THE SCHIP EFFECT
July 30, 2007
A bigger State Children's Health Insurance Program (SCHIP) would crowd out private insurance, says Paul Guppy, vice president of research at the Washington Policy Center.
The Department of Health and Human Services estimates that an expanded SCHIP would cause 1.6 million people with private insurance to drop their coverage and enter the government program. After all, why buy something when Congress will let you get it from taxpayers for free?
Top-down government programs undermine consumer choice and the ability to shop for affordable coverage. A public program that aggressively seizes market share risks putting private insurers out of business. Lawmakers should target assistance to those who need it, not set up tax-subsidized programs that compete for business against their fellow citizens.
Instead of shrinking the private market, lawmakers should review their own policies that make it harder for families with children to gain access to affordable health coverage. Such as:
- Reduce costly mandates -- insurance mandates add 15 percent to 25 percent to the cost of health coverage.
- Lift the ban on basic-value insurance -- accumulated mandates and needless regulations mean that basic-value health insurance is not legally available, preventing families from buying economical insurance at bargain prices.
- Lift the ban on shopping nationally for health coverage -- Congress has barred Americans from shopping for health coverage in any state and state regulatory monopolies block citizens from tapping a national market for the best deals on health insurance.
Over the years, lawmakers have piled up inflexible rules that make health coverage more expensive, then they propose costly entitlement programs like SCHIP in an effort to solve a problem they helped create, says Guppy.
Source: Paul Guppy, "Proposed SCHIP Expansion Relies on Shaky Finances," Washington Policy Center, July 27, 2007.
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