Rejection for SCHIP in Oregon

Opinion Journal:

Oregon voters passed judgment Tuesday on a plan that would have made their state children's health insurance program "universal." Sound familiar?

It should, because Oregon reproduced the current Schip fracas in D.C. on the state level--and the referendum took a major shellacking, with voters siding three to two against. Oregon's expansion was almost identical to the one backed by Congressional Democrats, so let's conduct a post-mortem, which may also be a portent.

Like Beltway Democrats, Governor Ted Kulongoski and his legislature wanted to broaden eligibility for Oregon's "Healthy Kids" Schip program to 300% of the federal poverty level. They would also allow all families to opt in, regardless of income, though higher earners wouldn't get subsidies. Again like Congress, Salem intended to pay for the expansion with cigarette taxes, which would increase to $2.02 from $1.18 a pack. That would be one of the highest state tobacco levies in the nation.

Democrats couldn't dredge up the three-fifths approval required for a tax increase in the legislature, so they kicked the expansion over to the ballot. And already, Measure 50's defeat is being blamed on $12 million in advertising by Big Tobacco. "What happened was, the tobacco industry bought the election," Governor Kulongoski declared yesterday.

We're surprised the Governor thinks voters in his left-leaning state are so easily gulled--especially in a contest between "healthy kids" and cigarettes. More persuasive is the notion that voters didn't want to pass a state tax increase to finance a health-care expansion that Congress might soon pass, along with buckets of federal dollars. But most likely, voters understood that a tax increase on cigarettes is still a tax increase, and a highly regressive one at that. Only about 20% of Oregonians smoke, and most of those are lower income.

They may also have figured that to the extent tobacco taxes reduce smoking, they will soon not yield enough revenue to pay for ever-growing health costs. An analysis by William Conerly, a member of Governor Kulongoski's own Council of Economic Advisors, found that a straight Schip expansion funded by a tobacco tax was unsustainable, with costs exceeding revenues by $115 million by 2017.

...

The Governor's low opinion of the intelligence of the voters of his state is an expression of the arrogance of Democrats when their policies are rejected. The media and the Democrats have been quick to warn Republican's that is is political suicide for the GOP to oppose SCHIP. Putting aside the obvious question of why Democrats would care if Republicans lost elections, it seems clear they were trying to scare Republicans into voting for a program that Democrats would take all the credit for anyway.

What was apparently obvious to the voters in Oregon is that the financing of the program is unsustainable with cigarette taxes and the Democrats scheme was really a bait and switch where the payments would have to come from the general fund after the smoke cleared from the cancer stick tax. They are trying the same bait and switch in Congress and so far much of the media likes the smoke filled room.

At it root the financing scheme is just another example of the politics of fraud and deceit as practiced by Democrats.