SCHIP: "Call it HillaryCare on the installment plan."

This weekend the Wall Street Journal Editorial Report took a closer look at the State Childrens Health Insurance Program (SCHIP) reauthorization and funding making its way through the Senate (transcript) (emphasis added):

Varney: Call it HillaryCare on the installment plan. Democrats in Congress are quietly laying the groundwork for a gradual government takeover of the health-care system.

We're back with Bret Stephens, Rob Pollock and Jason Riley. And joining us, the panel, from Washington is columnist Kim Strassel.

Kim, you first. The latest health-care proposal from the Democrats is to expand government coverage to more children. Is that really socialism on the sly? Is that really a government takeover of the health-care system?

Strassel: It's a beginning of it. Look, the Democrats, back in the 1990s, tried Hillary Care and they were roundly defeated, and they have bad memories of that. The vast amount of Americans don't like the idea of socialized medicine. So they've got a new plan, which is, rather than have an honest debate, put forward legislation about socialized health care.

What they want to do is take the programs that exist in Washington already and expand them. Schip is the beginning of this movement. What they want to do is, it was supposed to be for very poor kids. They want to expand it to encompass more kids, and adults. At the same time, there's discussions about lowering the age for Medicare so that many more people will be encompassed by that program.

Varney: You said the Schip, that is the State Children's Health Insurance Program. The Democrats want to expand it by $35 billion, I believe, to include more children. That's it?

Strassel: They would like to expand it by even more than that. The administration is advocating a $5 billion increase. The Democrats would love to have it at $50 billion to $60 billion. Right now in the Senate, they're talking about a $35 billion compromise.

Varney: A compromise? OK, I'll take that.

(+)

Rob Pollock?

Pollock: No, I agree fully with what Kim said. The strategy is poor people and old people. And look, the Democrats don't even have to lower the age for people to get into Medicare. All they have to do is wait for demographic trends to continue, and more and more Americans will be moving into the Medicare system in any case. So what's going to happen over time, if nothing new happens, is our system is going to become more socialized?

Varney: Why is it that I've heard nothing from the Republicans? I've never heard anything about the market-oriented health-care solutions.

Riley: The Republicans are really on their heels here. They don't want to appear to be against children and health care for children. And Hillary Clinton and Barack Obama have already come out and said Bush wants to cut health care for children and wants to punish children. And the Republicans don't want to be on the receiving end of that criticism, and so they're on their heels.

Varney: Have they got a point?

Riley: That's the problem, they--

Strassel: They do have a plan.

Pollock: They do, Jason.

Strassel: I mean, they're having a discussion at least, in the backrooms in the Senate, in particular. They're trying to decide whether or not they want to get behind the president's plan, which he came out in the State of the Union, which would offer a standard deduction to every American family, or if they want to get behind a different tax plan, which would be a tax credit. They are having this fight behind the scenes. The question is if they get their act together soon enough to actually put it forward as a viable alternative to what the Democrats are offering.

Varney: What's the point of a $15,000 tax deduction, standard deduction for everybody, when more than half of the people in this country do not pay federal income tax? What am I missing here?

Pollock: The point of it is to equalize the tax treatment of health insurance. Right now if you get it from your employer, that's a tax-free benefit. If you're not lucky enough to get it from your employer, you have to buy it with after-tax dollars. What we want to do, if you believe in the market, is break down this employer-based system so people will own their policies, have portable policies, will take them with them when they switch jobs. That's a major source of health insecurity right now, just changing jobs.

Riley: And the other thing that that will do is reduce the costs. Because right now this third-payer system, third-party payer system that Rob was describing, spikes costs. Because when people are spending other people's money, they care less about the treatment they're getting. What we want to do is remove this distortion in the tax code, lower the costs for everywhere and then make health care more accessible to the lower-income people that we are trying to help.

Varney: When you say you're doing something for the children, you can't lose politically now, can you? Kim, what do you say?

Strassel: No, and this is a problem that Republicans face at the movement, because unless they have a plan, what they're basically faced with saying is, Well, we care about the children, too, just not as much as you. So this is what's happening at the movement. Unfortunately, you see Republicans who are so scared of this debate that they are compromising. They're agreeing to raise taxes, tobacco tax, in order to fund this. They're giving up on their principles because they don't have something to stand behind.

Varney: Bret, you've been strangely quiet in the health-care debate. Why don't you muscle in some?

Stephens: No, look, I think that the issue here is how Republicans fight ideological debates. And we have a 40-year history of Republican policy, which says, We're in favor of what the Democrats are in favor of, only less so. And I think that, exactly as Jason put it, the Republicans have to articulate a set of clear free-market principles that don't seem politically to be penalizing preferred groups--children, the elderly or so forth. If they don't do that, they're going to be steamrolled.

Riley: I will tell you who else has been very quiet on this is the Republican presidential candidates, who I think are in the same position as the Republicans in Congress.

Pollock: No, no. Again, I respectfully disagree on this. But you've got--on one side, you've got Mitt Romney, who's running a sort of quasisocialist experiment he did in Massachusetts. But you've also got Rudy Giuliani, who's came forward with some very interesting market-oriented ideas, building on the tax cuts, but also pushing for interstate commerce in health insurance, which is currently not allowed and would make a major difference in improving the market.

Riley: I'm speaking about the Schip debate, however. I mean, you've see Hillary and Barack Obama jump right in and attack. You haven't seen the Republican presidential candidates.

Varney: Last word to Kimberley. Do you think, at the end of the day, there is a compromise possible between more state help for children, health-wise, and more market help for children?

Strassel: Well, I don't think--you either have one or the other. Because Schip is about bringing people into a government system. But what you really would hope here is that Republicans simply, instead of saying, OK we'll go with you, they come out with something on their own and don't force the president to veto this.

Varney: Fair enough. Kimberley, thanks very much.

Fellow SOB'er Thurber's Thoughts has also been posting on the SCHIP = Socialism theme and has this latest post referencing Star Paker's No to Medicaid for the middle class.

Related:

• SCHIP; Another Step Towards Socialized Medicine
• Robert Novak: Socialized Medicine for "Kids"
• "[A] victim of her own success" and the convenient omission of a 'little' detail.
• State Children's Health Insurance Program: When do federal benefits start becoming an economic disincentive?