Socialize Medicine—It's For the Kids!

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Both the Senate and House of Representatives have passed bills dramatically expanding the reach and cost of the State Children's Health Insurance Progam (SCHIP). President Barack hailed the passage of SCHIP, declaring:

"Providing health care to more than ten million children through the Children's Health Insurance Program will serve as a down payment on my commitment to ensure that every American has access to quality, affordable health care."

And what does this "down payment" accomplish? As the folks at the health care think tank, the Galen Institute explain:

The bill changes the rules of the game, making it much easier for states like New York to put children from families making up to $84,800 a year on this publicly-funded program.

In addition, generous "income disregards" will be allowed, which means that a family can subtract things such as rent or mortgage payments, heating, or food costs from its income in calculating eligibility. That means that children in families making well over $100,000 a year will be eligible for SCHIP.

If your goal were to get as many people on public coverage as possible and to have children grow up thinking they get their health insurance from the government, this would be a good way to start.

Will the nation go as Hawaii has gone? We wrote last year about Gov. Linda Lingle pulling the plug on a state program designed to get to universal coverage. She found out that 85% of the children enrolled previously had private coverage but their parents had dropped it for the virtually free state program.

"People who were already able to afford health care began to stop paying for it so they could get it for free," said Kenny Fink, Hawaii's HHS director.

The same thing will happen across the country with SCHIP. Millions of parents will think it is a better deal to have the taxpayer pay the bill for their children's insurance than to pay for private coverage themselves.

The fact that parents do switch from private insurance coverage to SCHIP is amply backed up by various studies. As I reported earlier:

The Congressional Budget Office (CBO) issued a report in May that found, "For every 100 children who gain coverage as a result of SCHIP, there is a corresponding reduction in private coverage of between 25 and 50 children." In January, MIT economist Jonathan Gruber and Cornell University economist Kosali Simon published a study that estimated "for every 100 children who are enrolled in public insurance, 60 children lose private insurance." And why not? From the point of view of parents, the government is giving their kids free health insurance, so they can pocket the money they were otherwise spending on private insurance.

The CBO also noted that a broadening of SCHIP to higher income levels "would probably involve greater crowd-out of private coverage than has occurred to date because such children have greater access to private insurance." Recall that 90 percent of kids living in families with incomes between 200 and 300 percent of the poverty level are insured and 95 percent of those in families with incomes over 400 percent are. Crowding out of private insurance helps force the country to take "next step" toward universal government-controlled health care.

But for SCHIP proponents, insurance switching is not a bug, it's a feature. Advocates of universal health insurance hope that as fewer and fewer Americans rely on private health insurance, government-funded health insurance will grow in political acceptance. 

But that strategy could backfire. As the Galen Institute suggests:

The rude awakening will come when parents start searching for a physician who will see their children for SCHIP payment rates that, in some states, pay doctors just $10 or $15 for a visit—not even covering their office overhead. Free insurance will come with a high price.

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  1. The rude awakening will come when parents start searching for a physician who will see their children for SCHIP payment rates that, in some states, pay doctors just $10 or $15 for a visit — not even covering their office overhead.

    Just make it illegal for a physician to refuse to see an SCHIP patient. Once you let go of your silly ideas of “freedom” and “self-reliance” and embrace statism life is so much easier.

  2. Socialism for the youth. Socialism for the elderly. Capitalism for those in between.

    Hmm.

  3. LMNOP, don’t forget socialism for the rich (bailout) and socialism for the poor (welfare). Capitalism for those in between.

  4. LMNOP, don’t forget socialism for the rich (bailout) and socialism for the poor (welfare). Capitalism for those in between.

    Yeah, I know. I was considering it less in a normative sense. I think that socialism for the rich and the poor is stupid by definition, because those are economic categories. However, kids (not teens, mind you, but actual kids) and old folk can’t do much productive labor, and yet there exist good policy reasons to support them.

    It was just a thought that sort of back-handed me while I was reading the article.

  5. Will the nation go as Hawaii has gone? We wrote last year about Gov. Linda Lingle pulling the plug on a state program designed to get to universal coverage

    IIRC, that makes four states that have tried and failed to established some kind of socialized medicine for children. All failed due to runaway cost and restriction of care.

    Would it no seem prudent to get these programs up and running on a small scale before we expand them to the national scale? If you can’t get something to run on the scale of a small state, why would anyone think it will work bigger on a much, much larger scale?

    Socialized medicine isn’t pragmatic compassion, its the exploitation of suffering for power.

  6. How can you JUST drop coverage for your children? These must be either single-parent households or both parents must be working and have individual plans available to them that, when combined, cost less than getting a single family rate.
    Right?

  7. I’m no insurance wiz or anything, but two individual plans probably do cost less than a family plan.

    What’s the avg price of a single plan, $500/mo? I could see the average price of a family plan be around $1800/mo., making it cheaper to go the 2 single plans route.

  8. But for SCHIP proponents, insurance switching is not a bug, it’s a feature.

    I’m glad you added this in here, Ron.

    Because while everyone gasps and wonders if SCHIP proponents are horrified that private coverage withers on the vine, this result is by design.

  9. I realize that being a paranoid conspiracist in regards to the Democrat takeover of government is most unfashionable at present, but I still can’t deny the nagging feeling that the “long march through the institutions” is proceeding apace.

  10. Yes, I do believe two individual plans pretty much have to be cheaper than a family plan (since to calculate risk, the average family is always bigger than 2)

    But I’m just saying, in order to get that, you have to have 2 employed adults with offered health benefits, which implies full time.

  11. More horribly: I cannot find The Benny Hill “The National Health” sketch anywhere on the vast interweb.

  12. The single plans at my work and my wife’s work are both cheaper separately than a two-person plan, and way cheaper than the family plan at either company. Companies are willing to provide more on their end for their employee who produces for them than for the spouse who only detracts from their employees available time and focus at work. Multiply the same logic times the number of kids and you see why the plans are more expensive as you add non-producers to it. Also, the volume the insurance provider rates the group on is per employee, not total people who will be insured so that’s a non-factor in pricing.

    If it is cheaper for me to be in my employer’s plan, my wife to be in hers, and my daughter can get it free from the state (which in NY is actually a very good plan as far as coverage goes) that is what we would do. But the NY plan, as far as I know, does not allow us access to it since we both have the option to add our daughter to the company plan. It should be this way IF they must cover all children or the article will be exactly correct regarding the drop-out consequences.

  13. Let me clarify: I don’t think we would get my daughter on the state plan for free since we both have access to coverage for her, so we’d have to pay and it would not be worth doing.

  14. My company’s health care broker says the insurers make a profit on the kids share of the premium (yes, more sniffles and doctor visits but generally much lower serious health problems) so as kids leave plans, the rates on the adults will have to go up to compensate for the loss of margin.

  15. But I read in the WSJ yesterday that states are cutting their medicaid roles due to falling tax receipts.

    Which is it?

  16. reinmoose,

    There is another option. A two parent family with one income could simply purchase health insurance themselves, without getting it from an employer. It happens.

  17. Socialized medicine is coming from the same folk that gave us AMTRAK and the DHS. It will suck and team blue will never admit it.

  18. Given an informed choice, democracies tend toward socialized basic services. The only reason it’s happened in every other advanced country and not here has to do with the key word “informed.”

    Given an informed choice, democracies never opt for libertopian fantasies because they inevitably mean a lower standard of living for everyone except the ultra rich.

    But by all means trash the concept of socialized medicine while not coming up with an alternative. Because nobody is defending what we have now.

  19. Tony: But I HAVE come up with an alternative.

  20. tony’s right – that’s why all the ultra rich in america supported bob barr for president.

    shame on them.

  21. Tony,

    The only reason it’s happened in every other advanced country and not here has to do with the key word “informed.”

    Socialized medicine in Europe is the result of WWII. For people living in rubble, socialized medicine was an easy sell. England remained under war time rationing until the early 50’s and they paid for their system using Marshel plan money.

    Japan does not have socialized medicine. So, really, socialized medicine is better thought of a fluke of history than some kind of per destined evolution of societies.

    But by all means trash the concept of socialized medicine while not coming up with an alternative.

    There are many alternatives. For example, medical saving accounts for the middle-class and vouchers for the poor. Or, just vouchers for everyone. In the latter system, cost are socialized but medical decisions are not.

    The fact that leftist oppose all systems except those which centralize decisions about medical care in the state reveals that their true motivation is the desire to make people dependent on the state and to thus secure the dominance of a permanent political class.

    Because nobody is defending what we have now.

    The system we have now is not a free-market system but rather a bastardized system in which the state distorts the market in health with capricious dictates and biased tax polices.

    Just because you lack imagination and crave authority does not mean that other people have not put a lot of thought into how to care for everybody without sacrificing innovation and freedom.

  22. So, really, socialized medicine is better thought of a fluke of history than some kind of per destined evolution of societies.

    I prefer to think that history is a fluke of history and be done with it. But I agree with your other points.

  23. More horribly: I cannot find The Benny Hill “The National Health” sketch anywhere on the vast interweb.

    Was that the one where the rich guy goes to a privately run hospital and the nurses all had great racks and where wearing lingerie?

    If so, that was a good one.

  24. Reinmoose,

    Where I work the employee contribution for family insurance is around 6x the contribution for individual insurance. The gap is somewhat wider than the underlying policy difference since the fraction of the total premium cost covered by the company for family plans is lower but even by the underlying numbers there is about a 3x difference.

  25. My health insurance options include 1 employee, employee and spouse, and family (i.e. more than 2) plans so yes it would at least in my case be possible to drop coverage only on the kids.

  26. The fact that parents do switch from private insurance coverage to SCHIP is amply backed up by various studies.

    Would this not prove that socialized medicine is better?

  27. So let me get this straight.
    Private enterprise having monopoly power over health care is good, but if consumers desire to operate as a group capable of defining pricing for health care (never mind that group is government, plenty of private enterprises enjoy equal or greater power to define the market), that is bad?

    Nonsense.

  28. Kurt: yes.

    The again I think that describes anything on Benny Hill:

    Was that the one where the…guy goes to a [place] and the [women there] all had great racks and were wearing lingerie?

  29. “Would this not prove that socialized medicine is better?”

    How are you making that logical leap? All it proves is that people liking getting something for less. The notion that someone making six figures should have the taxpayers footing the bill for their kid’s medical bills should be offensive to anyone who doesn’t think government is the greatest thing since sliced bread.
    Frankly, I hope more and more doctors refuse to see SCHIP patients, just like they often refuse to see a single Medicare or Medicaid patient because of shitty reimbursement rates.

  30. Do you guys really have to keep citing the Galen institute? It’s a wingnut talkshop whose only function is to deliver steaming hot soundbites against socialized medicine.

    Quoting them only encourages this behavior and hurts your own credibility. It’s not like there aren’t plenty of credible health care analysts out there.

  31. Is it so stupid to think that supply and demand drives healthcare. By definition hospitalization means that a person needs primary care from nurses, otherwise patients are taken care of else where! There has been a nursing shortage for years! With lines of nurse at nursing schools students are turned away by the thousands which drives wages up and healthcare a long with it! If our government wants to change healthcare it needs to solve the problem not fuel it! Dump billions into nursing school teachers will leave their high paying nursing job and teach,more nurses will be trained and healthcare cost will be driven down! Socializing the healthcare is not the answer more common sense capitalism is!

  32. Do you want to find cheap corsets online? If you do you won’t be the only one. Everyone is trying to cut back on what they spend these days, but most of us are reluctant to stop spending money altogether, especially when it is on something that makes us feel so good.

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