September 28, 2007 | EPI Policy Memorandum #121

Why SCHIP matters

by Monique Morrissey

Yesterday, the Senate passed a $35 billion expansion of the State Children's Health Insurance Program (SCHIP), which would allow state plans to enroll an additional 3.8 million uninsured children.

The money is sorely needed. The share of children covered under employer-based health insurance has dropped from 66% in 2000 to 60% in 2006, according to a recent EPI Issue Brief by economist Elise Gould. Meanwhile, the share covered under government plans has leveled off, leaving a growing number of children without coverage.

Gould highlights the social and economic consequences of this trend: higher illness and mortality rates among children as well as an increase in avoidable hospitalizations. Uninsured children also don't do as well in school. But children aren't the only ones who pay the price: the social costs include higher personal bankruptcy rates, lower work productivity via increased absenteeism and turnover, and higher premiums for the insured.

The SCHIP bill passed the Senate with strong bipartisan support, and the program is popular with voters of all political stripes. Nevertheless, the Bush administration has tried to block attempts to use state funds to expand SCHIP by accusing the program of crowding out private plans. But economist Jared Bernstein points out in a recent EPI Snapshot that the evidence shows that few children have enrolled in SCHIP after voluntarily switching from private plans.

The problem isn't just children. As EPI economists Jared Bernstein, Elise Gould, and Lawrence Mishel explain in their Income Picture analyzing new census data, the overall number of Americans without health insurance has increased for the fifth straight year. All told, the share of uninsured Americans increased from 14.2% in 2000 to 15.9% in 2006, largely due to a decline in employer-based coverage.

President Bush has indicated that he plans to veto the bill on "philosophical" grounds, viewing SCHIP and Medicare expansion as "a strategy to get more people to be a part of a federalization of health care." In other words, the president is afraid that if people try government-provided health insurance, they might like it. He's right. That's why EPI's Agenda for Shared Prosperity supports Yale University Prof. Jacob Hacker's Health Care for America plan, which would allow a Medicare-like plan to compete on a level playing field with private plans to cover Americans of all ages.