Public Insurance for Kids Discourages Other Coverage, Report Says
For every 100 children who enrolled in SCHIP, between 25 and 50 left private health insurance plans, according to a report released Thursday by the Congressional Budget Office, CQ Today reports (Wayne, CQ Today, 5/10).
CBO Director Peter Orszag said expanding SCHIP to cover all uninsured U.S. children likely would result in some parents forgoing private health coverage for their children so they can enroll in the program. According to the report, the most significant reductions in uninsured children occurred in families with annual incomes between 100% and 200% of the federal poverty level, while the rate of uninsured children remained stable among families with higher incomes.
However, according to the report, not all children were uninsured when they enrolled in SCHIP. "On the basis of a review of available studies, CBO concludes that the reduction in private coverage among children is most probably between a quarter and a half of the increase in public coverage resulting from SCHIP" (Johnson, CongressDaily, 5/11).
The report's findings are in line with agency predictions made in 1996 that about 40% of children enrolling in the then yet-to-be-established program would leave private health insurance (CQ Today, 5/10).
Orszag said the extent of the so-called "crowd out" of private insurers that would result from expanding public health programs would depend on how the expansions are structured. He said that enrolling all Medicaid-eligible children in the program would lead to lower crowd-out effects than increasing income thresholds, because more "families at higher income levels have access to private coverage in the first place."
However, Orszag said, "The uninsured are swimming around in the same pool as the insured. It is very hard to reach a little net into that pool and just pick out the uninsured," adding, "You almost inevitably will pick up some of each. This is a necessary trade-off that is involved in any significant effort to reduce the ranks of the uninsured" (CongressDaily, 5/11).
Senate Finance Committee Chair Max Baucus (D-Mont.) and the committee's ranking Republican Chuck Grassley (Iowa) jointly requested the CBO study but "had divergent views of its findings," according to CQ Today.
Baucus, who supports spending $50 billion over five years to expand SCHIP, said the report validates the program. CQ Today reports that Baucus "expressed little concern" that people would leave private insurance plans to enroll in SCHIP, saying that every public health insurance program provides coverage to some people who might be able to obtain private health insurance (CQ Today, 5/10).
Baucus said, "The fact that uninsurance for children in higher-income families has stayed about the same means that SCHIP is helping the lower-income families it's meant to serve."
Grassley said the report supports his argument that SCHIP eligibility should not be expanded beyond 200% of the poverty level. He said, "This report tells us that Congress needs to make sure that whatever it does, it should actually result in more kids having health insurance, rather than simply shifting children from private to public health insurance" (CongressDaily, 5/10).
The CBO report is available online. Note: You must have Adobe Acrobat Reader to view the document.