If SCHIP were to be expanded, it is feared that it would be at the expense to private insurers. An article on SCHIP on Wikipedia states: In a 2007 analysis by the Congressional Budget Office, researchers determined that "for every 100 children who gain coverage as a result of SCHIP, there is a corresponding reduction in private coverage of between 25 and 50 children." The CBO speculates this is because the state programs offer better benefits and lower cost than the private alternatives. A Cato Institute briefing paper estimated the "crowding out" of private insurers by the public program could be as much as 60%.
The Watchdog Blog reports "Government operated health care programs such as Medicare, Medicaid and State Children’s Health Insurance Program (SCHIP) operate with far less administrative expense that the so-called “market-based” private insurance programs. In fact, private health insurers and HMOs now href="http://www.pnhp.org/physiciansproposal/proposal/Physicians%20ProposalJAMA.pdf">consume 13.6 percent of premiums for overhead while both the Medicare program and Canadian NHI have overhead costs below 3.2 percent. "
Given the amount of lobbying the insurance industry does ($227 million in the first half of 2007), it would seem the veto is a preemptive (turf protecting) strike against the "terrorist threat" of national health care being built from the foundations of SCHIP, Medicaid, and Medicare.
And, as reported in the Congressional Quarterly, "A Families USA analysis of Census Bureau data finds that more than one out of three people under age 65 — approximately 89.6 million Americans — were uninsured at some point during 2006-2007.
Most of the uninsured lacked coverage for long periods of time, the study found. Nearly two-thirds were uninsured for six months or more and over half were uninsured for nine months or longer."
Given that increases in spending for SCHIP worked out to an estimated $555 per child per year, it will be a tough sell to convince American families that SCHIP is a bad plan, if for no other reason than one visit to the emergency room can easily cost that much or more.
The revamped SCHIP bill will go through this year or it will be another nail in the Republican's White House chances.