OMB Watch has put out letters urging support for the SCHIP expansion bills now moving in the House and Senate.

• Senate letter
• House letter

The Senate bill will probably get a vote either today or tomorrow, while the House will probably vote either tomorrow or Thursday. Some members have reservations about how the expansions would be paid for, and others may try to tack on amendments that reduce coverage, but both bills are expected to pass as they are.

Merrill Goozner, a health economist/journalist, gets deep responding to an article on the unevenness of cancer treatment. A few of his thoughts on one cancer drug:

Let's do a cost-benefit analysis of this drug. If we look at all patients taking this drug as a group, we find that their life expectancy has been extended by three months on average. Given that the average person in the group will be taking the drug for over two years, that amounts to nearly a quarter million dollars in extra medical expenses per patient. That means patients' insurers are paying $1 million per additional year of life.

You'd think for that kind of money you'd be cured. But that's almost never how it works. Despite the cost, Goozner doesn't necessarily believe that it's not worth covering this kind of expense.

Which brings me to my real bottom line when it comes to the new, targeted therapeutics for cancer. Isn't the real issue that $10,000 per month pricetag? Isn't what we really need is a better way to develop drugs so that they are affordable?

Too often this question is framed as a false choice: either we pay for the treatments, or we let people die before they have to. Pretty stark- but what if what's truly at issue is that the price of the treatment is inefficient? $1 million for an extra year of life, as callous as it may sound, is just too much. The benefit isn't worth the cost.

But that doesn't mean that people shouldn't get treatment- it means the health care market fails to price treatments properly. Government intervention could plausibly ensure that treatments are more accurately priced. That way, people could still get the treatment they wanted, only it'd be for a price that reasonably reflected the value of what's being bought. Say good-bye to your long-term fiscal imbalance, then, too.

It all makes sense to me. It's just too bad that nobody trusts government to do something like this, even though every other industrialized nation has managed to make government do this job pretty darn well.

Congress is rushing to get lots done before its August recess. The Farm Bill is one of the bills Congress is working madly on. The entire House will probably vote on it today.

The Farm Bill essentially sets the federal government's agricultural policy- crop subsidies, farmland conservation payments, bioenergy, and anti-hunger programs, like Food Stamps. It needs to be renewed every five years.

The reauthorization that's being considered now would both broaden Food Stamp eligiblity and raise benefits. Getting food stamps is a lot like paying your income tax. You have to report certain assets, income, and expenses to find out how much in benefits you'll get. Likewise for eligibility- if your income or your assets are too high, you aren't eligible.

So this bill would raise the standard deduction, index asset limits to inflation, and increase the deduction for child care, among others, the effect being that more people will be eligible for food stamps, and some people will get higher benefits. See this Coalition on Human Needs report for more.

These improvements would cost $4 billion over 5 years (in an era of $3 trillion budgets). It's pennies, really, compared to the difference it'll make in the lives of the people living on the margins, where every dollar matters. Plus, the real value of food stamp benefits has been eroding signficantly (CBPP paper)- without these changes, things will continue down that path.

As for other programs, the House bill would increase funding for The Emergency Food Assistance Program (TEFAP), which purchases commodities and distributes them to food banks and other organizations. Many people depend on the food this program obtains, and food banks have been seen a decline in their TEFAP food allotments. This food bank in Oregon, for instance, is down 5 million pounds of the food it used to get from the program. And the House bill would give a permanent funding stream to the McGovern-Dole international school lunch program, which feeds kids in poor countries and helps them to go to school.

So how good is the bill? Well it's good enough to get a veto threat from the Bush administration. They and many congressional Republicans mostly don't like that the bill would also shut down a loophole that lets foreign companies pay less taxes on payments made by their U.S. subsidiaries.

After some delay, the House Energy and Commerce Committee is now marking up the SCHIP reauthorization and expansion. Some resources on the bill:

• A summary of the chairman's mark
• A section-by-section analysis
• CBO's preliminary score
• Families USA's chart that compares the House bill with the Senate version.

Want more? Well, check out this American Prospect article, which says the House bill will insure 1 million more kids than the House version. CBO estimates that there are 5.4 million kids who are eligible for SCHIP but aren't on the program. The House bill would therefore provide funding for nearly all of them.

House leaders have an agreement on their version of the State Children's Health Insurance Program (SCHIP) reauthorization and expansion, reports BNA (subscription req'd) today. The House Energy and Commerce Committee should approve the package on July 25th, and the House Ways and Means Committee on July 26th. The entire House is expected to vote on the bill by late next week- the Senate is expected to vote on their package this week.

There are three major differences between the Senate and emerging House bill:

• It would make available $50 billion over five years, rather than the $35 billion in the Senate committee version.
• It would find savings in the Medicare Advantage program, which the Senate version doesn't do.
• It would raise the cigarette tax by 45 cents, compared to 61 cents in the Senate version

In all respects, the House's bill seems more progressive.

Update: Families USA put out a good chart that compares the two bills here.

President Bush, as you probably know, says he's gonna veto any SCHIP expansion, the principle rationale being that government doesn't belong in health care.

My hunch is that this won't carry the day. SCHIP's focus on kids is its trump card. But Bush is right that SCHIP is only the beginning of the policy fight over health care, and when the focus isn't on kids or some other sympathetic demographic group, the arguments being made today could win out by tapping into public distrust of government, which the Bush administration has deepened.

The good news is that recent events have demonstrated the superiority of government-sponsored health insurance and government-provided health care, properly administered. Once neglected, hospitals in the care of the Veteran's Administration have been transformed into some of the best examples of how to efficiently deliver health care. Medicare has experimented with privatization in insurance and prescription drugs- both of which have turned out to be more expensive than if government just did it itself.

And the positive conservative agenda -give everyone tax breaks, privatize government and let the market do its thing- really has no prospect of success. More market forces aren't what's needed. Market forces create perverse incentives and do not encourage the information distribution needed for effective market competition and long-term care. The market prices goods arbitrarily. It encourages actors to provide health insurance to the healthy but not the sick. In other words, the market isn't the solution- it's the problem.

I don't expect SCHIP supporters to risk political capital and make this argument just yet, especially with an expansion being so likely. But at some point they'll probably have to show some leadership and challenge the dominant narrative about government and the market if they want to get anything done.

A tax on tobacco is a regressive tax, and so equity-based opposition to a tobacco tax increase generally makes sense. However, if the tax will be used to fund an expansion of a fiscally progressive program, then it is possible that the net result will be progressive. I spent some time this morning compiling info that would give some indication of how the SCHIP expansion would shake out. Well, someone has already done the yeoman's work and crunched the numbers. The fiscally conservative, but nonpartisan Tax Foundation state their opposition in this article, they essentially make the progressive case for tobacco-tax-funded SCHIP expansion.

Now, an income-tax-funded expansion would be more progressive, but given a filibuster-happy senate and veto-mongering president, this is a best-case scenario.

Some good news: key Republican Senators are defying President Bush on SCHIP. From CQ (sorry, subscription only):

The chief Republican architects of a deal to expand a children's health insurance program are defending the proposal against criticism by President Bush, who has threatened to "resist" it.

This week, members of the Senate Finance Committee tentatively agreed on a renewal and expansion of the State Children's Health Insurance Program (SCHIP), which covers about 6 million children from families that are low-income but not poor enough to qualify for Medicaid.

Bush sees the legislation as a backdoor move toward government-run health care, but committee Republicans Charles E. Grassley of Iowa, Orrin G. Hatch of Utah and Pat Roberts of Kansas said in a July 11 letter to Bush that the issue that most concerns him — the use of SCHIP to cover adults — is partly his fault. Under Bush's watch, the department of Health and Human Services has approved 12 waivers to states allowing SCHIP coverage of adults, records show, including a waiver issued May 24 allowing Wisconsin to cover parents earning up to twice the poverty level.

Expanding the program, which expires Sept. 30, is a top priority for Democrats, although the deal the Finance Committee has struck would not expand it as much as some would like.

When I think of the Senate, I picture something like the insides of a very old and very big clock, with gigantic rusty gears that move extremely slowly. Well, it seems like, when it comes to expanding the State Children's Health Insurance Program (SCHIP), those gears are finally starting to turn, but slowly, of course, and with so much effort and compromise required for so little movement.

CongressDaily (subscription only) is reporting that the Senate Finance Committee has reached an agreement on the scope of the SCHIP expansion- apparently it'll be for $35 billion over 5 years, while the CBO has put the cost of covering all uninsured children eligible for SCHIP at $47.5 billion. Still, the $35 billion may be close to enough to full coverage because, as Sen. Gordon Smith (R-OR) has said, adults who are on the program might get kicked off. Lovely.

They've also agreed to finance the expansion by increasing the tobacco tax by 61 cents. That's instead of cutting costs in the Medicare Advantage program, which would have been opposed by the health insurance industry, whose bottom lines are far more important than ensuring that kids get good medical care. Far easier to levy a highly regressive tax.

The bill is expected to be marked up and approved by the Finance Committee next Tuesday. We'll see how the full Senate responds. Only people like Sens. Jim DeMint (R-SC) and Tom Coburn (R-OK) have said they oppose it. The President says he opposes the expansion on "ideological" grounds, or something related to the role of government, blah blah blah. Isn't this the same guy who created the Medicare prescription drug benefit?

Anyway, unseemly compromise is what the Senate is all about. So while it's hard to like the way this bill is taking shape, it's hard to see an alternative. It might be wise to appreciate any movement we get out of the Senate's big old rusty gears.

Business Week has an interesting article on how some in the corporate community are embracing government-run health insurance. It's not particularly new news, but the article shows that some true-believers in the primacy of the free market are becoming more practical. They're moderating their views on government's capacity and role in society (though their faith in the market probably hasn't been shaken, paradoxically).

[Safeway CEO Steve] Burd first tried wellness and preventive-care programs. But it wasn't enough. His frustration grew so strong that he underwent a fundamental conversion: The lifelong believer in keeping government out of corporate affairs became convinced that, to rescue the U.S. health-care system, government had to get involved. Ultimately, all Americans needed coverage, and CEOs had to lead the charge. "I've become a bit of an evangelist on this," says Burd, sitting in his fifth-floor corner office overlooking the bustling Amador Valley, outside of Oakland, Calif.

While some in business are getting more practical, the ideologues see the health care issue merely as a test of their faith.

Conservative purists insist on free-market remedies. "No bureaucracy will ever be able to get the scale of change we need," asserts former House Speaker Newt Gingrich (R-Ga.). And the Bush White House stands prepared to work with conservative groups to block any fix that increases the reach of government. "My message for the CEO of Safeway is to focus more on your private-sector solutions and less on trying to get other people to absorb your costs," says Grover Norquist, president of Americans for Tax Reform, who favors market-based measures such as expanded medical savings accounts.

Could health care become the wedge issue that breaks apart the conservative coalition? A boy can dream.

But anyway, as business drifts further into the "socialized" medicine camp, it is becoming clear that more structural factors are coming together to usher in a massive change in health care policy. Will the fiscal policy community, with its purported commitment to eliminating the long-term fiscal gap, be ready for it?