Heritage Foundation: State Health Program Fails Children

It’s hardly controversial to point out that all children deserve access to the best available health care, regardless of their economic circumstances. Unfortunately, if Congress has its way, our country will actually move further away from that ideal.

Simply put, the House and Senate bills to expand the State Children’s Health Insurance Program, or SCHIP, aren’t the way to improve the quality of health care for low-income children.

In fact, Congress is poised to expand a program that has a track record of contributing to the overcrowding of hospital emergency rooms, which is degrading the quality of care for all of us.

We’ve had 10 years of experience with the program. Created in 1997, SCHIP originally targeted children in families whose earnings were too high to qualify for Medicaid but less than 200 percent of the federal poverty level. In today’s dollars that’s slightly more than $40,000 annually for a family of four.

Like many other federal programs, SCHIP already has grown far beyond its original scope.

In 2005, an esti­mated 45 percent of all children were covered by Medicaid or SCHIP, compared with 28 percent in 1998.

The House bill would accelerate this expansion by allowing 21-year-olds to be recognized as "children" for purposes of the law (an earlier version of the House bill would have defined 25-year-olds as "children") and by giving special "bonus payments" to state officials who hike up SCHIP and Medicaid enrollment. That, in turn, would crowd out private coverage by expanding SCHIP to middle- and upper-middle-income kids.

The non-partisan Congressional Budget Office reports that under the House bill 2.1 million people could be pushed out of private insurance and into government health care.

Whatever Congress does, it shouldn’t erode the private health insurance that Americans already have, since that coverage provides access to superior private medicine. Anyone who is concerned about the quality of medical care individuals and families can receive should note that the House and Senate bills go in exactly the wrong direction.

After all, we know that those with health insurance coverage have access to better quality medical care.

One reason is because the uninsured of all age groups often get care that is delayed, of poorer quality and unnecessarily costly. Surveys show that as many as 54 percent of chil­dren without coverage have never had an annual checkup and that 30 percent had no primary pediatrician.

No child should be without affordable quality health care coverage, but expanding government control of health care is not the way to achieve that laudable goal.

Since the majority of uninsured children are from families with annual incomes that are below 200 percent of the federal poverty level ($41,300 for a family of four), congressional proposals to raise family income eligibility levels to 300 percent of poverty ($62,000 for a family of four), or more, does not target the problem intelligently.

The CBO reports, for example, that 77 percent of children between 200 percent and 300 percent of the federal poverty level already have private health insurance.

More importantly, moving people into government health care programs in the name of providing minimal coverage instead of expanding their opportunity to get private coverage won’t improve their quality of care.

Medicaid and SCHIP enrollees fair no better than the uninsured when it comes to having a regular source of well-child and primary care. Because of that, they often wait and only interact with the system when they are sicker and require more intensive services.

In other words, those on Medicaid and SCHIP don’t get the timely and more responsive care available to people with private coverage.

Worse, according to the Centers for Disease Control, patients with Medicaid and SCHIP as their source of payment are twice as likely as the uninsured and four times as likely as those with private insurance to visit a hospital emergency room.

These are often people with non-urgent medical conditions that could — and should — be handled in a more appropriate, less costly venue, such as a primary care physician’s office. Instead, they crowd into an already overburdened emergency medical system.

Congress should exercise common sense and restore SCHIP to its original intent. Let’s target federal funding to kids in low-income families, with sensible age and income eligibility requirements, while removing legal and regulatory barriers to affordable private health insurance.

This could easily be done through a new system of refundable health care tax credits or vouchers to low-income families, as well as direct tax relief to individuals and families, enabling them to choose the type of coverage that best suits their needs.

Congress should not increase the already hefty health care price tag faced by American taxpayers and make them fund the expansion of a government health care program that delivers substandard care.

John S. O’Shea, MD, MPA, is a practicing physician and a former Health Policy Fellow at the Heritage Foundation (heritage.org).