NCPA - National Center for Policy Analysis


April 9, 2009

Proponents of universal health coverage believe that expanding government insurance improves access to care.  For example, some proponents believe that expanding eligibility for Medicaid or the State Children's Health Insurance Program (S-CHIP) would improve access to care for lower-middle income families.  In practice, things are different, says Devon Herrick, a senior fellow with the National Center for Policy Analysis.

For example:

  • On paper, Medicaid coverage appears more generous than the benefits the vast majority of Americans receive through private health insurance.
  • Potentially, Medicaid enrollees can see any doctor or enter any facility and pay nothing.
  • In fact, the uninsured and Medicaid patients do tend to get their care at the same hospitals, clinics and emergency rooms.
  • But the availability of other providers is limited: Nationally, one-third of doctors do not accept any Medicaid patients and, among those who do, many limit the number they will treat.
  • Studies have shown that access to care at ambulatory (outpatient) clinics is also limited for Medicaid patients, as is access to specialist care.

Another problem is that expanding public coverage encourages people to drop their private health plan to take advantage of the free program -- leading to a phenomenon known as "crowd-out," says Herrick:

  • For every new dollar of spending on Medicaid expansions in the 1990s, between 49 and 74 cents went to people who had dropped private coverage.
  • The crowd-out rate for S-CHIP averages is about 60 percent.
  • Hawaii recently abandoned its universal child health care program after state officials discovered 85 percent of newly enrolled kids had dropped private coverage.

As income rises, so does the likelihood that families will be covered by private insurance.  Thus, increasing eligibility for public coverage also increases the likelihood that a family will drop better quality private coverage, explains Herrick.

Source: Devon Herrick, "Exposing the Myths of Universal Health Coverage," National Center for Policy Analysis, Brief Analysis No. 651, April 9, 2009.

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