We've been so immersed in health reform that we've been reading up on its history, and decided to share some thoughts with you this week. Yesterday we looked at the New Deal. Today, it's the State Children's Health Insurance Program (SCHIP, or CHIP).

SCHIP became law through a careful process in the mid-1990s of bipartisan give-and-take between President Clinton, the Republican Congressional majority, and the Democratic minority. The failure of the Clinton health care reform of 1993-94 is legendary, so the creation of the more modest SCHIP several years later—-in a period of divided government, no less—-deserves some attention. Obviously, SCHIP was not a comprehensive reform fo the health care system along the lines that we're seeking today, but it did help hundreds of thousands of children and their families.

After the Clinton health care reforms went down in flames, both the President and Senator Kennedy, who was the top Democrat on the Senate HELP Committee, sought to salvage some part of those health reforms. Another bid for comprehensive reform was out of the question; attention shifted to incremental approaches. With the Republican majority, then spearheaded by Newt Gingrich, hostile to expansion of most domestic government programs, any reforms would have to be limited in scope, deficit-neutral, and give the states considerable flexibility.

The states lived up to their name as the "laboratories of democracy" in inspiring SCHIP. A Massachusetts initiative to cover uninsured children of the working poor inspired Senator Kennedy to introduce the legislation to create SCHIP in 1996 (with a tobacco tax to fund it). President Clinton endorsed the concept in his State of the Union address in 1997. Sen. Orrin Hatch (R-UT) co-sponsored his friend Kennedy's bill a few months later (much to the dismay of some conservative activists), citing the moral necessity of providing children with health insurance.

As enacted, the bill was a carefully constructed set of ideological compromises.

First, SCHIP gave states flexibility to design their own benefits within certain parameters. This was a compromise between creating a new federal program or expanding Medicaid, as Democrats and some Republican moderates like John Chafee of Rhode Island proposed, and a straight block grant program, as Republicans preferred.

Similarly, SCHIP's financing reflects a partisan compromise. Designed as a voluntary program with the states, Republicans insisted on a higher federal match than Medicaid provides (averaging 70% for SCHIP versus 57% for Medicaid). The bill was passed to be budget-neutral. A 43 cent-per-pack increase in the federal tobacco tax raised roughly the revenue needed to pay for the program.

Finally, SCHIP's structure was itself a compromise. To placate Republicans, the bill was designed to prevent "crowding out" of private insurance; to please Democrats, it allows federal funding to go to children from families with income above the Medicaid limit.

Just as the creation of SCHIP shows the potential for bipartisan compromise, the long-running battle over extending and expanding it through 2007, 2008, and 2009 shows how easily bipartisanship can melt away. Democrats, who had recaptured control of Congress, tried to expand SCHIP with some bipartisan support in both houses (though Sen. Hatch, who was so instrumental in passing the bill in 1997, decided to oppose that approach). President Bush vetoed the bill; Congress made some changes and sent him the bill again, but again the President wielded his veto pen. SCHIP wasn't reauthorized until 2009, shortly after Barack Obama had become president.

The success of SCHIP holds several lessons for the current effort at comprehensive health reform. For a number of reasons, SCHIP was able to succeed in an intensely partisan environment of divided power. SCHIP was also driven at least as much by Congressional leadership as by the President. The current health care reform efforts parallel SCHIP's creation in this way. Though the President is fully engaged and supportive, the partisan give-and-take that ultimately shapes the bill is left to Congress.