Uncle Sam pays for middle-class health care

January 30, 2009

 Diana Furchtgott-Roth– Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. –

On January 29, the U.S. Senate passed the reauthorization of the State Children’s Health Insurance Program (SCHIP), originally enacted in 1997 as an addition to Medicaid. It would have expired on March 31, potentially leaving over 7 million children without health insurance.

The bill passed 66 votes to 32, with several Republicans joining Democrats to pass the bill. The Republican leadership wanted to expand SCHIP spending by $5 billion over five years, an annual increase of 20 percent. In contrast, congressional Democrats succeeded in increasing SCHIP by $32 to $39 billion over five years, according to estimates by the Congressional Budget Office, almost tripling the program by 2013.

Democrats seek to move the government toward national health insurance that is not a low-income program but would be like national defense—available to everyone, and paid for by the taxpayers, as in Europe and Canada. This is a fundamental philosophical difference.

Since the House of Representatives passed a similar bill on January 14, the two bills will be reconciled in conference. The bills are funded by increasing tobacco taxes (assuming the smokers don’t quit in response to the higher tax). The legislation will then go to President Obama, who indicated that he will sign it, unlike President Bush, who vetoed a similar SCHIP increase as excessive.

Senate Finance Committee Chairman Max Baucus declared, “When President Obama signs this bill, the real victory will belong not to politicians, but to kids. The winners today are the kids who need health care.”

The losers, however, might be the taxpayers. The bills are costly because they would raise income eligibility well into the middle class. Last year, SCHIP covered about 7 million low-income children and Medicaid covered an additional 23 million. The proposed bills would add another 6.5 million children to the SCHIP and Medicaid—and, according to Census Bureau data, 42 million children would be eligible.

In addition, the bill allows states to receive federal reimbursement for adding more immigrant children and pregnant immigrant mothers, and drops the five-year waiting-period now required for legal immigrants to be eligible for the programs. This would enable immigrants to come to the United States and qualify for benefits on day one.

The bills would raise family income ceilings for states to qualify for Federal reimbursement. The present limit is 200 percent of the poverty line, or $44,000 for a family of 4 (although individual states can and do fund higher levels without the Federal share). The new bills raise the Medicaid limit to 300 percent, or $66,000. An exception for New York will include families at 400 percent, or $88,000.

According to the Senate Minority Leader, Kentucky’s Mitch McConnell, “It’s grossly unfair that a family in Kentucky making $40,000 must pay for the health insurance of a family making double that — especially if the Kentuckian can’t afford it for his own family.”

The median U.S. household income is $50,000. Sixty percent of American households earn less than $62,000. By raising government insurance eligibility to embrace three fifths of households, Congress will change government-provided health care from a low-income to a middle-income program—even as middle-income households pay lower taxes under the pending economic stimulus plan. The fiscal consequences of this new entitlement will be felt far into the future.

The SCHIP bill prefigures crucial health-care questions for Americans of all ages in the next few years: Who should be insured under federal plans, and who under private plans? Do the American people want increased nationalization of health-care financing, as they have seen increasing nationalization of the banks?

The answer to these questions will determine the shape of American health care for years to come.

Diana Furchtgott-Roth can be reached at dfr@hudson.org. For previous columns, click here.

32 comments

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The government, run by quasi-communistocrats are out of control. If by act of God, you were born poor, and chose not to get an education, but instead became a welfare mother by choice, why should I pay for your care and your childrens care?
The welfare state is a self fulfilling condition. I say NO MORE WELFARE, NO MORE HANDOUTS. Now, as president we have a community organizer, that assisted the groups like ACORN in getting government handouts. Now he wants to bankrupt our country so that he can give away billions to his special interest groups.
This excessive spending by OBAMA is going to wake up every crook and fraudster looking for a handout. And then there are the lobbyists!!

This is the end of our dear country as we once knew it.

Posted by JAQUEBAUER | Report as abusive

What isn’t being said is the “piggyback” on the bill adding more restrictions on doctors. Where and when will the people be told the whole story!

Posted by Darrin | Report as abusive

As a smoker I do find that this new bill is very harsh on smokers. Almost everywhere in America is smoke free, we as smokers are being huddled in the corner but then also being told that we should pay exceptionally higher taxes. We have no rights anymore, is this truly what America stands for, I remember in history class reading about a little thing called the Boston Tea Party. Taxation without representation….now it is taxation with representation for only the rich. Why couldn’t they put high taxes on the mansions, yachts, or jets that all the politicians have, maybe if they felt such a hefty tax put on their shoulders they might actually take a second look at the taxes they so easily pass against middle to lower class citizens. I mean the RYO or MYO (roll your own or make your own) tobacco, the increase is so terribly obscene that it will increase the tax on it more then you pay for it. Who do you think makes their own cigarettes the rich or the poor? We could have just stopped giving money away to countries that don’t pay us back, I mean you don’t give what you don’t have….that alone with capping all politicians salaries for I thought it was more of an honor to serve your country then about how much your paid, would solve a lot of our countries financial crunch. Politicians should be held accountable for how the spend taxpayers money.

Posted by Terri | Report as abusive

Anne Thanks for the advice I am thinking outside the box I mentioned in an earlier comment I offer healthcare to children for as low as 38.00 a month. Of course I can only offerv this to uninsued families because of “insurance laws” I spend an average of 15 minutes with my patients and concentrate on preventative healthcare not just sick patients. I know i could do well with this but i have to trend softly as the insurance companies are protected by lots of rules. I do need staff however,to give vaccines,and do patient workup or it would take me twice as long to see patients.They also answer the phones…about 60-200 calls per day,enter data in the immunization registry etc… I also proposed to my state representative an idea of exchange health care for tax credit..
We have a “same day sick” policy for children that is why so many parents with FREE healthcare come over the border of Canada to our office. They have to wait 2 weeks to see theirs , with a sick child that won’t work..
also I feel that if the government stayed out of this somewhat good doctors who charged reasonable prices for quality care would be able to do well, those who were too expensive or didn’t provide quality care would lose patient.. I believe the word for this is free market. Let it happen!! most healthcare providers are seeing only a SMALL fraction of what you pay the rest is eaten up by 3rd party administrators and exectives bonuses of “not profit” organizations(look at how much the president of BCBS of MI made last year!!

Posted by beaner | Report as abusive

Universal health care can work. It works all right in Canada and in many other countries. But Canada does not have a history of malpractice lawsuits. I think you will find that once the government has to pay for these many medical expenses, suddenly the lawsuits will mysteriously vanish. For instance, provinces that try provincially-operated auto-insurance experience fewer accident claims. A person can have his eyeballs dangling from out of his armpits is a terrible accident, but the doctors will say he looks just fine. No need to pay out anything. It is an amazing system.

Posted by Don | Report as abusive

It is strange discussion – everybody’s health care coverage in US.
If some people cannot get coverage for themselves and their children, it means that they are losers and should die. Meanwhile, US provides HIV assistance to many people abroad (Africa PEPFAR for example) and cannot afford to cover basics in health care at home even for children? Or for not good enough children? Middle class pays for foreign assistance and nobody argues.
So what is the real reason for this question – support inequity between people in home country? Health care is a human right, not a fancy car.
How about article for health care user’s abuses such as multiple unnecessary CT, lab tests, surgeries, prescriptions, that insured people use as health care is without any limits for services…
You may get CT/MRI scan test before treatment of simple pimple …

WE all need to stop coplaining about insurance companies. This isn’t an insurance company or a hospital problem. No, I don’t work for either. We need to be mad at all those people on welfare that keep having more and more kids without the ability to pay for them.

I am going to put this in simple terms. Anyone with half of a business mind will understand this. When government taxes businesses, the company doesn’t pay for those tax increases. Consumers pay for those tax increases when the companies raise the cost of their goods.

This is the same with hospitals and insurance companies. When 100′s of people go into the hospital and don’t have insurance because they keep having babies that they can’t afford, the have to raise the cost of services to cover the costs of all those wonderful people that don’t have insurance. Guess what…you guessed it, we get to pay those higher costs through premiums and deductibles. Don’t be mad at insurance companies or hospitals.

Another case in point. I live in the Memphis area, and in Memphis, my car insurance went up drastically when I moved here from Wisonsin. One would think insurance would be more in WI because of the road conditions during winter. Not the case at all. My insurance in Memphis is about 30% more because no one likes to follow the law and carry insurance. Again, the company passing that cost on to the consumer.

So, the bottom line, we need to reform welfare. We need to stop taking money away from my pocket and giving it to the worhtless people on welfare that continue to stay on welfare for generations and continue to have more and more babies so they can take more and more of my money.

True story. I recently did my taxes for 08. The sad thing is that I got a $400 credit for my child because my combined income is too high. I got no credit for my education. I got not credit for my childcare I paid. I got no credit for anything except the interest I pay on my house.

A relative of mine, who I have to say is worhtless, doesn’t work, and paid no income tax last year, but has two kids. They somewhere in the ballpark of 4K back on income taxes. How does that happen? They pay nothing into it and get a check back. No wonder why so many worthless people are on welfare.

Posted by Jeff | Report as abusive

So many heartless people…

With over 2 million US citizens out of work in the last year the likelihood of the welfare mother with her kids at the Dr office getting free healthcare being from a household that made over $100K in 07 is very high. Most people on welfare are not habitual welfare families. The current economic situation demands this administration provide a broader social safety net. And for those that have short term memory problems remember that it was the Bush administration that raped the Treasury to protect their elitist buddies and it is this new administration that is making it very clear that crap will not continue.

As for socialized medicine, of course it could work. Canada’s problem is that they are short on Dr’s. That happens when you have a country to the south that still grossly overpays Dr’s. Haven’t you ever wondered why there are so many foreign Dr’s in the US? Mexico, India, Canada all have socialized medicine. It is the insurance companies in this country that have driven medical costs through the roof. Their profits have been out of sight for years and nobody seems to think there is a problem. Medical personnel should be civil servants and the facilities should be capitalized by the federal government. Healthcare should be universal for all, regardless of race, religion or wealth.

We can maintain a corporate aristocracy through CEO compensation packages and nobody gives a damn. We can spend trillions on unjust wars where fear mongering and lies from elected officials swayed a nation and nobody gives a damn.
We can torture and imprison without charge and nobody gives a damn.
We can spend billions, destroy people’s lives and fund criminals aboard through the War on Drugs and nobody gives a damn.

But, let some baby of an illegal immigrant get some free medical attention and the indignant crawl out of the cracks to right this social injustice.

What a country…of fools. I just hope the future brings a kinder and gentler society.

Posted by B.Free | Report as abusive

to be free i”d be happy to help out people who are in need I ALREADY DO see patients with no insurance and charge little or barder if necessary, Ie exchange a haicut for medical care We are not heartless people we just want to stop wasting our $$$ I think many doctors would help out Patikents in exchange for tax credit TRUST me the red tape big government approach doesn’t work..Why do I have so many new canadian patients if their care is free??

Posted by BEANERML | Report as abusive

BE FREE I would love to show you my tax returns as a primary care physician I make way less than many business men I went to school for 8 years and paid for it myself to provide myself with a nice life !!NO I live in the US not to be a servent to anyone especially government officials….Canada is short cause who would want to work hard without the return for their efforts ?and FYI we have alot of Foreign doctors cause we have the best medical training facilities in the world!!

Posted by Beanerml | Report as abusive

I think than anyone appling for any government assistance should take a drug screen to see who is really trying out there in the world. But I always think about this comment, but then I think who’s really going to suffer (the childrens).

Posted by pat | Report as abusive

Yes wants every citizen in calilfornia and else were to work for peanuts and tax us like crazy and raise our hmo’s and dr’s office’s to raise their prices for all the illegals he let in our country and they get to speak their own language,what did we work hard for and pay are taxes,so we all could pay for others dream and not ours. this health plan is going to break us more . it’s cost’s us a lot of money to have these illegals here and let them get in here free tha’s not away to run a state,you think other countries would change their ways for us NO. He spends too much of our money on them selves and other members of his family,this isn’t right and all american citizens must write call and bug every politicans and call the white house and write we must make this stop. we need our national graud back to protect our borders and our troops too obama is leaving us ungrauded and whom knows if terrorist aren’t here already. I was happy for the blacks yrs ago they did get a bad deal but that isn’t are fault read mrs obama’s thesis princeton 1985 and youtube 2005 congressional swearing in ceremony for the black caucus witheva clayton danial mudd. that says alot. I just believe this country opened the door to all the citzens of america nobdy kept them down and yet the whites are blamed for that too and now in minimarkets and othe stores blacks and others from over seas and not citizens didn’t pay their way took jobs from citizens because our jobs went over seas these people come here to do the jobs we won’t do ,does this sound american ,what hapen to our civil rightsright to news papers books and tv stations and radio people that believe we are being treated wrong ,charli gibson katie corurc and a few others won’t report anything bad about obama the media is very onesideed and has been thru this whole campagin. Godbless all that love american and our citizens and god blees the true patirots our troops fighting to keep all of us safe.