Schwartz on the SCHIP and Medicaid

The April 6, 2008 Rocky Mountain News posted the following online Speakout by Brian Schwartz:

The budget: An "immoral document"

A "moral document." This is what Colorado House Democrats called their budget ("State budget clears House,: March 27), which expands government-run children's health insurance. This moral grandstanding is typical of the anointed, who support expanding Medicaid and the State Children's Health Insurance Program (SCHIP) — and it’s nonsense. There's no compassion or virtue in spending other people's money taken by force.

If a thug forces you to donate to charity, does that make either you or the thug virtuous or compassionate? What if this charity unfairly competes with voluntary charities, fosters dependency of recipients, encourages people to stop buying private insurance, and is run by a government that makes insurance expensive in the first place? All of these apply to Medicaid and SCHIP, which are government-run charities.

Advocating for government-run charities doesn't make one compassionate, as there's no compassion in forcing others to comply with another's notion of virtue. Unlike voluntary charities, not "donating" to a government charity through taxes lands you in prison.

Compulsory donations to government charities are unfair to voluntary charities. Every dollar the state extorts from taxpayers for SCHIP or Medicaid is one less dollar for a voluntary charity.

Forced giving is also disrespectful and intolerant. By forcing us to fund causes others think are important, it thwarts our freedom of expression and ability to support causes we judge to be worthwhile.

Unlike government charities, voluntary charities have strong incentives to be effective. Since they compete with other charities for donations, they must convince potential donors that their cause is worthwhile. Government charities need not persuade.

We know the cost of not "donating": prison.

If each Colorado adult funded Medicaid and SCHIP equally, we’d each pay almost $1000 per year. If you had $1000 to donate to a medical charity, which would you choose? Would you choose SCHIP, or a voluntary charity like Rocky Mountain Youth Clinics, which provides primary care to infants, kids, and teens?

Might SCHIP or Medicaid deserve your donations? Downloading Cato Institute studies "Sinking SCHIP" and "Medicaid's Unseen Costs" could provide guidance. SCHIP covers non-needy families: more than half of eligible children already have private insurance. The National Bureau of Economic Research reports that "For every 100 children who are enrolled in public insurance, 60 children lose private insurance."

Both Medicaid and SCHIP ensnare recipients in a low-wage trap: aversion to seeking higher-paying jobs for fear of losing "benefits." This keeps people on their backs and dependent on government, instead of being independent and self-sufficient. As "entitlement" programs, they send adults the message that they are entitled to have children — even if they cannot afford to raise them.

Too bad you have no choice; it's your hard-earned income after all. But government could provide such choice — by allowing its programs to compete more fairly with voluntary charities. One method is a dollar-for-dollar tax credit for donations to non-government charities that assist families with the medical and insurance expenses.

Taxpayers who prefer Medicaid and SCHIP to non-government charities can continue to fund them. The threat of lost tax revenue would give Medicaid and SCHIP strong incentive to effectively and efficiently assist families in need and foster their independence.

Empowering taxpayers to choose allows for true compassion, which is absent when we are forced to give. Taxpayers could compare non-profits with tools like Charity Navigator and GuideStar.org. GuideStar envisions "an increasingly efficient nonprofit marketplace where donors seek out and compare charities, monitor their performances, and give with greater confidence; nonprofit organizations pursue more effective operating practices, embrace greater accountability, and enjoy lower fund-raising costs; and society benefits from a more efficient, generous and well-targeted allocation of resources to the nonprofit sector."

So drop the "you're a bad person for opposing government charity" rhetoric and rise to this challenge: If Medicaid and SCHIP are so good, why not let them compete fairly with other charities, and let individual taxpayers decide for themselves?

Brian T. Schwartz, Ph.D., submitted the free-market proposal to the Blue Ribbon Commission on Healthcare Reform.

(A version with additional references and hyperlinks can be found on Brian's website.)