Introduction
Everyone favors eliminating wasteful health care spending. Virtually everyone, polls show, also believes that children should receive the health care they need.
We propose to achieve both goals with a proposal that eliminates unnecessary non-benefit costs spent establishing eligibility of children for Medicaid and CHIP (Children's Health Insurance Program), and would make all children eligible for the health care coverage that Americans overwhelmingly believe children should have. It would benefit struggling middle class families, as well as poor families, where 13 percent of low-income children were without insurance in 2012 (most recent data we found).
Scrapping complicated, costly, time-consuming eligibility tests would save billions. Substituting a program assuring all children their needed health care with no other eligibility condition than being a kid (that is, below a specified age) would accomplish their coverage. Let's call it Medikids.
With that one-two punch, we would spend more money on health care and less on shuffling paper. Facilitating timely care would avert further deterioration and complications, thereby reducing costs and, not least, improving health care outcomes. Healthier children would become a smaller source of infection for other kids and adults, further reducing costs for health care and absenteeism. Such a measure also would trim health care insurance costs for adults in both public and private programs. This arrangement would relieve states of Medicaid expenditures, their largest or second largest budget outlays. That would help them recall large numbers of laid-off state employees, restore vital education and protective services, and fund other essential public services. Most importantly, adequate health care for the nation's children is an investment in all of our futures. Healthier children are likely to be healthier adults. Over the long haul, healthier children will become more productive, more employable and better paid adult workers -- paying higher taxes and contributing to the nation in other important ways.
Wide Support for Assuring Health Care to Children
Despite tight federal, state, business and personal budgets, numerous polls show widespread support for assuring health care for children. Apparently, misgivings about financial help to adults lessen or disappear with regard to children. Moreover, it costs comparatively little to provide comprehensive health care to infants, children and young people.
Coverage for Children Has Grown Due to Federal-State Programs - But Not Enough
Between 2007 and 2010, the percentage of children without health insurance declined from 10.9 percent to 10 percent. This resulted from the 2009 expansion of CHIP, which provides coverage for children in families with income somewhat higher than those poor enough to qualify for Medicaid. Recession-caused declines in income made more children eligible for those programs. Medicaid covers around 31 million children, while CHIP covers some 5.3 million children. We could cover even more children by eliminating needless costs.
The Key Strategy: Minimize Non-Benefit Costs
Proposals to reduce health care costs often focus on paring provider services but largely ignore avoidable expenditures, such as what we spend to restrict eligibility to those who meet prescribed income and asset limits. In addition to Medicaid and CHIP, other public programs -- such as well-infant clinics and other publicly-funded health plans -- often impose differing eligibility conditions and provider compensation rates. For example, in the recent past, despite their common purposes, Massachusetts's programs for poor mothers and children had eight different formulae for eligibility and/or benefits. The comparative political power of affected parties and who was dominant in state politics at the times of each program's enactment or extension determined the generosity or tight-fistedness of the eligibility and provider payment provisions selected. Applying such variations to millions of patient claims increases non-benefit costs substantially. Simplification or, better yet, elimination of those variations, or, best yet, elimination of the requirements altogether, would reduce program costs.
Savings Would Be Substantial
A study published in 2004 found that New York State spent an average of $282 to establish the initial eligibility of each applicant for its CHIP and Medicaid programs for children. In October 2014 -- in the 44 states reporting their numbers -- there were 28,425, 834 children enrolled in Medicaid and Chip. Multiplying that average cost of determining eligibility by the number of children found to be eligible in October 2014 produces a cost of over $8 billion. And that is just for the enrollment of children participating at that particular moment in time! It does not factor in the cost investigating those found not to be eligible. Moreover, CHIP and Medicaid for kids require other expensive administrative tasks -- including, for example, periodic recertification -- but a high percentage do not seek renewal. As a result, many who seek the benefits anew require reprocessing, many of them from scratch. And, the estimate is likely low because inflation and other factors have likely increased processing costs since 2004. (The study looked at the programs New York, where costs, at least in New York City, are generally higher than elsewhere in the country.) Bottom line: Though we are unaware of any study of the cost of determining the eligibility of all children to participate in Medicaid and Chip, it unquestionably involves billions and billions of dollars -- monies that could be devoted to providing actual care.
Like Universal Free Public Education, society-wide Benefits Justify Health Care For All Children Without Eligibility Barriers and Costs
Some will argue that it is more efficient to focus resources on those with demonstrable financial need and leave it to those with adequate resources to bear the responsibility and burden for their own children. This was the critical dispute over free public education two centuries ago. All states embraced the notion that the full development of children goes beyond the children and families immediately affected but benefits all of society and thereby justifies public expenditures.
Further, financial capability can change radically and rapidly when it collides with a serious illness or accident. It is desirable to address the need for medical care when it arises without delay. That makes for better treatment, better outcomes, and lower costs.
Social Security and Medicare -- two virtually universal programs for working families -- illustrate the greater efficiency of universal programs. Social Security's non-benefit costs -- less than a penny of every dollar collected and spent -- are dramatically lower than those of their private sector counterparts. Similarly, private sector health insurance non-benefit costs are significantly higher than Medicare's even though Medicare covers a higher cost population -- the aged and people with disabilities. The reason for the greater efficiency is not hard to understand. These programs -- like our proposed Medikids -- are insurance, which is most efficient when the risk pool is as broad as possible -- in the case of Social Security and Medicare workers; in the case of Medikids, all children purchasing insurance only when personal risk factors increase -- is impossible. Only the federal government has the ability to determine that all children participate, creating the broadest risk pool possible, with no ability to select adversely. And, in the real world, targeting is likely to be unsuccessful in many cases, in any event. Income tests in the area of health care often are no real constraints because when medical need arises, ability to pay frequently declines.
And the savings would go beyond dispensing with verifying eligibility. Such an extensive program could undertake preventative measures like nationwide mass vaccination of all children. Once established, such programs might readily be extended to mothers and babies, very young children and adults, even those without kids. Single dads, too. Convenience and low -- or no -- out-of-pocket cost would encourage adult participation for preventative measures like flu vaccinations. Medicare has been funding mass flu and pneumonia vaccinations. That experience probably can facilitate the initiatives suggested here.
We're sure that our grandchildren are typical for being always adorable and frequently infectious. School is where they pick up colds, flu, a variety of communicable ailments and bring them home. Reducing that vector of illness would promote better health for the adults who teach and take care of them, other children with whom they play, their parents, grandparents with whom they visit or sometimes live, strangers on buses, subways, trains and planes -- and so on. We are describing what epidemiologists call the "herd" factor.
Medicare Should Handle Medikids; It Uses Experienced Private Insurers At Low Non-Benefit Cost, Varies Payment Scales By Locale
For half a century, the Medicare program has been a giant nationwide system that takes account of regional and local variations in cost. It knows the game. Not least, it has proven to be an efficiency champion with non-benefit costs regularly registering in the 2 to 3 percent range.
Private Insurers Administer Medicare- A Plus for Many
Further, the fact that Medicare uses private insurers to administer its policies should make it more acceptable to those who advocate a substantial role for private enterprise, while avoiding the sometimes costly conflicts of interests that private insurers have vis-à-vis patients.
One Plan for All Children Reduces Costs of Adult Coverage
Shifting all children into one plan also reduces private plan and state and local employee tabs for both care and administration attributable to covering those youngsters. Further, all public and private programs are on the prowl to fasten liability on some other plan -- for example, workers compensation or the insurers of parties to an accident. Where both parents are employed, insurers of one parent sometimes seek to charge the other parent's plan. Those efforts, whether successful or not, add to non-benefit costs without enlarging the pool of resources. With only one plan for kids, those games and their costs disappear.
Children: Society's Main Concern, Society's Future
Our society cherishes children as individuals and for their contributions to society; let's set about maximizing their health -- for the good that will do all of us. As this essay demonstrates, the nation's per capita health care costs can be reduced without eliminating desirable services. Medikids is unquestionably a win not just for children, but for everyone.