay Rockefeller (D-WV), the Senate bill will leave the SCHIP program intact.

I oppose the House's plan to eliminate the SCHIP program once reform starts for two important reasons. First, I don't really trust the exchange. I would like to see this country move to a universal system in which everyone in the country is covered by the same basic mechanism. Unfortunately, I don't think the exchange as currently designed could or should serve that function. The exchange is going to need much stronger risk adjustment mechanisms, tougher regulation, and more standardization in insurance plans. The CBO and CMS concluded that adverse selection will still be a problem on the new exchange. Until the exchange is improved and we are confident it is working, we should probably not be in a rush to dismantle the current well-functioning health insurance program for children.

The Second important reason is cost. The CBO concluded that maintaining the SCHIP program would be roughly $15 billion cheaper than eliminating the program and moving the children into the new exchange. With the foolish, arbitrary $900 billion ceiling in place, reform needs every dollar it can find. I think there are much better uses for this $15 billion, like increasing affordability tax credits, or moving up the implementation date of some reforms. Moving children from the SCHIP program to more expensive private insurance ranks very low on my priorities of things on which to spend limited reform money.

The Senate made the right decision choosing not the dismantle the SCHIP program. Unfortunately, it is the right decision primarily because Congress made so many wrong decisions on how they structured the rest of health care reform.

Read Part 1 Wavier For State Innovation and Part 2 Cantwell’s Basic Health Program and Part 3 Greater Access To The Exchange At The Start.