State Children's Health Insurance Program - Debate Over Impacts

Debate Over Impacts

SCHIP has cost the federal government $40 billion over its first 10 years, and the debate over its fiscal impacts reflects the larger debate in the U.S. over the government's role in health care.

In 2007, researchers from Brigham Young University and Arizona State found that children who drop out of SCHIP cost states more money because they shift away from routine care to more frequent emergency care situations. The conclusion of the study is that an attempt to cut the costs of a state healthcare program could create a false savings because other government organizations pick up the tab for the children who lose insurance coverage and later need care.

Detractors of the program focus on the impact to the private health insurance industry. In a 2007 analysis by the Congressional Budget Office, researchers determined that "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." The CBO speculates this is because the state programs offer better benefits at lower cost to enrollees than the private alternatives. A briefing paper by libertarian think-tank Cato Institute estimated the "crowding out" of private insurers by the public program could be as much as 60%.