(CNSNews.com) – More than 1.9 million American children will be taken off of private health insurance and moved to government health care if Congress approves expansions to the SCHIP program sought by Congressional Democrats, according to a 2008 analysis by the Congressional Budget Office (CBO).
Expanding the SCHIP program could also cause employers to scale back or eliminate workers’ health benefits, according to a 2007 CBO study of the program.
SCHIP, or the State Children’s Health Insurance Program, is a joint federal-state program designed to provide healthcare coverage to children whose parents cannot afford private coverage.
The 2008 report, delivered to Congress on Sept. 3, examines the increases in enrollment in SCHIP and outlines where those new children will be coming from – whether from the ranks of the uninsured or from the already-insured.The CBO found that 2.5 million previously uninsured children would be added to the federal health-care rolls, mostly from low-income families. The 1.9 million who would move from private insurance would come from mostly middle-income families who can already afford health care – families who are not the intended targets of the bill.
This phenomenon, known as crowd-out, undermines the intent of SCHIP by moving resources away from poor children and toward those who don’t need government assistance.
According to a 2007 CBO summary of SCHIP, crowd-out could also create incentives for employers not to offer dependent coverage at all, since low-income employees’ children would be eligible for SCHIP.
“If employers of low-wage workers believe that SCHIP makes health insurance less important in attracting high-quality employees,” the report explains “some might reduce their contribution to the premiums for family coverage, reduce the level of benefits offered, stop offering family coverage, or stop offering insurance altogether.”
Families who move to SCHIP would not be hurt, since SCHIP costs individuals less than private insurance, but the move would hurt those families who still have insurance – especially those with employer-sponsored coverage – who do not qualify for SCHIP according to the 2007 report.
The CBO also found that the vast majority of children who are uninsured are already covered by SCHIP -- less than 5 percent of middle-income kids are without health coverage.
For children from families making 300 percent or more of the federal poverty level -- $21,000 for a family of four – only 5 percent are without health insurance. For children from families making between 200 and 300 percent of the poverty level, 11 percent are without insurance.
The CBO reported that since SCHIP’s creation in 1996, the percentage of children without insurance had not declined significantly among families making above 200 percent of the poverty level.
The two reports raise questions as Congress is poised to enact a sweeping expansion of SCHIP that would cover children whose families make 400 percent or higher of the federal poverty level, upwards of $85,000 per year.
This expansion comes even though CBO found that only 29 percent of children ostensibly eligible for SCHIP in 2005 were enrolled, suggesting that the number of children left uninsured had less to do with SCHIP’s scope than with its implementation, which is the responsibility of the individual states.
The report further found that 56 percent of the children eligible for SCHIP in 2005 already had private insurance in some form and that only 15 percent lacked coverage, further casting doubt on the need to expand the program deep into the middle class.
The House voted 289-139 on Jan. 13 to expand the program.