Against Health For Kids?
by John Goodman

Who could be against health insurance for children?  People who want government to run the whole health care system are counting on there not being very many.

That's why you see a big push to expand SCHIP, the state-run, federally subsidized program to provide health insurance to children whose families earn too much to qualify for Medicaid.  Since children are the healthiest population age group and child health insurance is the cheapest insurance found anywhere, the theory must be that SCHIP is a lot less expensive than tackling a really serious problem.

One disadvantage of living in a democracy is that people actually get to vote on these things.  Fearing something much worse, I joined with Gene Steurle (Urban Institute) a few years back with a simple proposal.  Parents should show proof they have insured their children (by employer plan, Medicaid, direct purchases, etc) before claiming the $500 child tax credit (the tax code's reward to the middle class for having children).

Now that the credit has climbed to $1,000 per child, the case is stronger than ever.  Republican members of Congress who passed on our tit-for-tat idea will now have to explain why only they and Ebenezer Scrooge want to deny families both a tax credit and free health insurance.

In the unlikely event that voters are inclined to listen, the arguments against SCHIP are quite strong.  Harvard economist David Cutler and MIT economist John Gruber find that for every additional $1 spent on Medicaid, private insurance spending contracts by 50¢ to 75¢.  For SCHIP expansion, Gruber estimates the contraction is 60¢.

If people can get free insurance from the state, they drop their private coverage.  Or employers stop offering private coverage as a fringe benefit.  The result: a massive shift of the burden from the private sector to taxpayers - while making only minor dent in the percent of people uninsured.

Also of the 8 million uninsured children in this country, fully 70 percent already qualify for Medicaid or SCHIP - their parents have just not bothered to enroll them!

Sorry if I ruined your day.

John C. Goodman is President of the National Center for Policy Analysis

For more insights, see Devon Herrick in the Washington Times at: http://www.washingtontimes.com/commentary/20070523-092313-2781r.htm

For some common sense policy proposals from the Consensus Group, see:

Principles for Health Insurance Coverage for Children and Families at: http://www.galen.org/statehealth.asp?DocID=1029

For the Gruber/Cutler studies, see:

Does Public Insurance Crowd Out Private Insurance http://www.nber.org/papers/w5082

Crowd-Out Ten Years Later: Have Recent Public Insurance Expansions Crowded Out Private Health Insurance? http://www.nber.org/papers/w12858