Pediatric Politics

A program Congress sold as a way to provide flexible private insurance to children is quickly becoming a way to hook more middle-class families on government health care.

In 1997, Congress passed the State Children's Health Insurance Program, popularly known as KidCare.

The program gives states $48 billion over 10 years to provide health insurance to children of the working poor. KidCare's promoters claimed that flexible block grants would allow states to experiment with market-driven health care systems, such as insurance vouchers or tax credits. One year after the program's adoption, however, there's little innovation and a lot more government.

So far, 21 state KidCare plans have been approved, and all would expand Medicaid or a similar, state-run program. This isn't surprising, since states qualify for more federal money if they expand Medicaid, while they may lose subsidies if they establish new programs.

While Medicaid traditionally serves the poor, the new rules say children younger than 19 who live in families with incomes that exceed 200 percent of the poverty line–$32,900 for a family of four–may qualify for Medicaid. As a result, the families in this income range who currently purchase private insurance will face strong incentives to obtain tax-subsidized health coverage.

A study in the journal Health Affairs that examines recent Medicaid expansions suggests that for every two persons added to the Medicaid rolls, one person will drop private health insurance. KidCare could push millions of children out of the private health market.

John Hood, president of the North Carolina-based John Locke Foundation, reports that pro-KidCare lobbyist Adam Searing of the Health Access Coalition conceded that the program will prompt families to drop private insurance. "The long-term effect" of the program, says Hood, "may very well be to eliminate private coverage for children [from families with incomes less than] 200 percent above the poverty line."