SCHIP and Beyond

Delivering health care to the uninsured hasn't been a very visible issue in Congress since the failure of Hillary Clinton's massive and cumbersome reform scheme in 1994. But it's about to come back. The first real test of political sentiment will be the upcoming debate on reauthorization of the State Children's Health Insurance Program, SCHIP, which was created in 1997 as a 10-year, $40 billion partnership between states and the federal government. SCHIP extends coverage to children whose families aren't poor enough for Medicaid but still can't afford to buy private coverage.

Under SCHIP, the states and the federal government share the cost of coverage, but states are accorded considerable flexibility in creating their own plans. And so 50 states and the District of Columbia have been largely free to experiment with ways to develop healthy kids, while trying to figure out how to keep costs as low as possible.

The cost issue has been particularly important with SCHIP inasmuch as the program is not fiscally open-ended. Unlike Medicaid, SCHIP is a straight grant program, with finite amounts of federal money flowing to states. And so state health agencies have had to be very mindful of costs as they seek to expand coverage.

Although limited in scope, the program has been credited with extending health care to more than 5 million children all over the country. And while detailed studies on the positive health consequences of that coverage are perplexingly hard to come by, no one seriously disputes that setting kids on a healthier path early in life pays dividends.

As Congress begins to debate reauthorization of SCHIP, a couple of points are important to keep in mind, one about the program itself, and the other about what SCHIP tells us with regard to the broader issue of health care coverage for the more than 40 million Americans of all ages who do not have it now.

SCHIP needs an infusion of additional money if it is to reach the universe of eligible kids that program advocates have always wanted to reach. In fact, though, SCHIP needs more money just to tread water. If the program were to be reauthorized at current levels, analysts estimate that the rising cost of health care would require that more than a quarter of the children currently covered by the program be dropped.

But beyond the issue of funding. SCHIP needs reauthorization and replenishment because it represents a first step toward the kind of larger program that an increasing number of experts now see as inevitable.

The most fundamental lesson that SCHIP has to teach is that a strong partnership between states and the federal government can be the foundation on which to base expanded health care coverage. It is a model that embraces state experimentation along with federal support, and not just fiscal support but also analytical support aimed at finding successful programs.

The state-federal partnership angle is equally important from the standpoint of pragmatic politics. A federally enacted health care plan that allows for a wide variety of state-designed and implemented coverage experiments, and can be phased into existence in cooperation with all relevant statewide interest groups, has a much better chance of political survival than any giant federally based monolith, or yet another set of complicated changes to our tax code aimed at altering markets and human behavior.

In other words, there's a potentially attractive middle ground between universal coverage and tax-code tinkering, and that middle ground lies in some sort of cost-sharing formula between the feds and states along the lines of SCHIP. States would be given some money and then cut loose to experiment with ways of extending coverage beyond children.

Discussion of that scenario should go forward independent of SCHIP reauthorization. SCHIP may be a model -- and perhaps even a platform -- for wider coverage, but for now, states and the federal government should be working hard to preserve and strengthen the existing program. Then they need to turn to a serious examination of the lessons the program might offer when it comes to broadening coverage to more Americans.