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War between the states over health insurance

The clash over the Children’s Health Insurance Program is being fought largely between members of Congress from high-income, high-cost states versus members from low-cost, low-income states.
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It’s the War Between the States, but this time without bayonets and cavalry charges.

The clash over the Children’s Health Insurance Program (CHIP) is being fought largely between members of Congress from high-income states, such as Maryland, versus members from low-income states, such as South Dakota and Mississippi, which rank near the bottom in median household income.

The bill, which President Bush vetoed Wednesday, would have allowed states to extend coverage to families with incomes of three times the poverty level.

Thus, a family of four, with two kids, earning $61,332 would be eligible for CHIP.

In South Dakota, where the median household income is only $42,791, giving such a benefit to a family with an income of more than $61,000 seems excessive, according to Sen. John Thune, R-S.D.

“Low-cost, efficient states such as South Dakota... end up subsidizing higher costs in inefficient states,” complained Thune during the Senate debate.

Eligibility varies from state to state
Some states, such as South Dakota, currently offer CHIP only to people with incomes twice the federal poverty threshold, which is $20,444 for a family of four with two children. So in those states, families with income of $40,888 are eligible.

But other states such as Maryland, which has the highest median household income in the nation, provide CHIP coverage to people with incomes three times the poverty line.

On the decisive Senate vote to push ahead with expansion of the CHIP program, where both senators from a state voted for CHIP expansion, they came from states with an average household income of nearly $50,000.

But where both senators from a state voted against CHIP expansion, they came from states with an average household income of under $42,000, including the lowest-income states such as Kentucky, Oklahoma and Mississippi.

The economic clash works between congressional districts, too: House Republican Whip Roy Blunt of Missouri, an outspoken opponent of CHIP expansion, represents a district with the median income is $36,962.

His Republican colleague from New York, Rep. Vito Fossella, who voted to expand CHIP, represents a district which includes Staten Island and part of Brooklyn in New York City. In Fossella’s district, the median income is $62,108, nearly 70 percent higher than in Blunt’s district.

Where $70,000 doesn't go far
Fossella said, “The core concept of CHIP is to give states the flexibility to tailor the program” to their individual needs.

He added that “$60,000 or $70,000 in Staten Island or Brooklyn doesn’t go as far as in other parts of the country.”

But Blunt said the more that Americans found out about the proposed expansion of CHIP to families making over $60,000, the more they’d scratch their heads in disbelief.

“People will say, ‘What is this? They’re talking about giving free health care to kids whose parents make $66,000 a year?’”

Blunt added, “In Vito Fossella’s district that might not be very much money. In my district, that’s a pretty good income. In my district, people who make that amount of money have anticipated that they’ll insure their kids.”

Blunt said many federal programs face the problem of regional cost disparities. But he said, “Do we want to go back and re-calibrate every single government program so that people who live in New York City get a lot more than people who live in Springfield, Missouri or Tampa, Florida?”

New York presents a special case.

Although the Bush administration rejected New York’s plan to provide CHIP to families who have incomes of four times the federal poverty level — or nearly $82,000 for a family of four — the law would still leave the door open to the next president, perhaps a New Yorker, to grant New York permission to proceed with its more generous coverage.

There’s another economic angle to the war between high- and low-income regions.

Smokers, many of whom are low-income people, are the ones who would have paid the cost of CHIP expansion under the bill which Bush vetoed.

The bill would have raised to a dollar per pack the current 39-cent per pack cigarette tax, a 156 percent tax increase.

Rep. Gene Taylor, D-Miss., one of only eight Democrats to vote against CHIP expansion, represents one of the lowest-income districts in the nation. He said the tax increase was unfair.

“I do have a lot of folks in my district who are not wealthy and I regret to say a lot of them are smokers,” Taylor said. “This is a tax on the least of us.”

“The headline ought to read, ‘Smokers in America to pay for middle-class welfare,’” said Rep. Mike Pence, R-Ind.

Is CHIP expansion middle-class welfare, as Pence argues? Is the expansion an attempt by Democrats to woo middle-class voters by extending benefits to them that were once available only to lower-income people?

One Democratic strategist, House Democratic Caucus Chairman Rep. Rahm Emanuel, framed the battle as a war Bush was waging on the middle class.

“What I find as a student of politics most fascinating is that in the 1980s the Republicans used to attack the poor,” Emanuel said. “This president has chosen to attack middle-class children getting health care. It’s one of the most bizarre turns in politics that I’ve ever seen.”

Emanuel said Congress is right to extend coverage to middle-class people because “the fastest growth of the uninsured has happened among the middle class.”