DMI Blog

Harry Moroz

Immigration, Cigarettes, or Children’s Health

Evidently, the mainstream punditry is exhausted with children’s health.

Indeed, yesterday’s House vote on expansion of SCHIP, the health insurance program for low-income children whose families earn too much to qualify for Medicaid, has been portrayed as everything but an effort to reduce the ranks of the youthfully uninsured. Indeed, we seem to have forgotten that the ability to take a child to the doctor for regular check-ups and immunizations is fundamental to a middle-class standard of living.

Politico, along with The New York Times, pondered the implications of a provision allowing legal immigrant children to receive health benefits (current law results in a 5-year delay for legal immigrants seeking coverage). The Beltway publication, not forgetting to remind us about the immigration status of Treasury-pick Timothy Geithner’s housekeeper, suggested that “For a number of first-year Democrats…this will be their first vote on the immigration issue.”

Was it really a vote on “the immigration issue,” though? In fact, the bill explicitly refuses SCHIP and Medicaid benefits to illegal immigrants, while the CBO estimates that only 17% – 700,000 of 4.1 million – of the children the legislation prevents from becoming uninsured will receive coverage as a result of any eligibility criteria states choose to broaden (this presumably includes anything from permitting coverage of legal immigrant children to increasing the income ceiling for coverage). That is, the legislation primarily assists with the enrollment of children already eligible for SCHIP benefits and prevents current recipients from being cut from the program as states take hatchets to their health programs to deal with budget crises. At least for now, the Senate version of the SCHIP reauthorization does not include the immigration provision, admittedly presenting a possible schism in Congress. But emphasizing the immigration narrative simply ignores the actual effects of the legislation.

Phil Kerpen of Americans for Prosperity used a similar technique in a Washington Times op-ed that argues against SCHIP reauthorization. Kerpen asserts the perfectly defensible claim that the 61-cent increase in tobacco excise taxes used to pay for the SCHIP expansion is regressive and so will hurt the poor in a measure designed to protect them. This is reasonable, as is Kerpen’s concern that revenues from cigarette taxes are decreasing as people smoke less (Indeed, included in the SCHIP legislation is a measure to “study the magnitude of tobacco smuggling in the United States,” surely a sign that tobacco taxes aren’t packing the revenue punch they used to. More suspect in this area is Kerpen’s claim that “the tobacco industry no longer markets to non-smokers.”)

But then Kerpen goes astray. First, he suggests that increased tobacco taxes would lead the poor to subsidize the health care of the middle class. But between two thirds and three quarters of SCHIP enrollees are families with incomes at or below 150% of the federal poverty level (just over $30,000), by no means putting them firmly in the middle class. Further, though effective federal tobacco tax rates are highly regressive – the bottom income quintile pays an effective rate of 0.15% compared to the top quintile’s 0.02% – the lowest quintile of households still contributes $51 to the middle quintile’s $73 and the fourth quintile’s $68: the tax may be regressive, but the “middle classes” are contributing more in absolute dollars. In any case, the growing backlash against tobacco in Congress has as much to do with the plausibility of a 61-cent tax increase as does the need to raise revenue to meet PAYGO rules.

More fundamentally, Kerpen claims that SCHIP

would be a big step toward universal government children’s coverage which could, in combination with other program expansions, lead to a universal government-run health insurance system. Such a system would be rife with long waiting lines and substandard quality of care -- judging by international experience.

But, setting aside the bogeyman of universal healthcare, our experience in the U.S. shows that SCHIP has been quite effective at increasing quality of care for children. The findings of the Child Health Insurance Research Initiative of the Agency for Healthcare Research and Quality demonstrate that health outcomes improved with SCHIP enrollment with SCHIP enrollees “more satisfied with the health care their children received after SCHIP enrollment than before SCHIP.” The Kaiser Commission on Medicaid and the Uninsured suggests that whereas 3% of privately insured and 4% of Medicaid- or other public program-insured children have a usual place of care, 32% of the uninsured lack one.

Yesterday’s vote on SCHIP expansion surely was suffuse with politics – and emotion – after the impassioned back-and-forth between Congress and President Bush that occurred in the fall of 2007. But we might sacrifice quite a bit to politics, while still recognizing the benefits of the SCHIP bill. Indeed, spending on health care – which cannot leak from our borders like other spending – is good stimulus and prevents nasty cuts to state government spending. More simply, perhaps even more politically, the measure is a first step in reforming our health care system, preventing 4 million children from dropping into the ranks of the uninsured.

The primary interest of this Congress should be figuring out ways to strengthen the middle class and to provide more people access to it. This most certainly involves establishing building blocks, like children’s health insurance and fair pay standards, that can help low-income Americans achieve a middle-class standard of living.

Check out a full analysis of the Children's Health Insurance Program Reauthorization Act at

Harry Moroz: Author Bio | Other Posts
Posted at 11:59 AM, Jan 15, 2009 in Congress | Health Care | Medicaid | Middle-class squeeze |
Permalink | Email to Friend