Michael LeavittIn case you were wondering what the White House tried to sneak out with the trash last Friday, now we know. The Bush Administration quietly announced new rules that will have the effect of denying health care to many children that states are seeking to cover under the State Children's Health Insurance Program (SCHIP). Even worse the new rules are so onerous they could even force states to stop providing care to some children already covered by SCHIP.

And what's the reason for this callous action? It seems the Administration is worried that state efforts to expand the reach of this successful program to include more children who are currently uninsured may result in fewer families seeking private insurance plans, because the SCHIP program would be less costly and works better and has fewer hassles than dealing with insurance companies. In other words, the Administration wants to deny SCHIP health coverage to possibly millions of low-to-medium income children solely to shield the private insurance companies from competition and to protect their profits.

Today's New York Times has the story:

The Bush administration, continuing its fight to stop states from expanding the popular Children’s Health Insurance Program, has adopted new standards that would make it much more difficult for New York, California and others to extend coverage to children in middle-income families.

Administration officials outlined the new standards in a letter sent to state health officials on Friday evening, in the middle of a month-long Congressional recess. In interviews, they said the changes were aimed at returning the Children’s Health Insurance Program to its original focus on low-income children and to make sure the program did not become a substitute for private health coverage.

SCHIP has been highly successful in extending health coverage to millions of low income children, but there are still several million children with no coverage at all. The Democratic Congress has been developing legislation to expand the coverage to most of these kids, but Bush has threatend to veto the bills.

In the meantime, recognizing that SCHIP works, both Republican and Democratic Governors have expanded eligibility rules, so that families with incomes higher that the US poverty level of $20,600 per year could qualify. But the Bush Administration now seeks to impose strict limits on the states' ability to expand eligibility, forcing the states to meet impossible hurdles before they can cover more children. Under the new rules, states would have to:

- Prove that 95 percent of those eligible at the 200 percent of the poverty level are covered before allowing kids in families at 250 percent of the poverty level to be covered. State officials all agree this standard cannot be met, which means the state would not only be prohibited from expanding eligibility to more children in the future but also have to scale back current expanded eligibility rules. In other words, children above the poverty line and currently covered by SCHIP could be removed from the program because the state can't meet the condition for covering them.

- Demonstrate that raising the eligibility standard would not result in a reduction in private insurance. In other words, states can't expand public coverage except by protecting the private insurance market share.

- Require that children who receive care under SCHIP pay deductibles set high enough to make the private insurance coverage "competitive." Translation: arbitrarily impose additional costs on families using the public system so that the private system looks more attractive in comparison, even though the aggregate effect is to raise total costs for covering the same number of children, with no guarantee that those facing higher SCHIP deductibles would actually seek private insurance instead of just foregoing health care they can no longer afford.

The Bush Administration and its Republican Congressional allies seek to justify this latest outrage by claiming that SCHIP was meant only to help those children at or below the poverty line. That may have been its original rationale, but so what? There is no public policy reason to limit a children's health care system that is highly successful, improves public health, is endorsed by governors of both parties, and costs less than private insurance schemes that don't work as well (because of the perverse incentives private insurance schemes have to deny or limit coverage to lower their costs and increase profits). Nor is there even a "conservative" policy justification for subsidizing a private insurance scheme merely for the purpose of making it appear "competitive," when in fact it is more costly (as well as less effective in providing actual care). That's phony competition, subsidized by tax payers, and even Republicans should oppose that.

This is a simple case of insurance company greed and influence coupled with the Bush Administration's complete distortion of ideological preference for markets. This isn't genuine competition. Instead, here we see the hand of government using subsidies or penalties to tip the scales to favor private schemes that are more costly and less desireable, with two inevitable effects: (1) fewer children will receive health care and (2) it will cost more for those who do. So much for "compassionate conservatism."

The new rules are bad public policy no matter how you look at them; it's bad market economics, bad fiscal policy, bad health care policy, bad conservative principles and most of all, it's bad for kids. It's just plain bad for America. But it's exactly what you would expect from the worst President since . . . ?? ever. DemFromCT has more at The Next Hurrah. Check out the linked poll showing overwhelming support for expanding SCHIP, even if it means higher taxes. [h/t Peterr] And N=1 point us to this excellent health blog that also covered the story.

I know we've got a lot on our plate, but this is just one more reason to follow Christy's advice and meet with your elected officials while they're home. Let them know how you feel about the Bush Administration rules for denying health care to kids and make sure they're supporting the Democratic bills to expand SCHIP to millions of uninsured children. This is one veto override we can win.

And if you happen to mention impeachment, I'd say going out of your way to deny decent health care to America's children is a high crime and misdemeanor, wouldn't you?

Photo: Health and Human Resources Secretary Michael Leavitt, on PBS’ NewsHour.