Throwing Out the Babies

Powerline on the Dems' approach to healthcare.

However, as Paul Winfree and Greg D'Angelo of the Heritage Foundation point out:

Expanding SCHIP to cover children in higher income families is not an efficient or cost-effective way to reduce the ranks of uninsured children. As the safety net is cast further up the income ladder, it will increasingly substitute government programs and taxpayer dollars for private coverage and funding.

This phenomenon is known as the "crowd-out effect." Winfree and D'Angelo are able to estimate the extent and consequences of this effect, using as their starting point an econometric methodology developed by MIT professor Jonathan Gruber, coupled with findings by the Congressional Budget Office regarding the crowd-out that resulted from previous SCHIP expansions.

They find that under the Senate's SCHIP expansion, an estimated 1 million to 1.2 million children would gain SCHIP coverage, but between 467,000 and 611,000 children would lose private coverage. Due to poor targeting and the relative cost of crowd-out, the annual cost to taxpayers of covering an uninsured child under the Senate’s expansion plan would basically double, increasing from $1,418 to between $2,508 and $2,859. Moreover, these new cost figures are almost 2.5 times the average cost of private insurance. The House bill expands SCHIP even more -- an estimated 2.2 million to 2.4 million children would gain coverage. As a result, the annual cost to taxpayers of covering an uninsured child would increase by an even larger factor.

Throwing out the babies with the bathwater---and it would all cost more of course. And last I heard, some of the "babies" covered would be old enough to run for Congress. Now there's a good reason for throwing out the babies.

Related posts: Stability and Portability, HillaryCare: Death by Fiat