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Welfare Is Welfare

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When is welfare not welfare? When it goes to the middle class.

At least that’s what many people want to think. A controversy in Bill Clinton’s state of Arkansas illustrates the point.

A few years ago President Clinton and the Republican Congress created the Children’s Health Insurance Program, which gives state governments money to provide free medical insurance to children whose parents make too much money to qualify for Medicaid. Families with incomes as much as 200 percent above the official poverty line are eligible. Governors, many of them Republicans who say they believe in limited government, have been dashing madly about signing children up. The government’s schools have enlisted in the effort.

Arkansas’s Republican governor, Mike Huckabee, is no exception. He’s signed up 43,000 children for government-paid insurance. But the Clinton administration says Governor Huckabee’s ARKids First program is a little too zealous. It’s been enrolling families that qualify for Medicaid, which Washington says is illegal.

You might wonder why it matters whether a family is in Medicaid or ARKids First. The governor sees a big difference, so big that he believes families enrolled in ARKids First would be ashamed to be in Medicaid and would rather give up the subsidy than be transferred to Medicaid.

Why would someone be embarrassed to get free medical insurance for his children through Medicaid but not through ARKids First? Says Governor Huckabee, “Our program gives parents a sense of personal responsibility, since the co-payments are required.” If your kids go to the doctor under Medicaid, you pay nothing. But if they go under ARKids First, you pay a small fee. In neither case do you pay insurance premiums. The co-payment allegedly keeps the program from qualifying as welfare.

Nonsense. In both cases, the taxpayers are forced to provide the coverage. A co-payment does not change that principle. Parents who enroll their kids in either program are not paying their own way.

Therefore, the stigma of welfare, if such still exists, should attach to both Medicaid and ARKids First. The governor is playing word games and helping people to escape the implications of their actions.

How ironic that so-called conservative Republican governors are bringing socialized medicine to America! If that term sounds too strong to describe the Children’s Health Insurance Program, consider this:

Early in the first Clinton administration, the president and First Lady Hillary Rodham Clinton attempted to foist on the American people a gargantuan program under which the government would attempt to organize the entire medical and health-insurance industries, some 14 percent of the economy. Although a façade of private enterprise was to be maintained, bureaucrats would call most of the shots.

To their credit, the American people turned thumbs down. They didn’t like seeing the word “bureaucrat” in the same sentence with “medical care.”

But the Clintons were undeterred by that humiliation. Aided by congressional Republicans, they simply shifted tactics and imposed new regulations on medical insurance, predictably making it more expensive. Then they took a bolder leap with the program to provide free insurance to children whose working parents couldn’t afford the insurance the government had just made more expensive. Financing the Children’s Health Insurance Program through the states was a stroke of genius because, for reasons unknown, people don’t associate state governments with socialism. The plan is clear: enroll as many middle-class kids as possible, tethering their families to government. President Clinton has vowed to step up the schools’ efforts to sign kids up. Vice President Al Gore has promised that as president he would expand eligibility. The next step will be to sign up parents. (In the spirit of bipartisanship, I note that Gov. George W. Bush of Texas also touts subsidized medical insurance.)

Within a few years the middle class will have its medical insurance paid for by the state, with increasing regulation. Most people will see nothing wrong with that-unless it carries the stigma of welfare. The Clinton people realize that the way to avoid the stigma is to segregate “poor people” from the middle class. Then middle-class citizens can fool themselves into believing they aren’t selling their souls for “free” insurance. Governor Huckabee seems to have missed the point, which is why Washington is taking him to task.

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    Sheldon Richman is vice president of The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.