State Children's Health Insurance Program

Senate Democratic leaders have unveiled plans to dramatically expand taxpayer-funded health insurance to millions more children through the State Children's Health Insurance Program (SCHIP).

Eighteen governors have blamed the White House for weaknesses with the program in its budget by $10 to $15 billion.

Launched in 1997, SCHIP provides health insurance to more than six million enrollees, primarily children in lower-income families. Originally authorized to spend $40 billion over 10 years, the program is set to expire this year unless Congress approves new funding.

Senate Budget Chairman Kent Conrad this week said his plan would expand coverage to 8.3 million more uninsured children and boost spending by $50 billion over the next five years.

SCHIP funds are also used, often, to insure children who are not in low-income families. In New Jersey, for example, SCHIP covers children whose parents earn up to three-and-a-half times the poverty limit.

This misallocation of funds happens because the federal government gives states more money for those enrolled in SCHIP than for those covered by Medicaid, which is designed to provide health coverage to low-income Americans.

Many employer sponsored health insurance plans allow parents to pay extra to put their kids on their own policies. Some parents often can't afford it. This leaves the employer money on the table and means these kids are more likely to receive taxpayer-subsidized health insurance coverage.

Adults should not be eligible for Schip. Covering adults was never the intent of the program, and states that extend health coverage to adults are diverting funds from the needs of low-income children. Second, Schip should focus on America's poorest families. States need to meet the law's intent.

Finally, it must be easier for states to utilize Schip as a premium-support program. It is relatively inexpensive to add children to family policies, but by making the process so bureaucratic, employer-provided plans are underutilized and families are split into private and public coverage plans.

Lets see if they get it right this time.