How (Not) To Do Incremental Health Reform

Posted on the National Journal Health Care Expert Blog. 

Q. If policy makers feel it is unrealistic to pursue a single, comprehensive health care reform bill next year, what should incremental or phased-in reform look like?

What are the essential components of incremental or phased-in reform, and in what order must they be implemented, to build the infrastructure that a reformed system requires?

Where does reauthorization of the State Children's Health Insurance Program fit in?

-- Marilyn Werber Serafini, NationalJournal.com

Grace-Marie Turner, president of the Galen Institute: 

The temptation of the new Congress will be to quickly act to expand the State Children’s Health Insurance Program to children in families with incomes of 300 to 400 percent of poverty, as several experts here have suggested.

While it’s easy to make an emotional argument for that action, it would be wise for members to look at the data and consider whether this is the best investment of scarce taxpayer dollars.

Lisa Dubay, John Holahan, and Allison Cook reported in Health Affairs (November 30, 2006) that “children who are eligible for Medicaid and SCHIP account for 74 percent of all uninsured children. Consequently, increasing participation among those already eligible is a critical mechanism for eradicating uninsurance among children. Another 11 percent of uninsured children live in families with incomes that make the purchase of non-group coverage unaffordable. Children who are ineligible for public programs and who have family incomes above 300 percent of poverty account for only 15 percent of uninsured children.”

Sending states new SCHIP money for children in these higher-income families would give them fewer incentives to find the uninsured children from more modest-income families who already are eligible but, as governors acknowledge, are much harder to enroll.

Further, expanding SCHIP to children in higher-income families, as Congress attempted last year, will likely primarily replace private coverage they already have. Hawaii had a similar experience this year with its Keiki (Child) Care program, finding that 85 percent of the children enrolled in this premium-free program previously had been covered under a private non-profit plan.

Expansion of SCHIP to children in higher-income families who already have private coverage doesn’t seem to be a wise investment when more than 45 million people remain uninsured.

A better alternative would be to provide the resources for uninsured families to get coverage, ideally through refundable tax credits or premium support for private coverage, including policies that may be available to parents at work.

Dubay et al report that, “Noneligible parents with incomes below 300 percent of poverty constitute the bulk of uninsured parents (57 percent).” Targeted subsidies to assist these families in purchasing coverage would provide more incentives for uninsured families to get coverage and would be a better investment in actually covering the uninsured than blanket expansion of SCHIP.

To see what other health experts on all sides had to say, visit the rest of the conversation.