Pulling Pork? Sanford Veto of Children's Health Insurance

No surprise: Governor Sanford knows how to use the line-item veto. And much of the pork he pulled should have been vetoed. $70,000 for a Little League complex. $285,000 for the Colleton Cultural Center. $100,000 for the Fountain Inn Civic Center. And $9,000,000 in the stupidly wasteful "Competive Grants Program."

A great deal of the General Assembly's budget is unsustainable, poorly thought through, and just plain dumb. But that's not true of everything. There is at least one veto that's short-sighted and needs to be overturned.

That's the State Children's Health Insurance Program expansion. The budget included $21,000,000 to cover children from families up to 200% of the federal poverty level. (For a family of four that would be $41,300 yearly or $3,442 monthly.) Increasingly, those families are finding themselves paying one-fifth or more of their total income on health insurance, as much as they pay for housing.

They are hard-working Americans, struggling to make ends meet, and they often just skip health insurance as an unaffordable luxury. When their kids get sick, they go to emergency rooms, or walk-in clinics (that are just lower-level emergency rooms) and seek treatment there. That costs everybody more, becuase emergency room medicine is not designed to be primary health care, and when they can't pay the bills, hospitals pass those costs on to you and me. We get taxed, only we call it a "health insurance premium."

So why is the Governor doing this? I'll let him tell you:

I am vetoing this funding because, while well-intended, it could have both long-term consequences on our ability to fund health care and to participate in private markets.
[ In other words, the insurance companies think they will lose customers.]

First, the change will increase the eligibility from 150 percent of poverty to 200 percent of poverty. We believe that the state should move cautiously in expanding this type of entitlement program. It was just a few short years ago that the General Assembly funded $500 million in the Medicaid program with one-time funds. In 2000, the Medicaid program comprised $1 out of every $7 in state funding; now the ratio I approximately $1 out of every $5. Even without this expansion in the State Child Health Insurance Program, projections show that the state could spend as much as $1 out of every $3 in the state budget. [Health care spending is out of control. Is that the fault of hard-working parents and their children? Doesn’t this crisis require bold efforts on the part of the government to intervene in a broken system where market forces no longer work?]

We certainly understand the desire of some to expand this program, but our current program already covers a significant number of children relative to other states. For instance, the South Carolina program covers approximately 40 percent of all children ages 0-18; only Arkansas, Louisiana, Mississippi, New Mexico, Vermont and the District of Columbia cover a higher percentage. Regionally, South Carolina covers a higher percentage of children than Georgia, Florida, or North Carolina. Expanding this system would put us even further towards the top. [This is simply disingenuous. Of course the percentage of children in Arkansas, Lousiana, New Mexico and the District of Columbia is higher than ours. There is higher percentage of poor children there. And of course we have a higher percentage than Georgia, Florida or North Carolina: they are richer than we are. Vermont’s a red herring—a state that’s requires its residents to have some sort of healthcare coverage, whether public or private]

The House budget included a logical provision that required co-payments based on income for participants in the system in an effort to make the cost of this expansion more affordable. However, the final version of the Conference budget has no requirement for such payments, thus eliminating an important check on the growth of the program. [Co-payments based on income would have made sense, granted. But killing this sensible measure makes no sense at all.]

There is a certain crowd-out effect that is happening nationally as a result of SCHIP expansions.The Congressional Budget Office (CBO) has noted a reduction of children participating in private health insurance and that 50 percent of the children now enrolled in the State Child Health Insurance Program (SCHIP) were covered by private health insurance the prior year. [This is because paying $300 or $400 per month per child for health care is unaffordable for most families in this income bracket. It’s no surprise that families take the lifeline when it’s thrown. By this logic, any government program that is actually used by people should be ended. It’s a great way to shrink budgets, but it’s a lousy way to design public policy.]

Finally, national trends are starting to raise concerns about the cost of the SCHIP in the halls of Congress. For the first four years of this program, there was more money for the program than cost of the enrolled children. However, starting in 2002, a deficit started to occur that was funded by dollar shifts from state to state. By the end of 2005, Congress was forced to spend more than $200 million to keep the program afloat. As the reauthorization of the legislation is being debated, we should take into consideration that national policymakers tend to cut programs in order to manage costs. [And state policymakers don’t? Come on, Governor!] Ultimately, that could leave South Carolina financing an even higher portion of the costs. We should monitor closely what Congress will ultimately do in terms of changes to the program before we make this sort of expansion. [Under the Healthy Kids Act of 2007, sponsored by Reps. Rahm Emanuel (D-Ill. ) and Jim Ramstad (R-Minn. ), the federal government would provide financial incentives to states that find ways to increase children's enrollment in SCHIP including tax-credits. But waiting on Congress ]


There's lots of pork to pull in this budget. And the General Assembly should sustain many of Governor Sanford's vetoes, but not this one. Making barbecue out of the children of working families is a recipe that only Maurice Bessinger could love.