The Scientific Activist

Although the expansion of the State Children's Health Insurance Program (SCHIP or CHIP) passed in both the House and the Senate earlier this month, the Bush Administration has once again decided that it prefers to preempt the Democratic process. President Bush had already promised to veto the legislation before it had even come up for a vote, but now it seems that the Administration can't even wait for the two chambers of Congress to reconcile their versions of the bill and has instead decided to carry out its agenda uninhibited while Congress is on recess.

Last Friday, the Director of the Center for Medicaid and State Operations, Dennis Smith, sent a letter to state health officials outlining the Bush Administration's new restrictions on SCHIP. The full letter can be read here. The questionable pretense of the Administration's actions is that expanding SCHIP will significantly decrease the number of children enrolled in private health insurance... and then (you have to read between the lines here) people will begin opting out of private coverage in droves, the system will collapse, Lenin will rise from the grave, and a Soviet flag will fly over Washington. Or, something like that, anyway.

Given the current state of our private health insurance system in the US, I don't find it reasonable to expect everyone to want to stay in the private system, but, accepting the assumption that decreases in enrollment in private health insurance must be avoided at costs, the "crowding out" effect of SCHIP has been rather mild so far. The Congressional Budget Office (CBO) estimates this effect at 25-50%. This means that for every 100 children enrolled in SCHIP, 25 to 50 would have left private coverage to enroll. This is a pretty liberal estimate compared to others, which have been lower. Regardless, the "crowding out" effect has been no worse than what was predicted (40%), and there are many indications that it has been much more mild. Due to confounding variables, however, these numbers are not particularly informative and do not get at the reasons for any decreases in private coverage. A better indication may be that a study of children enrolling in SCHIP in 2002 found that only 28% of these children had private insurance in the last six months and only 14% at the most had left this coverage voluntarily. The authors of the study conclude, and rightly so, that "relatively few SCHIP enrollees could have retained private coverage and that even fewer had parents who felt that the option was affordable."

The recent letter from the Bush Administration outlines the new restrictions for states wishing to expand SCHIP to children in families above 250% of the poverty line. One of these is "assurance that the State has enrolled at least 95 percent of the children in the State below 200 percent of the FPL who are eligible for either SCHIP or Medicaid (including a description of the steps the State takes to enroll these eligible children)." According to the AP, though, this is not a reasonable condition:

But, currently, no state can make such an assurance for their participation rates. The best that any state is doing is Vermont, with about 92 percent participation. So, essentially, eligibility for states' SCHIP programs would be capped at 250 percent of poverty, said health officials who examined the administration's new policy.

...

Some 19 states, including the District of Columbia, provide health insurance coverage to children in families with incomes above 250 percent of the poverty level, or are in the process of doing so.

The new guidelines could have a dramatic impact on those states as well as any other that wanted to follow in their steps, said Cindy Mann, executive director of the Georgetown University Center for Children and Families.

Another condition is that "the State must establish a minimum of a one year period of uninsurance for individuals prior to receiving coverage." There's not much need to harp on this point, though, because I think that the absurdity of mandating that a child goes a full year without health insurance speaks for itself.

The Bush Administration's recent anti-SCHIP zealotry is unfortunate, considering that the program has otherwise been such a great success. According to the CBO, since the inception of SCHIP in 1997 the percentage of children in households at 100-200% of the poverty line without health insurance has dropped from 22.5% to 16.9%. Also, since it has been demonstrated that cuts to SCHIP can end up costing the system $2000 per child in the long run, there is not a good rationale to be restricting SCHIP. At this stage, though, it looks like our best chances lie in Congress, where hopefully the House and the Senate can reconcile their versions of the SCHIP expansion and then come up with a veto-proof majority in the House (one already exists in the Senate), thus overcoming the hurdles to children's health care put in place by the Bush Administration.