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Bush Does Health Care

Now that he's lost the battle over immigration reform, it looks like Bush might turn his attention to health care next. At the moment, he's wrangling with Congress over how much money to give S-CHIP, the public program to cover uninsured kids. (He thinks congressional Democrats are being much too generous.) Bush even gave a little speech on the subject yesterday:

The fundamental question is, what should we do about [the fact that so many children are uninsured]? On that question, our nation has a clear choice. One option is to put more power in the hands of government by expanding federal health care programs and empowering bureaucrats to make medical decisions.

The other option is to put more power in the hands of individuals, by making private health insurance more affordable and accessible and empowering people and their doctors to make the decisions that are right for them. That's the divide.

Okay... deep in the weeds we go. Most S-CHIP programs actually contract with private managed-care companies to cover their beneficiaries. Bush, for his part, wants to give families tax credits to purchase insurance on their own. The main "divide" here isn't really public vs. private; it's that, under S-CHIP, the managed-care providers have to adhere to certain standards--they're supposed to offer a minimum level of benefits, and co-payments are usually capped. Under Bush's plan, that presumably wouldn't be the case, and families would get no guarantees that they could buy adequate coverage or limit their out-of-pocket payments. (And there would be nothing to prevent insurers from turning down applicants with pre-existing conditions.)

In fact, as the Center of Budget and Policy Priorities points out, Bush's proposal looks suspiciously similar to something Congress did back in 1990, when it created a health tax credit for low-income workers. That program ended up being a fiasco: Among other things, in the absence of regulations, unscrupulous insurance companies were free to swindle poor families into buying policies that were basically worthless. After an investigation, Congress ended up repealing the credit in 1993.

Now, conservatives--and Bush in particular--have criticized proposals to expand S-CHIP because it would "crowd out" private insurance: Some families with private coverage would drop their current insurance to sign up for the government program (this would happen with about 25 percent of all new S-CHIP enrollees). But as MIT's Jonathan Gruber--the expert everyone cites on this stuff--has pointed out, this would happen with any attempt to expand coverage. S-CHIP just happens to be the cheapest way to do so, even after the "crowd out." By contrast, Gruber found that Bush's tax credit proposal wouldn't expand coverage at all.

Meanwhile, a recent Urban Institute study found that low-income children in public-insurance programs actually get better care than their privately-insured counterparts: They see doctors and dentists more frequently, and it's all done at a lower cost. For whatever reason, it really does appear to be more effective than tax credits and the like. Then again, since one approach involves additional government spending and the other involves cutting taxes (sort of), Bush is always going to favor the latter, no matter what.

--Bradford Plumer