The State Child Health Insurance Program Debate: Background and Insights

Abstract

Even though the State Child Health Insurance Program (SCHIP) has strong bipartisan support, the Bush Administration and the 110th Congress were unable to agree to a comprehensive reauthorization of the program. The Bush Administration disagreed with a bipartisan majority of the House of Representatives and a veto-proof majority in the U.S. Senate on a wide variety of SCHIP issues including: (1) the desired scope of coverage for children, (2) needed funding, (3) coverage of adults, (4) limitations on enrollment, (5) cost sharing, and (6) benefit packages. A review of legislative proposal reveals the compromise bill passed by Congress was substantially less ambitious than the bill sought by many Congressional Democrats. The most difficult economic problem associated with a successful SCHIP expansion involves control of crowding out, the tendency for an expansion of public health insurance to result in individuals switching from private to public insurance. In my view, the vetoed bill, while not perfect from any perspective, was a reasonable way to balance the goal of expanding coverage to the uninsured with the goal of limiting crowding out.