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S-chip of Fools By: Fred Barnes
The Weekly Standard | Monday, October 08, 2007

Rahm Emanuel, the chief intimidator for House Democrats, didn't go for subtlety. Republicans who oppose expansion of the S-chip program will be denying "10 million American children their health care," he told Major Garrett of Fox News. Chuck Schumer, his counterpart in the Senate, took the sorrowful approach. "We're all hurt as a country when a child is not covered by health care and goes to school sick," he said. In vetoing the S-chip bill, President Bush "sided with [the] tobacco industry instead of America's children." That blast came from the nice folks at the American Cancer Society, who favor the 61-cent hike in the cigarette tax that would pay for the S-chip increase.

It isn't going to be pleasant for Republicans who believe the new S-chip legislation is bad policy. But there's a way to resist the measure and neutralize the Democratic demagoguery without suffering too much political heartburn. It consists of three steps. First, you go negative and criticize the bill as "welfare for the middle class," which it is. Second, you go positive and offer an alternative. Third, you go big picture and show how an expanded S-chip program is inconsistent with the kind of health care system most Americans want.

S-chip expansion has been easy for Democrats to defend because it affects children, including millions without health insurance. But it's a free good for the recipients, paid for by taxpayers: By definition, it's welfare. Few oppose welfare for poor children, even for children living in families earning up to 200 percent of the poverty line ($41,300 for a family of four). That's whom S-chip was created to cover.

The bill vetoed by Bush, however, would offer S-chip for kids up to 300 percent of poverty ($61,950) in every state, or up to 400 percent ($82,600) in New York and perhaps other states. Millions of these children already have private insurance, but they wouldn't for long. They'd be switched to S-chip because it's free.

Supporters of the S-chip-plus bill don't have a credible answer for the crowding out of private insurance. They simply pass the buck, saying it's up to the states to limit the program to those currently uninsured. How will the states do this? The S-chippers don't say.

Then there are the half-a-million eligible poor kids who haven't gotten S-chip coverage and the 700,000 adults who have. Bush's idea of straightening out the program before expanding it makes sense. He calls it "poor kids first."

But merely opposing expansion of S-chip isn't sufficient. There are millions of children in households above the 200 percent cutoff without health insurance. Republicans need an alternative that's better than S-chip. That's step two.

Republican senator Mel Martinez has an alternative, an obvious one. "Rather than putting more people on a government-run program, we would advance tax credits to families with incomes between 200 percent and 300 percent of the poverty level," he said last week. This would be expensive--tax credits can be refundable--but not as costly as expanding S-chip. And tax credits wouldn't spur the deleterious trend toward government-run health care. They are part of any patient-run, market-driven reform.

There are four tests of any plan to reform the health care system: Does it make health care more accessible? Does it restrain soaring cost increases? Does it maximize patient choice? And does it generate more competition among hospitals, research institutions, pharmaceutical companies, producers of medical devices, and doctors?

The Martinez plan meets all four. S-chip-plus meets only the first test, increased access. It would drive up costs and effectively limit patient choice, which, again, is why Republicans--and Democrats, for that matter--who favor real reform voted against it. And putting opposition to a middle-class S-chip in the context of broader health care reform makes it more politically palatable.

The broader issue is likely to dominate the domestic policy debate in the 2008 election. As Karl Rove noted in the Wall Street Journal, it's a debate Republicans can win if they promote true reform rather than offer trimmed-down versions of Democratic schemes for greater government involvement in the health care system.

A sweeping reform of the kind President Bush, Rudy Giuliani, and Mitt Romney have been touting would assure that everyone can get health insurance--and get the kind that fits their needs. A 22-year-old may want cheap catastrophic coverage. Middle-class families could opt for paying routine doctor bills, but want coverage for hospital stays and drugs. Individuals who pay these bills are bound to be cost-conscious in ways third-party payers--usually their employers--are not.

Republican congressman Steve Chabot of Ohio voted against the S-chip bill, and he's been targeted for personal attack by Rahm Emanuel. Voting to fund the war in Iraq but not for expanding S-chip, as Chabot has, is "not the place you want to be," Emanuel says.

Yet Chabot is comfortable. "There are about 118,000 children in Ohio that aren't getting S-chip which they ought to be entitled to," he told Major Garrett. "Instead of giving them health care," S-chip expansion would "give it to people that make as much as $83,000 a year." Cast in those terms, being against the bill is a no-brainer.

Fred Barnes is executive editor of The Weekly Standard.

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