Time to sink a SCHIP

It’s a program which lends itself to a lot of great plays on words, but what’s not funny about the State Children’s Health Insurance Program is the means Congressional Democrats want to use to pay for it.

After an expansion of SCHIP was vetoed twice in 2007, the issue’s laid low for awhile but is likely to be reborn in Congress in the next few weeks. Already there are a couple shell bills introduced which can be vessels easily amended to not only expand the reach of the children’s health insurance program but increase the federal cigarette tax as well. In 2007, the figure used was a 61 cent per pack increase (making the revised federal tax a round dollar per pack) so most research has been based on that tax increase number. It comes on the heels of the General Assembly here in Maryland adopting a $1.00 per pack increase effective in January 2008. Other states have adopted similar increases over the last couple years.

Unfortunately for Maryland (and those other jurisdictions which have attempted bolstering the revenue stream from tobacco), the revenue generated by that 2008 tax increase has fallen short of expectations. Instead of grinning and bearing the added cost, many smokers voted with their feet and purchased their smokes in places where the tax bite was lower. Others managed to kick the habit, which was a goal the state had set but brings up the age-old question of why government at all levels levies a tax on something they simultaneously discourage the use of by restricting where the public can consume the product in question.

One study done using the 2007 tax increase figure of 61 cents per pack (h/t NetRightNation and Americans for Limited Government) illustrates the effect such a federal tax increase could have on residents in the Free State. In this case, the loss of revenue could reach $47 million, at a time when the state is already scrambling for funds. (Bear in mind this study was completed before the current economic recession reached its full fury so the shortfall could now be greater.)

In effect, one of three things needs to happen if the federal government decides to go this route in order to fully fund the Democrats’ vision of SCHIP:

  • The smokers who already have the habit would need to smoke more cigarettes, with a resultant increase in maladies from first- and second-hand smoke. (While the effects of second-hand smoke are debatable, most states and cities adopted their public smoking bans in order to combat diseases which were claimed to be linked to second-hand smoke.)
  • Related to the above, those same effects would result from the increased number of smokers required to keep revenue constant if per-capita smoking didn’t increase significantly. One source pegs the number at 22 million new smokers needed.
  • If neither of the above happened – and the long-term trend has been one of fewer smokers who smoke less per user – the revenue required would need to come from some other source (read: increased taxes on everyone, not just cigarette smokers.)

In terms of limiting government, reauthorizing SCHIP and including a dedicated tobacco tax for purposes of funding it is another expansionistic step on the evolutionary path to nationalized health care. Government involvement in health care began with an idea proposed by President Truman in the 1940’s, became law as part of the Great Society (Medicare and Medicaid were enacted as part of Social Security reform in 1965 under President Johnson) and slowly morphed from strictly medical coverage solely for the elderly and poor into coverage for children with the birth of SCHIP in 1997 and the inclusion of prescription drugs (Medicare Part D) during the most recent Bush Administration. Other recent proposals like one lowering the age for Medicare eligibility to 55 haven’t cleared Congress – yet. But the possibility for more incremental steps always remains.

There is even a proposal in the current Congress to dictate that health care is a Constitutional right.

While taking care of one’s body and mind is of paramount importance in maintaining the lifestyle each of us wants, the solution to all ills does not lie in having someone inside the Beltway be the final arbiter of what is required for the purpose of keeping one’s self healthy. The basic economics of supply and demand for services and the real-life examples of other nations like Canada or Great Britain – where “free” health care comes at a cost of long waits for procedures and confiscatory tax rates – should easily and quickly teach America that a system such as theirs isn’t one our nation needs to follow.

While it won’t be an easy task to achieve nor a politically popular one, revamping SCHIP into total mandated coverage for almost anyone under 30 years of age and enacting yet another tax which never goes away but only increases is an idea which desperately needs to be placed into the circular file, never to be heard from again. The health of our Republic depends on it.

Author: Michael

It's me from my laptop computer.

3 thoughts on “Time to sink a SCHIP”

  1. I heard a statement recently that smoking in the U.S. was down 33% from 1990-2007.

    Some portion, if not all, of the revenue lost to a decrease in tobacco tax revenue is offset by savings in long term health care costs.

    Somebody with a two pack a day habit is spending more than $200 a month on cigarettes. They could make a car payment with that and help save GM.

  2. I’m not so sure about those savings. For one, smokers die earlier than non-smokers (everything else being equal). So while a smoker may consume a lot of health care in the process of dying at 65, that means he or she is not consuming health care from 65 to 85, when he or she would die of something else (and likely consume a lot of health care in the process, given that a large amount of health care spending comes in a person’s final year or two). Furthermore, by dying earlier smokers use much less Social Security money, saving the government money.

    The idea that quitting smoking will save society a bunch of money really isn’t true. You also have to consider how much government money will be consumed by all these former smokers in their extended lifespan.

    There are certainly other reasons to desire that people quit smoking but cost-savings isn’t a big one.

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