No to Medicaid for the middle class

Star Parker
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Posted: Jul 23, 2007 12:00 AM
No to Medicaid for the middle class

The Senate Finance Committee has approved a major expansion of SCHIP, the State Children's Health Insurance Program. President Bush had proposed expanding its $25 billion budget by $5 billion. But the committee has approved the Democrats' initiative to expand this government program far more aggressively.

Under the proposal, 50 percent more children will be covered by SCHIP through an increase in funding of $35 billion. The cost will be financed by a tax hike on cigarettes of 61 cents per pack.

More health-care coverage for children. More taxes on tobacco. Sounds like a winner, right?

Not at all. Responsible senators should vote against this major step toward further socialization of American health care. And if Congress does pass this, the president should veto it.

The reason for the launch of the SCHIP program in 1997 was affordability of health care. The point was to finance health care for children in families that earn too much to qualify for Medicaid.

Now, according to The Wall Street Journal, almost half of our nation's children have government-paid health care either through Medicaid or SCHIP.

This new proposed expansion would entrench government health care more deeply into the nation's middle class.

Whereas SCHIP coverage has commonly covered families earning up to 200 percent above the poverty line, the new proposal lifts this ceiling to 300 percent. According to the Congressional Budget Office, up to 75 percent of families in this income range already have private coverage.

Because the program is administered at the state level, coverage guidelines vary and in some cases have even included adults.

Meanwhile, as we extend last-resort government medical coverage for the poor into the middle class, increasing numbers of physicians are refusing to participate in Medicaid because of inadequate compensation.

But let's get back to the core issue: runaway health-care costs and accessibility of coverage.

Why, in a country of abundance such as ours, where practically everything just gets cheaper and more accessible, does health care stand out in just getting more expensive?

Or to put it another way: Name any product or service that is delivered in a competitive free market that has not gotten cheaper over time.

This should provide a hint to the problem in health care. Despite what our Democratic Party leadership would have us believe, the increasing costs and inaccessibility of health care is the result of excessive government interference in this market as opposed to not enough.

You'd think that our representatives in Washington would want to fix these distortions so that health care could be delivered more freely and hence more cheaply, imaginatively and abundantly.

But this doesn't sit well with the political-power-loving class in Washington. It would rather do what the Senate Finance Committee has just done: Ignore the real problems and then expand government even more to try and cover those who fall through the cracks.

As a result, we get Medicaid for middle-class America and children getting health care from different suppliers than their parents. Brilliant!

Bush offered a creative proposal in his State of the Union address this year that would start addressing the problem at its root. It puts a $15,000 ceiling on the deductibility of employer health coverage, and offers a $15,000 tax deduction to every American family to purchase health care. This would change current economics that favor plans delivered through employers rather than purchased individually.

Yet, Rep. Pete Stark, D-Calif., who chairs the health subcommittee of the House Ways and Means Committee, declared the president's proposal dead on arrival and said no hearings would be held.

The proposal alone might not deliver gold-plated plans to working-class Americans. But it certainly would increase the accessibility of basic coverage.

Leveling the tax field is just a start.

We need to allow a national market in health-care delivery to emerge to replace the crazy quilt of separate state-regulated fiefdoms, and to fix our tort-law system that requires young medical-school graduates to spend tens of thousands of dollars on malpractice insurance in order to start practicing their profession.

Health care follows the same laws of supply and demand as every other good or service.

It's not an accident why, as Regina Herzlinger of the Harvard Business School explained recently in a Wall Street Journal column, we don't see innovation and entrepreneurship in the delivery of health care like we see in every other marketplace. As she explains, the health-care marketplace is too controlled and constrained by government regulations.

Americans should refuse to tolerate this latest move by our political class to address failure with more of the same. We need freer markets in health care, not more government.