NCPA - National Center for Policy Analysis


July 25, 2007

Since children are the healthiest age group and child health insurance is the cheapest insurance found anywhere, the theory must be that the State Children's Health Insurance Program (SCHIP) is a lot less expensive than tackling a really serious problem, says John C. Goodman, president of the National Center for Policy Analysis.

In reality, the arguments against SCHIP are quite strong:

  • Harvard University economist David Cutler and Massachusetts Institute of Technology economist John Gruber find for every additional $1 spent on Medicaid, private insurance spending contracts by 50 cents to 75 cents; for SCHIP expansion, Gruber estimates the contraction is 60 cents.
  • 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 is a massive shift of the burden from the private sector to taxpayers --while making only a minor dent in the percentage of uninsured people.
  • Also, of the eight million uninsured children in this country, fully 70 percent already qualify for Medicaid or SCHIP but their parents just have not bothered to enroll them.

One good idea is a simple proposal made a few years back: Parents should show proof they have insured their children (by employer plan, Medicaid, direct purchases, etc.) before claiming the $500 child tax credit.

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

Source: John C. Goodman, "How to Cover the Kids," Heartland Institute, August 1, 2007.


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