NCPA Commentaries by Devon Herrick

Devon Herrick is a Senior Fellow for the National Center for Policy Analysis. While Herrick works on a number of issues, he concentrates on health care issues, such as Internet-based medicine, health insurance and the uninsured, as well as pharmaceutical drug issues.

  • Nov 18, 2010

    Texas Considers Withdrawing from Medicaid

    Heath Care News- A closer look at Medicaid changes at the state level from Dr. Herrick


  • Jul 07, 2010

    Uninsured Emergency Room Use Greatly Exaggerated - Health Care News

    Dr. Herrick explains projected increases in emergency room traffic in this Health Care News commentary.


  • May 01, 2009

    Will Health Care Rationing Follow the Stimulus Bill- Health Care News

    The American Recovery and Reinvestment Act, known informally as the "stimulus" bill, appropriated $1.1 billion to create a Federal Coordinating Council for Comparative Research. The provision is one of the most controversial in the 1,000-page measure.


  • Jan 01, 2009

    Web Replaces Doctors as Patients' Top Health Information Source- Health Care News

    A study by New York-based Manhattan Research has found people more frequently turn to the Internet for health information than seek information from their doctor. An estimated 145 million U.S. adults now turn to the Internet for information about diseases and other medical conditions.


  • Dec 01, 2008

    Consumers Better With Competition

    As a new Congress begins to look at health care insurance options, some of the more liberal members are already discussing proposals for a single?payer, universal health care plan.

    Click here to read the entire commentary.


  • Nov 17, 2008

    Health Reform Needs a Competitive National Marketplace

    The Health Reform proposal championed by Sen. Max Baucus would require individuals to have health coverage, and force employers to contribute to its cost (mostly by reducing workers' take-home pay). In addition, millions more children and adults would be eligible for public subsidies, Medicare, Medicaid or SCHIP.

    Click here to read the entire commentary.


  • Jun 01, 2008

    Experts Debate Causes, Cures for Uninsured

    April 27-May 3 was Cover the Uninsured Week, a Robert Wood Johnson Foundation-sponsored initiative to raise awareness about the millions of Americans who lack health coverage. The grassroots campaign included forums across the country at hospitals and community centers, seminars for small businesses, and information about enrolling in free or low-cost health plans.

    Click here to read the entire commentary.


  • Apr 01, 2008

    The 180-degree approach to medical benefits reform

    President Bush has proposed a plan for insurance reform that would provide a standard income-tax deduction to cover medical expenses. The amount of the deduction would be the same, regardless of the amount of out-of-pocket medical expenditure, and would require purchase of a government-qualified plan with a Health Savings Account. Under this proposal, harmful government interference in the medical marketplace would continue. An alternate proposal, with the same cap on the tax benefit, would abolish tax favoritism for third-party expenditures and restore a true competitive marketplace.

    Click here to read the entire commentary.


  • Jan 29, 2008

    State Children’s Health Insurance Program Expansion: Robin Hood in Reverse

    Mr. Chairman and members of the Committee, I am Devon Herrick, Senior Fellow at the National Center for Policy Analysis, a nonprofit, nonpartisan public policy research organization dedicated to developing and promoting private alternatives to government regulation and control, solving problems by relying on the strength of the competitive, entrepreneurial private sector. I welcome the opportunity to share my views in writing regarding HR 3963. 

    The families of millions of children currently in SCHIP would have otherwise had private coverage, and most of the children that would be newly eligible already have private coverage. Furthermore, the cost of expansion would be borne by poor families and seniors. 

    Unnecessary Benefit.

    Most uninsured children are already eligible for SCHIP or Medicaid. More than 8 million children lack coverage at some point during the year, and it is estimated that about 70 percent of these may qualify for public coverage. However, the duration of uninsured spells tends to be short, and only 4.9 million children are uninsured for the entire year. According to the Congressional Budget Office (CBO), of the children who are uninsured for an entire year:

    • More than one million children currently qualify for public coverage but are not enrolled.
    • Another 1.1 million do not qualify because they are illegal (or temporary) immigrants.
    • About 403,000 are income-eligible immigrants who have not been legal residents long enough to qualify for Medicaid benefits.

    SCHIP expansion would do nothing to increase enrollment among children who are already eligible, and most of the additional children are already covered by private insurance. 

    Cost: Less Private Coverage.

    Estimates vary, but virtually everyone agrees that expanding "free" (or highly subsidized) public insurance crowds out private insurance. For instance:

    • Between half and three-quarters of spending on Medicaid expansions in the 1990s went to people who would have been privately insured, according to economist Jonathan Gruber.
    • Up to 60 percent of spending on SCHIP is for people who otherwise would have been privately insured, according to Gruber's research.

    Furthermore, the parents of children targeted for expansion have shown they want insurance coverage for their children badly enough to pay for it. On the other hand, since millions of uninsured children who already qualify for Medicaid or SCHIP have not enrolled, it is entirely possible most of the new spending will replace existing private coverage.

    • In families earning 200 percent to 300 percent of the poverty-level income, 77 percent of children already have private coverage, according to the CBO.
    • In families earning 300 percent to 400 percent of poverty, 90 percent of children are already covered by private health insurance.

    Cost: Less Health Care for Children.

    When their parents trade "free" coverage for private coverage, millions of children will have less access to care. The reason: Most SCHIP patients have less access than privately insured patients because the programs pay doctors the same, low reimbursement rates as Medicaid pays. A recent study found that two-thirds of Medicaid patients are unable to obtain an appointment for urgent ambulatory care, and in three-fourths of the cases, the reason is that the provider does not accept Medicaid. SCHIP enrollees face similar problems accessing care.

    Cost: Higher Taxes on the Poor.

    The Senate Finance Committee proposes to fund SCHIP expansion by hiking the federal cigarette tax by 61 cents a pack. Lower-income people are more likely to smoke than upper-income individuals. In fact, families in the lowest fifth of the income distribution spend 10 times as much of their earnings on tobacco as families in the highest fifth. Thus, the principal source of funding for middle-class kids would be taxes on the poor.

    Cost: Higher Taxes on Future Generations.

    Federal health spending is already out of control and SCHIP expansion will not help. In 2002, government spending on health care was nearly 7 percent of gross domestic product. Without significant reforms in Medicare, Medicaid and other programs, federal health outlays are on a course to increase to one-third of GDP by midcentury. The CBO estimates income taxes paid by the middle-class will reach 66 percent by 2050, and marginal tax rates for the highest earners will reach 92 percent!

    Conclusion.

    The increase in federal spending on health insurance for kids will go largely to children who could have had private coverage anyway. Yet under SCHIP, these children will have less access to care than they currently have. Funding for this effort will come from people who have less income than the families who will benefit. And future generations are being ignored.

    Thank you for the opportunity to submit testimony. I look forward to working with Subcommittee and Committee as this debate continues.


  • May 24, 2007

    Put the children back in SCHIP

    Originally published in: The Washington Times

    A hot topic in the halls of state and federal government these days is health insurance, specifically children's health insurance.

    The number of uninsured children in the U.S. is estimated at 8 million and counting. So many uninsured children must mean we're a failure on a grand scale. It means the government must step in to fix the crisis before children start dropping dead in the streets.

    If you listen to most politicians, the oft-repeated policy prescription is to expand the State Children's Health Insurance Program (SCHIP). The SCHIP program is a shared-responsibility entitlement. States pay an average of 30 percent of the program costs, and receive federal matching funds based on the state's population, its number of low-income children, and its number of low-income without insurance. States have three years to use their federal allotment or lose it.

    In 2003, states had to return nearly $1 billion to the federal government. They quickly learned their lesson, however, and started expanding their SCHIP programs in an attempt to maximize their federal subsides.

    Yet after 10 years of throwing tax dollars at this problem, an estimated 17 states now face budget shortfalls and, surprisingly, fewer children have insurance. How can this be? When states sought to use up their funds, they started covering children above the income requirement and started adding adults to the roles. In many cases, single adults with no children.

    For example, of Minnesota's SCHIP enrollees, 87 percent were adults in 2005. Arizona has one of the highest rates of uninsured children in the country at 16 percent, yet 56 percent of its SCHIP enrollees are adults.

    So, a program named for helping children now cannot help many uninsured children because the money is tied up covering adults. From this experience, it would seem intuitive that spending more money to continue down this path will do little for the 8 million uninsured children nationwide.

    In 2003, when the states had to return the $1 billion, there was a major push to spend the leftover funds on outreach programs. Presumably, there was unspent money because not all eligible children were enrolled.

    There are now an estimated 5.75 million children eligible for government aid but not enrolled (this includes Medicaid and SCHIP). That's more than 70 percent of uninsured children. So much for outreach.

    Another reason this program's expansion offers little hope for reducing the number of uninsured children is what economists call "crowd-out." When government raises the income qualification, people who already have insurance often drop their private coverage, including employer coverage, to join an entitlement program they think is free. In fact, an estimated 50 cents to 75 cents spent on expanding government entitlement programs cover those who dropped private insurance.

    That means we will spend more money to cover people who already had insurance. When states spend all their money, they come to back to the federal government with their hands out for more. And under SCHIP's provisions, they'll get it.

    Rather than spend billions of taxpayer dollars to encourage parents to drop private coverage, we should encourage states to reform their insurance regulations to create more competition in health insurance, and as a result, more affordable and attractive options.

    For instance, states should let insurers create health plans that do not have to cover a host of expensive mandated benefits. Taking it a step further, if the government allowed interstate competition in health insurance, any insurer licensed in one state would be free to offer products to residents in other states.

    Another idea would be for states to subsidize private coverage when parents have access to an employer plan but have not enrolled themselves or their children because they couldn't afford their share of the premiums. Oregon has tried a similar idea for their Medicaid beneficiaries, with much success.

    SCHIP was designed to achieve one specific goal: insurance for children. That goal has been lost in the mad scramble to not lose federal money. SCHIP should be scaled back to fulfill its original intent, and we need to explore better options for achieving that intent.

    Throwing money at a problem has never worked. It didn't work in 1997 when SCHIP started, and it won't work today. We need better solutions that don't involved burdening American taxpayers and stunting our economy. Our children deserve better, and so do our hard-working, tax-paying adults.

    Devon M. Herrick a senior fellow with the National Center for Policy Analysis and co-author of "Lives at Risk: Single-Payer National Health Care Around the World."