May 20, 2007 in Opinion

Our View: Time to rebuild

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Ever watch “Extreme Makeover: Home Edition”? It’s a TV show where the house of a down-and-out family is knocked down and a beautiful, more functional one is erected in its place in seven days. To get selected, a family makes a videotape of its dilemma and mails it in.

Imagine if such a tape were made about the federal-state program aimed at expanding health-care coverage for children. The State Children’s Health Insurance Program isn’t ready for the wrecking ball, but it is beginning to show cracks in its foundation. Let’s go to the videotape:

Hi, this is S-CHIPS, and we have a sad story to tell. Because of structural flaws, our good friend Washington state, which is at the head of the class, is being punished for her success. That’s right. Because she worked ahead and made significant progress before the feds came along, she gets less help. Meanwhile, laggard states annually reap the benefits of their historic inaction.

Time to grab the tool belt and get to work. And that’s what Washington’s U.S. Sens. Maria Cantwell and Patty Murray are doing in calling for a reformed funding formula. The current one forces the state to forgo an average of $26 million annually that could be used to extend health-care coverage to more children.

What’s behind this warped design? In 1994, the state decided to bump up benefits to families on Medicaid to help with children’s health care. Three years later, the feds introduced S-CHIPS and blocked states from shifting families over from Medicaid.

This matters, because the feds pay 65 percent of S-CHIPS’ costs, with states picking up the other 35 percent. With Medicaid, states have to kick in 50 percent. If Washington state could shift some families to S-CHIPS, its dollars would stretch further.

The unintended consequence is that states that were stingier in 1994 gain more now. Cantwell’s office estimates that 140,000 children under Medicaid could have been switched to S-CHIPS if the state hadn’t taken the lead in the first place.

The good news is that senators outside Washington state are recognizing the fundamental creakiness in this logic.

U.S. Sen. Olympia Snowe, R-Maine, recently said: “There’s perverse disincentive. … We ought to be rewarding success, not rewarding the status quo.”

But that’s not the only part of the program in need of a makeover. Back to the tape:

Furthermore, the president’s budget calls for a $5 billion increase for the program over the next five years. I know that sounds like a lot, but when you factor in inflation for medical costs, it means we’d have to kick some inhabitants to the street.

That’s true. The Congressional Budget Office estimates that $14.8 billion is needed just to serve the same number of people over five years. If it’s $5 billion, an estimated 1.4 million children and pregnant women nationwide would lose coverage.

Murray, who wields a heavy hammer on budget issues, insists that won’t happen.

Of course, all of this will take longer than seven days – this is the government after all. But at least a design team is on the way.

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