By Staff
Think government-run health care will cure the problem of the uninsured? Try telling that to Hawaii.
Earlier this year, the state decided to offer universal health care to children. The so-called "Keiki Care" program promised to insure anyone under 18 who didn't already have health insurance. However, just seven months into the experiment, Hawaii is canceling the program.
Why? "People who were already able to afford health care began to stop paying for it so they could get it for free," Dr. Kenny Fink, an official at the state's Department of Human Services, explained. "I don't believe that was the intent of the program."
Of course it wasn't. But it was a predictable outcome.
Once government enters a market and promises to provide a "free" service, people who've been buying that service on their own will stop paying for it. They're happy to let the government (i.e., taxpayers) pick up the tab. The "free" government program crowds out affordable private programs, leaving consumers no other options. And it can happen very quickly.
This matters to all of us, because our country may soon see a crowding-out effect on a national scale.
If elected, Barack Obama has vowed to "expand Medicaid and the federal State Children's Health Insurance Program (SCHIP) eligibility and insure that they continue to serve their critical safety net function."
However, as Hawaii discovered, that's exactly the wrong approach. The federal safety net will swiftly become a hammock.
Consider Medicaid, the federal-state health program for the poor and indigent. It already costs $350 billion per year, and that price is expected to increase every year even if policymakers don't expand the program.
As Robert Moffit and Nina Owcharenko of The Heritage Foundation point out in their comprehensive review of Sen. Obama's health care proposals, "Previous Medicaid expansions have unquestionably helped to 'crowd out' private health insurance coverage for certain populations."
Obama's plan would only speed the process.
As for SCHIP, the program was intended to provide health coverage for children in low-income working families that aren't quite poor enough to qualify for Medicaid. But states have repeatedly expanded SCHIP eligibility. Today, in many states, children of middle-class families are often eligible.
It's worth noting that Obama intends to require parents to carry health coverage for their children. One way he wants to expand coverage is by extending SCHIP to many more families, though he doesn't say exactly how far he would go.
Several states already cover families earning three times the level of poverty, and New York wants to extend eligibility to four times the poverty level ($84,800 for a family of four).
If a President Obama embraced that guideline, suddenly more than 70 percent of American children would be qualified for government health coverage. That would not only increase costs to taxpayers, it would drive up the cost for those who remain in private coverage. That creates a vicious cycle, as more people end up becoming uninsured.
As Hawaii proved on a smaller scale, such a mandate would likely shift millions of children from family health plans to taxpayer-funded public health rolls.
As Moffit and Owcharenko write, "It would be easy for these government health programs to serve as the default option, automatically enrolling children if their parents fail to act."
That would give the federal government significant control over the type of health insurance coverage that a child receives and crowd out private health insurance.
There's a better way.
Instead of top-down orders, our country needs grassroots reform. Tax policy should empower parents to own and control their health insurance plans. That would encourage them to shop for the best care at the best price.
Americans are smart enough to shop for their own car and house insurance. Surely they can pick a health plan that suits their family's needs as well.
That may not sound as easy as simply mandating "universal coverage."
But it has this advantage: It works.