"If something's free, I'll take two," a mentor of mine once said. His point was that people don't value things they don't pay for, especially things the government "gives" them.

And it's not only individuals who harbor this attitude. State governments do, too.

Take Medicaid. Many states find themselves dragged down by the program's costs because they irresponsibly promised gold-plated benefits to as many people as possible, knowing that Washington would pick up part of the bill.

That's caused major problems. Consider upstate New York, where county governments have been forced to raise taxes and cut important services. Chautauqua County, for example, fired sheriff's deputies, and Chemung County closed libraries to pay for Medicaid benefits.

This dreary history may soon repeat itself through another federal health venture, the State Children's Health Insurance Programs.

In 1997, Washington agreed to spend $40 billion over 10 years to help states provide health-care coverage to low-income, uninsured children. However, to keep SCHIP from becoming a boondoggle like Medicaid, it was set up as a block-grant program. States would receive a fixed amount each year, rather than an open-ended promise to spend "whatever it takes."

The program seemed to work well enough in its early years. However, that was only because some states didn't spend all the money they'd been allotted, and that money was made available to fund programs in states that went over budget. In 2001, for example, more than $2 billion was reallocated from low-spending states to higher-spending ones.

But states see no reason they ought to leave federal funding on the table, so they found ways to spend it. By last year, only $173 million was left over for redistribution. That's partially because many states started making it easier to qualify for SCHIP. The program was intended to help only low-income cdren, those whose family income is less than double the federal poverty line. That's about $40,000 for a family of four. Continued...