crossposted from unbossed
This is the third part describing and commenting on testimony at the April 9 hearing on the Bush Administration's August 17 directive related to SCHIP. The hearing explored the impact of the directive on providing health coverage to poor children and on usurping Congress' powers.
This is the third installment on the testimony last week about the Bush Administration's August 17 directive. As discussed in the two earlier posts, the purpose of the directive is stated to be protecting the program and protecting insurance coverage by ensuring that all children in need are covered by health insurance and that funds are wisely used.
In this part I include statements of the first panel of witnesses at the hearing.
Statement of Mr. Dennis Smith, Director, Center for Medicaid and State Operations, Centers for Medicare & Medicaid Services, Washington, DC
Oddly enough, some of his arguments seem to make a case for single payer. For example, in a discussion that presents the problem that expanding coverage for children will lead to "crowd out" - that is, it will entice people to drop private health coverage for their children to enroll them in SCHIP. This will leave, he argues, private insurers stuck with the sickest population. Insurance is supposed to be about spreading risk, so it needs to include the range of population to do so.
Of course, the train left the station a long time on this issue, and insurance companies were driving that train but kicking sick people out and imposing conditions that made coverage impossible or useless. So while admire the attempt to help out the insurance companies, they are not exactly coming to us with clean hands. Their practices are what has led to many of the problems we now have, and now they want help. Sad.
Here are a few excerpts from his testimony.
SCHIP provides a 70 percent federal match rate on an average national basis compared to the 57 percent average match rate for Medicaid. . . . Congress did not establish a statutory definition of "family income," allowing states to define and disregard certain income. . . . Congress identified and discussed the issue of "crowd-out," or the substitution of new public coverage for existing coverage. Ultimately, the SCHIP legislation did not adopt specific federal standards for preventing substitution but did require states to prevent crowd-out and provided a mechanism through the state plan review process for the Secretary to protect the Federal interest in preserving existing sources of coverage.
. . .
Insurance fundamentally means the sharing of risk. When the pool of healthy insured lives shrinks and the risk cannot be spread as widely as before, the cost will rise for those who remain, triggering another cost increase which is likely to displace yet another group of people – employers, employees or both.
One real weakness of his testimony is that he seems confused by the question whether the data show correlation or causation or something else.
For example,
As 16 million children have been added to Medicaid and SCHIP over the past decade, the percent of children in families between 100 and 200 percent of FPL with private insurance has declined. In 1997 according to data from the 2006 National Health Interview Survey, 55 percent of children in families with income at this level had private insurance. But by 2006, the percentage had declined to 36 percent.
So, which was it?
Did increasing coverage under Medicaid and SCHIP lead to
(1) the decline in health insurance coverage
(2) or did the decline in health insurance coverage lead people to seek out coverage under Medicaid and SCHIP
(3) or are they unrelated or related in some ofter way?
The statistics can suggest, if one is not careful about how one interprets them, that the people leaving private health insurance are the same people signing up for SCHIP. That is what this and other witnesses claim to be the case.
But it is possible and even very likely that some of the people lost private health insurance coverage and did not sign up for SCHIP. And some of the people signing up for SCHIP never had private health insurance. In other words, there is no correlation between the two events for many people.
It is also possible that people did not leave private health insurance plans voluntarily, that their employer dropped coverage totally or for this group or that the co-pays or employee shares became so high that the employee was priced out of coverage - food and shelter being more pressing needs.
But many who spoke against SCHIP at the hearing assume that employees abandoned private health insurance for cheaper coverage under SCHIP (and who could blame them) - and therefore must be beaten back into private health insurance coverage - not for their own good but for the good or private insurance companies.
Go back and read the testimony of hearing witness Paula Novak and see how these forces have played out in real life.
Statement of Dr. Peter Orszag, Director, Congressional Budget Office, Washington, DC
We have a similar problem of causation and correlation with this witness as discussed above. Orszag claims causation from the statistics.
The enrollment of children in public coverage as a result of SCHIP has not led to a one-for-one reduction in the number of low-income children who are uninsured, however. Almost any increase in government spending or tax expenditures intended to expand health insurance coverage will displace private coverage to some degree. In the specific case of SCHIP, the program provides a source of coverage that is less expensive to enrollees and often provides a broader range of benefits than alternative coverage. As a result, the program displaces — or "crowds out" — private coverage to some extent. On the basis of a review of the research literature, CBO has concluded that for every 100 children who gain public coverage as a result of SCHIP, there is a corresponding reduction in private coverage of between 25 and 50 children.
Orszag's full testimony presents studies on crowd out but admits that there are no good studies nor real information about how these two systems work is not available. Aside from trying to understand the dynamics of employers deciding not to offer coverage when SCHIP is available to an employee because it is cheaper for the employer, there are also issues of families opting one way or the other where they have choice, of the impact of the economy, and of other factors that affect these decisions.
Interesting, isn't it, that so many are willing to err on the side of private insurance over protecting children.
Interesting also that they seem to assume that the insurance coverage would have been of good quality and affordable.
Interesting that they assume that private insurance would continue to be available or maintain the level of quality it had, when that is not the trend.
And yet, we know that parents whose children could be covered by SCHIP are the very ones least likely to have good quality health insurance or any insurance at all.
Statement of Mr. Chris L. Peterson, Specialist in Health Care Financing, Domestic Social Policy Division, Congressional Research Service, Washington DC
Peterson's testimony was focused on the "95% test" in the August 17 letter. It required the states that want to enroll children with "effective" family income above 250% of poverty to provide "assurance that the state has enrolled at least 95% of the children in the State below 200% of the family poverty level who are eligible for either SCHIP or Medicaid." This seems reasonable - make certain that the truly needy are enrolled before extending coverage - and dollars - to those who are better off.
However, a major - and real - problem is in proving that 95% are covered.
According to the testimony, there is no administrative data on the uninsured. He states: "Although the CPS data provides estimates of the number of children below 200% of poverty, that is not the same as providing estimates of those children who are eligible for Medicaid or SCHIP coverage . . ." In addition, there is no standard as to what is a family and what counts as income.
Although the published estimates indicate that no state covers 95%, if one factors in the survey’s margins of error, several states could claim that the 95% level has been reached. Even so, there are fundamental concerns with the CPS’s insurance estimates, beyond the typical margins of error. For example, the CPS is known to undercount Medicaid and SCHIP enrollment by several million individuals.
Moreover, the 95% test is to be calculated among low-income children who are eligible for SCHIP or Medicaid. No national survey asks respondents or determines separately whether individuals are eligible for Medicaid or SCHIP. For example, the CPS does not ask respondents about their immigration/documentation status, which is a factor in determining one’s eligibility for Medicaid and SCHIP. Thus, analysts have to make adjustments to estimate, for example, how many uninsured children are eligible for public coverage. Such estimates can vary widely, depending on the methodologies used. For example, based on adjusted CPS estimates, the Administration announced that 1.1 million uninsured children were eligible for public coverage. This varied from an estimate of 6.0 million previously published by researchers using a different model.
The CRS testimony includes several tables with data broken down by states.
The other parts in this series are:
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