The Politics of SCHIP Expansion: A Comment on Professor Kopelman’s Theories of Justice

1. The Politics of SCHIP Expansion: A Comment on Professor Kopelman’s Theories of Justice Professor Leonard Nelson, Cumberland School of Law, Samford University

2. SCHIP Expansion: The Background • “The conflagration over the reauthorization of the State Children’s Health Insurance Program offers a compelling example of Washington’s current inability to address even seemingly uncontroversial matters such as improved health care coverage for children.” • Sara Rosenbaum, The Proxy War-SCHIP and the Government’s Role in Health Care Reform, NEJM 358;9 (Feb. 28, 2008)

3. SCHIP Expansion: The Background • Controversy among groups espousing various “theories of justice” under Professor Kopelman’s schema: • Conservatives (e.g., Bush Administration, and experts from AEI, Heritage, etc.) (limit governmental role to setting rules for market competition and providing subsidies to the poor) • Libertarians (e.g., Michael Cannon and Michael Tanner from CATO) (substantially cut back government regulation and rely on market forces to reduce costs, improve quality and expand access) • Utilitarians- (e.g., Henry Aaron from Brookings) (incremental approach to expanding access through state experiments, tax and insurance reforms coupled with rationing to contain costs) • Egalitarians- (Families USA, Progressive Democrats, Rahm Emanuel) (zealous advocates of expansion of government programs with focus on eventually implementing a single payer system)

4. SCHIP Expansion: The Background • In October 2007, President vetoed SCHIP reauthorization legislation that would have permitted states to expand coverage of children in families at or below 200% FPL to 300% FPL • Provided increased funding of $35 billion to paid for through a 61 cent per pack increase in tobacco tax. • State Children’s Health Insurance Program (SCHIP): Reauthorization History, http://www.kff.org/medicaid/upload/7743.pdf • President Bush Vetoes SCHIP Reauthorization and Expansion Legislation, Kaiser Daily Health Report (October 3, 2007).

5. SCHIP Expansion: The Background • I am returning herewith without my approval H.R. 976, the "Children's Health Insurance Program Reauthorization Act of 2007," because this legislation would move health care in this country in the wrong direction. The original purpose of the State Children's Health Insurance Program (SCHIP) was to help children whose families cannot afford private health insurance, but do not qualify for Medicaid, to get the coverage they need. My Administration strongly supports reauthorization of SCHIP. That is why I proposed last February a 20 percent increase in funding for the program over 5 years. • VETO MESSAGE, GEORGE W. BUSH,THE WHITE HOUSE, October 3, 2007, available at http://www.whitehouse.gov/news/releases/2007/10/20071003-2.html

6. SCHIP Expansion: The Background • “This bill would shift SCHIP away from its original purpose and turn it into a program that would cover children from some families of four earning almost $83,000 a year. In addition, under this bill, government coverage would displace private health insurance for many children. If this bill were enacted, one out of every three children moving onto government coverage would be moving from private coverage. The bill also does not fully fund all its new spending, obscuring the true cost of the bill's expansion of SCHIP, and it raises taxes on working Americans.” • VETO MESSAGE, GEORGE W. BUSH,THE WHITE HOUSE, October 3, 2007, available at http://www.whitehouse.gov/news/releases/2007/10/20071003-2.html

7. SCHIP Expansion: The Background • “Because the Congress has chosen to send me a bill that moves our health care system in the wrong direction, I must veto it. I hope we can now work together to produce a good bill that puts poorer children first, that moves adults out of a program meant for children, and that does not abandon the bipartisan tradition that marked the enactment of SCHIP. Our goal should be to move children who have no health insurance to private coverage, not to move children who already have private health insurance to government coverage.” • VETO MESSAGE, GEORGE W. BUSH,THE WHITE HOUSE, October 3, 2007, available at http://www.whitehouse.gov/news/releases/2007/10/20071003-2.html

8. SCHIP Expansion: The Background • After initial veto by President Bush in October 2007, there was a bipartisan attempt to develop a compromise measure • Second bill would also have given states authority to expand coverage of children in families at or below 200% of FPL to 300% FPL, but did have some additional provisions to address “crowd out” problem. • This passed Congress, but was vetoed by President Bush on December 12, 2007 • State Children’s Health Insurance Program (SCHIP): Reauthorization History, http://www.kff.org/medicaid/upload/7743.pdf

9. SCHIP Expansion: The Background The Administration strongly supports reauthorization of the State Children’s Health Insurance Program (SCHIP) in a way that puts poor children first. However, H.R. 3963 continues to allow states to expand coverage without assuring that poor children have coverage first; continues to provide coverage for some adults through 2012; continues to allow the use of income disregards to increase eligibility levels; continues to move children from private health insurance to government programs; provides insufficient safeguards to assure that funds will not be spent on ineligible individuals; and, remarkably, actually costs more than the earlier bill, not withstanding supposed improvements in policy. Because H.R. 3963 has not addressed in a meaningful way the objections that caused the President to veto H.R. 976, the President will veto this legislation if it is presented to him without significant changes. Statement of Administration Policy, OMB (10/25/2007), available at http://www.whitehouse.gov/omb/legislative/sap/110-1/hr3963sap-h.pdf

10. SCHIP Expansion: The Background • In December 29, 2007, President Bush signed a bill extending SCHIP funding through March 31, 2009 and providing states projected to have a shortfall with funding above their FFY 2007 funding levels. • SCHIP Funding and Reauthorization, MRMIB at http://www.mrmib.ca.gov/MRMIB/SchipBackground.html

11. SCHIP Expansion: The Nature of the Controversy • “Why would the President veto bipartisan legislation that does what he insisted on-namely, aggressively enroll the poorest children?” • Sara Rosenbaum, The Proxy War-SCHIP and the Government’s Role in Health Care Reform, NEJM 358;9 (Feb. 28, 2008)

12. SCHIP Expansion: The Nature of the Controversy • “One answer lies in a far larger dimension of SCHIP that is basic to any health insurance legislation-namely, the legislative architecture of the reform plan, its structure and operational approach. Viewed from this vantage point, the SCHIP battle turns out not to be about family-income assistance levels or the mechanism for financing…Instead, the issue became the role of government in organizing and overseeing the health care marketplace.” • Sara Rosenbaum, The Proxy War-SCHIP and the Government’s Role in Health Care Reform, NEJM 358;9 (Feb. 28, 2008

13. SCHIP Expansion: The Conservative View • In a speech given at AEI Conference in April 2007, Secretary of DHHS Michael Leavitt stated: “There are two very divergent views as to the role that government ought to play in health care. The first is that government ought to be the proprietor. We ought to define the benefits. We ought to set the prices. We ought to bear the risks. There are others of us who believe that government should be an organizer. As an organizer, our task is to set the rules, to remedy the inequities, and to subsidize the needy-two very divergent points of view.”

14. SCHIP Expansion: The Conservative View • With respect to SCHIP reauthorization, Secretary Leavitt stated: “We need to reauthorize SCHIP.  Let me clear about that.  It is a very important tool.  But we need to stick to what was intended to do, and that is to help low-income children have health insurance.  Besides, that really ought not to be, however, our objective.  Our objective ought to be for every American to have access to basic insurance at an affordable price.  The solution to this dilemma just is not incrementally to hook one more car to the train of government funded or government-run health care.  The solution is for every American to have affordable basic insurance, including children.”

15. SCHIP Expansion: The Conservative View • Comments on SCHIP by Health Policy Consensus Group (experts from AEI, Heritage, ALEC etc.) • COMPONENT #1: FUNDING FOR SCHIP SHOULD BE REDEPLOYED TO MORE EFFECTIVELY EXPAND COVERAGE TO CHILDREN WHO ARE MOST IN NEED AND GIVE THEM ACCESS TO PRIVATE HEALTH INSURANCE. • The primary focus of the State Children’s Health Insurance Program should be to cover children in families with incomes at or below 200 percent of poverty. • The program’s subsidies should be re-structured to encourage the purchase of private health insurance.

16. SCHIP Expansion: The Conservative View • Health Policy Consensus Group • COMPONENT # 2: TAX POLICY GOVERNING THE PROVISION OF HEALTH INSURANCE SHOULD BE FAIR AND EQUITABLE.

17. SCHIP Expansion: The Conservative View • Health Policy Consensus Group • COMPONENT #3: EXPAND PRIVATE SECTOR COVERAGE FOR LOWER-INCOME WORKING FAMILIES THROUGH DIRECT ASSISTANCE, INCLUDING VOUCHERS OR REFUNDABLE HEALTH CARE TAX CREDITS FOR THE PURCHASE OF PRIVATE HEALTH INSURANCE.

18. SCHIP Expansion: The Conservative View • Health Policy Consensus Group • COMPONENT # 4: ESTABLISH GREATER FLEXIBILITY IN THE USE OF SCHIP AND MEDICAID FUNDING. • Those who are eligible for assistance through SCHIP should be able to receive the benefit in the form of a subsidy for buying private coverage for their children or adding their children to their job-based policies

19. SCHIP Expansion: The Libertarian View • CATO Expert • “Rather than expand SCHIP, Congress should (1) make private health insurance more affordable by allowing consumers and employers to purchase less expensive policies from other states, and (2) fold Medicaid and SCHIP funding into block grants that no longer encourage states to open taxpayer-financed health care to non-needy families. With more Americans able to afford private insurance and no incentive for states to expand governmental programs beyond the truly needy, federal and state governments could reduce spending on those programs.” • Michael Cannon, Sinking SCHIP: A First Step toward Stopping the Growth of Governmental Health Programs

20. SCHIP Expansion: The Center Left View • Brookings Expert: • “A template exists for constructive action that appeals to important principles espoused by both parties. That template is the State Children's Health Insurance Program (SCHIP). Under this program, the federal government provides states with grants to be used to provide health benefits to children from families with incomes too high to qualify for Medicaid. As long as they do not curtail Medicaid coverage, states are free to pursue this goal under a variety of arrangements depending on local conditions and political preferences. SCHIP now provides health insurance to 4.3 million children. Most would otherwise be uncovered. It uses the conservative principle of permitting states latitude and independence to achieve the liberal goal of extending health insurance coverage.” • Henry Aaron, Senior Fellow, Brookings Institution, Template for Health Care Coverage,

21. SCHIP Expansion: The Egalitarian View • Families USA • “At a time when the economy is in trouble and families are struggling to pay for everyday expenses like housing, groceries, and gas, programs like Medicaid and CHIP are more important than ever. As families ride out these tough times and face loss of employment and often health coverage, more and more children will become uninsured and likely be eligible for Medicaid or CHIP. The Administration could not have picked a worse time to harm low-income children by vetoing legislation that could have provided an additional 4 million children with essential health coverage and imposing a directive that blows a hole in the health care safety net for these vulnerable children. What’s more, the President’s proposed policy changes would further restrict CHIP and put the health of America’s children at risk.’ • 9 Million Children and Counting: The Administration’s Attack on Health Coverage for America’s Children, Issue Brief, Families USA (Feb. 2008).

22. SCHIP Expansion: The Egalitarian View • Rahm Emanuel, House Democratic Chair: • “we should ensure that all Americans have quality, affordable health care. We should start on the road to coverage for all by building on the success of Medicare, Medicaid and the State Children's Health Insurance Program (Schip), guaranteeing universal health care to the two groups most at risk: children and older Americans between the ages of 55 and 64 (who are not yet eligible for Medicare). Schip should be for children what Medicare is for the elderly -- a universal health-care program. Covering every child is a moral responsibility, and will address working parents' greatest worry. Helping older workers and employers manage the health costs of early retirees will make it possible for entire sectors of the U.S. economy to get back on their feet.” • Rahm Emanuel, A New Deal for the New Economy, Wall Street Journal, 3/19/2008

23. SCHIP Expansion: The Egalitarian View • “House Democratic leaders will use legislation to renew a health insurance program for children to put President Bush and congressional Republicans on the defensive once the political turbulence surrounding forthcoming reports on the Iraq war subsides and the Congress refocuses on domestic issues…‘Now the Democratic majority sees a chance to use the SCHIP reauthorization to finally accomplish what the Clinton administration failed to do, put government bureaucrats in charge of everyone’s health care,’ House Energy and Commerce ranking member Joe Barton (R-Texas) said yesterday in a statement. Top Democrats do not necessarily disagree with that assessment. In April, Emanuel told an audience attending the House Judiciary Committee Congressional Forum on Universal Health Care with Single Payer Financing that the process to reauthorize SCHIP constituted ‘spring training’ for a future political debate, assuming there is a Democratic president, over universal health insurance.” • Jonathan Kaplan, House Dems See Political Win on SCHIP, The Hill (9/07/07)

24. SCHIP Expansion: Conclusion • The SCHIP controversy shows that although all persons of good will want children to have access to health care, there is still substantial disagreement over the role of government versus the private sector in providing access to health care • The basic disagreement focuses on the role of private health insurance and markets in health care reform

25. SCHIP Expansion: Conclusion • At the two extremes • Libertarians see no reason for any significant government presence in health care sector and would focus on enhancing consumer choice and market competition in order to bring down cost, expand access and improve quality • Egalitarians see no need for a private sector and favor a single payer-many would prohibit private health insurance as in Canada

26. SCHIP Expansion: Conclusion • Compromise to expand access to health care may be possible between conservatives and center left if solutions preserve role of the market and private insurance, focus on the role of the states, and minimize the expansion of federal government programs • Sweeping changes in accordance with a single theory of justice are unlikely in our system absent capture of the Presidency with a clear mandate for health care reform of a particular type and domination of both houses of Congress by overwhelming majorities (historical examples FDR and LBJ) • Minority party with 41 votes in the Senate can block sweeping reforms at the federal level and require compromises to be made by the governing party