Today, during a Senate Finance Committee hearing about SCHIP expansion, Sen. Jon Kyl (R-TX), like his Republican colleagues in the House, argued that expanding SCHIP would force millions of children with private coverage into a public program.
During last year’s SCHIP debate, Republicans similarly used this “crowd out” argument — the idea that expanding a public program would motivate families of children who currently have private coverage to voluntarily “drop that coverage for their children and enroll the children in SCHIP or Medicaid instead” — to keep from expanding the program.
Kyl cited the Congressional Budget Office’s (CBO) estimate that 2.2 to 2.4 million children who would gain SCHIP or Medicaid coverage would have otherwise had private coverage. But as the Center for Budget and Policy Priorities explains, “crowd-out is not the same as voluntarily dropping private health insurance for public program coverage”:
In other words, a large share of the SCHIP “crowd-out,” as estimated by CBO, involves children who are uninsured now but who would obtain private coverage at some later point if SCHIP (or Medicaid) coverage were not available to them. These are not children who had private insurance that their families voluntarily dropped for public program coverage.
In fact, as the center points out, “only a small share of children had private health insurance before enrolling in SCHIP or Medicaid.” An Urban Institute study that examined how 18 states are addressing crowd out concluded, “among the 18 study states, SCHIP and Medicaid officials, as well as other key informants, consistently reported little to no concern over crowd out; many believed it was a non-issue.”
Moreover, “the Congressionally-mandated 10-state evaluation of SCHIP found that while 28 percent of newly enrolled children had private coverage before joining SCHIP, half of them — or 14 percent —lost their private insurance for involuntary reasons before enrolling in SCHIP, such as when parents lost their jobs or became divorced or employers stopped offering health insurance for dependents.”
Indeed, the harsh economic climate has certainly made insurance less affordable and has led many Americans to lose their employer-sponsored coverage. As Sen. Olympia Snowe (R-ME) pointed out during the hearing, “it’s the cost of private insurance that excludes them from having coverage. More and more Americans are losing coverage becay they can’t afford it. Small businesses can’t afford to provide it.”
The Senate Finance Committee voted 12 to 7 to increase spending on SCHIP by $31.5 billion. The committee also passed an amendment, introduced by Sen. Jay Rockefeller (D-WV), extending coverage to legal immigrants.