NCPA - National Center for Policy Analysis

Preserving the Children's Health Insurance Program

May 23, 2003

Many states across the country, are struggling with fiscal problems. Decreasing state revenue, rising insurance costs and increasing enrollment in the Children's Health Insurance Program (CHIP) are threatening to undermine the financial viability of this vital state program. Decisions about Medicaid and CHIP pose one of the greatest challenges for state legislatures.

While well-intentioned, government-run health care programs promise more than they can deliver. Programs generally begin with generous benefit packages that impose little or no financial obligation on enrollees. As the cost of programs rise and fiscal constraints grow, governments generally reduce services, decrease access to programs and lower quality.

Faced with these problems, a study of Texas' CHIP program identified ways to conserve financial resources and improve health care. Among the recommendations:

  • Redefine eligibility requirements including removal of income offsets.
  • Reduce restrictive state health care mandates and eliminate many of the health care "extra services" that drive up cost.
  • Create the appropriate incentives for consumers using increased co-payments and personal care accounts.
  • Promote private employer insurance coverage and allow CHIP monies to subsidize employer plans.

The authors note that today's reform of CHIP can serve as a model for tomorrow's reforms of Medicaid and other government-subsidized health insurance. Accessible, affordable health insurance, with greater choice promises to benefit all who rely on government-subsidized health care.

Source: Chris Patterson (Director of Research, Texas Public Policy Foundation) and Devon M. Herrick (Research Manager, National Center for Policy Analysis), "Securing the Safety Net for Texas Children: Cutting the Budget and Strengthening the Children's Health Insurance Program," Texas Public Policy Foundation, May 2003.



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