Monday, January 26, 2009

The New SCHIP Bill: Higher Cost of Private Insurance

From the Heritage:
The United States Senate will soon consider legislation to reauthorize the State Children's Health Insurance Program (SCHIP). Its decisions on that legislation will have a major impact on the private health insurance coverage of millions of American children.
The House of Representatives recently passed a major SCHIP expansion and removed any provision to protect private coverage. Among many other provisions, the House bill would extend the program to target children in families with annual incomes of $66,150, and in some cases even higher.
[1] In other words, the House version of the bill would expand the program beyond low-income working families far into the middle class.
When the Senate considers the House legislation or a companion proposal to expand SCHIP to children in families with higher incomes, it should recognize that public program expansions would result in "crowd-out," or displacement, of both private health insurance coverage and funding. Expansions would impose higher and unnecessary costs as the program enrolls children who would have otherwise had private coverage. In particular, expanding eligibility beyond the current target population becomes a one-for-the-price-of-two proposition akin to taxpayers spending $1.00 to get 50 cents worth of new coverage. (more)

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