SCHIP Will Not Improve Quality of Kids' Health Care
Continuing its effort to override President Bush's veto,
Congress wants to expand income eligibility for the State
Children's Health Insurance Program (SCHIP) into the middle class,
even though the program was designed to provide health coverage to
low-income children. That approach would end existing private
health insurance coverage for millions of children--more so as
eligibility is ratcheted up the income scale.
Overlooked in the current debate over SCHIP expansion is the
impact it would have on the quality of children's health care,
particularly among families who already have superior private
insurance coverage. Expanding SCHIP is not the same as improving
health care for America's children. In fact, SCHIP has not
performed well in terms of stable coverage, access to primary care
and preventive services, and the quality of care.
The Role of Medicaid
SCHIP was created in 1997 with the intention of providing health
insurance coverage for uninsured children in low-income families
who earned too much to qualify for Medicaid. States are given a
fairly wide degree of programmatic flexibility in deciding how
SCHIP works within their borders. Under current law, they can
expand existing Medicaid programs, set up a separate SCHIP plan, or
use a combination of the two. Nine states, plus the District of
Columbia, currently have a Medicaid expansion; 18 have a separate
plan; and 23 states have a combination of the two.
While such programmatic flexibility allows state officials to
craft particular solutions for their individual problems, it also
makes program evaluation more difficult. Although estimates of
state-level SCHIP data can be gleaned from single-state reports or
multi-state comparisons, these estimates are difficult to compare,
because programs differ substantially from state to state in terms
of eligibility levels, premiums, renewal processes, and other
Quality of Care Under SCHIP
Despite the empirical limitations described above, the available
evidence shows that SCHIP has not performed well in terms of
providing high-quality care. For example:
- Lack of Continuity in Coverage and Care. Studies that
have attempted to evaluate the coverage offered by SCHIP programs
largely rely on information from current beneficiaries. Although
millions of American children have health insurance through public,
government-sponsored programs, some 4.4 million children who are
eligible for Medicaid and an additional 1.7 million who are
eligible for SCHIP remain uninsured, indicating the inability of
the state programs to sign up all eligible children. In
fact, Medicaid-eligible children account for more than half of all
uninsured children in the United States.
While much is made of the well-documented instability of
employment-based coverage, the instability of public coverage is
often ignored. Children enrolled in SCHIP and Medicaid, for
example, often do not stay enrolled. According to a recent analysis
in Health Affairs, a prominent journal of health policy,
one-third of all uninsured children in 2006 had been enrolled in
Medicaid and SCHIP in 2005; and among those uninsured who were
eligible for government coverage in 2006, "at least 42 percent had
been enrolled in Medicaid or SCHIP the previous year."
A relatively high proportion of SCHIP enrollees drop out of the
program, disrupting their health care and adding to the
administrative burden of other health care systems, including
clinics and hospital emergency rooms. A comparative study of SCHIP
in Kansas, Oregon, New York, and Florida, for example, found
unenrollment rates of roughly 20 percent within a year of
enrollment. Another study found that 13 percent of
children enrolled in the New Jersey non-Medicaid SCHIP plans
unenrolled within 9 months, and 34 percent within 18 months.
While many health policy analysts and medical specialists bemoan
the consequences of instability and "churning" in the
employment-based market, Congress should recognize that the same
phenomenon is widespread in public programs, affecting states and
localities, health plans, health care providers, and consumers. Data
based only on current beneficiaries gives an incomplete picture of
SCHIP performance. An accurate picture of SCHIP's performance must
include the large number of children who unenroll from the program
as well as the children who are eligible but remain uninsured.
Children who have intermittent coverage have limited access to
quality care and are less likely to have a regular source of care
than those with stable health care coverage.
- Poorer Access to Care.The majority of children in the
United States receive their preventive health care from private,
primary-care pediatricians or family practitioners. It is therefore
critical to have the participation of pediatricians in private
office settings in SCHIP to ensure access to quality care. However,
a detailed 2002 study published in Pediatrics, a
professional medical journal, found state-to-state variations in
the willingness of private primary care pediatricians to accept
Medicaid patients. These variations were related to the level of
physician payment and the administrative burden involved. In
addition, only two-thirds of physicians accepted all SCHIP and
Medicaid patients, with office-based primary care pediatricians
less likely to accept patients than those in safety net settings.
Physician participation in SCHIP and Medicaid varies markedly among
states, and states with the lower quartile of Medicaid payments had
substantially lower physician participation rates.
- Greater Reliance on Hospital Emergency Rooms. Data from
the Centers for Disease Control (CDC) show that Medicaid and SCHIP
enrollees are twice as likely as the uninsured and four times as
likely as those who have private insurance to use the emergency
department for non-urgent problems. This is another indication that
access to primary care for persons in public health programs is
inadequate. Expanding SCHIP to children at higher
income levels will only add to the fiscal burden on state health
care programs, making adequate physician reimbursement even more
difficult and exacerbating the problem. This is especially true if,
as the Congressional Budget Office (CBO) predicts, a large number
of children who now have private insurance drop that coverage in
favor of public programs.
- Questionable Quality of Care.Increasing eligibility
levels for SCHIP is not the same as providing better health care to
children. Few studies have examined health outcomes for patients as
they relate to enrollment in SCHIP. Most states have reported on at
least one of four quality measures for their SCHIP programs.
However, inconsistencies in measurement and reporting remain, and
the four measures currently reported are limited in scope. While
there is a paucity of direct data, one indication of quality of
services is the level of satisfaction of recipients with the care
they receive. The level of patient and family satisfaction is
strongly correlated with the level of payment in the state program.
This is particularly troublesome for states like New Jersey, where
Medicaid fees are among the lowest in the nation and payment for
child-specific services is only 31 percent of Medicare fees.
A Better Policy
Instead of disrupting existing private health coverage for
middle-class families, Congress should help these families keep
their coverage while focusing government programs on poor children.
A sound policy would involve three elements:
- First, reauthorize SCHIP for uninsured children in
families with incomes at or below 200 percent of the federal
poverty level (FPL), or $41,300 for a family of four, while
improving outreach efforts to enroll eligible children who do not
have private health insurance coverage.
- Second, provide tax relief for middle-class families
with annual incomes between 200 percent and 300 percent of the FPL,
or $41,300 to $61,950 for a family of four, to help them to keep or
get private health insurance coverage for their children. Such a
policy would reduce churning in the private insurance market,
enhance portability of coverage, and secure greater continuity of
- Third, provide incentives for the states to find more
efficient ways of using existing federal and state funds to
increase insurance coverage. Such a policy is embodied
in The More Children, More Choices Act of 2007, sponsored by Sens.
Mel Martinez (R-FL) and George Voinovich (R-OH) in the Senate and
Reps. Marilyn Musgrave (R-CO) and Tom Price (R-GA) in the House of
The available evidence shows that SCHIP has not performed well
in terms of health care coverage, access to care, and quality of
services. Congress should be aware of the hazards of disrupting the
superior private health coverage of millions of American families
and should instead focus on helping poor families with children,
stabilizing and expanding the coverage of those who have insurance
through the private sector, and improving the quality of health
care for all children in America.
John S. O'Shea, M.D., is a practicing
physician and a former Heritage Foundation Health Policy
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Dubay, L, Guyer, J, Mann, C, Odeh, M "Medicaid
at The Ten-Year Anniversary of SCHIP: Looking Back and Moving
Forward," March/April, 2007, Health Affairs, 26 (2):
Benjamin D. Sommers, "Why Millions of Children
Eligible for Medicaid and SCIP are Uninsured: Poor Retention Versus
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Dick, A. W., R. A. Allison, S. G. Haber, C.
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for SCHIP Disenrollment.'' Health Care Financing Review
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Miller, Jane E., Gaboda, Dorothy Cantor, Joel
C. Videon, Tami M. Diaz, Yamalis "Demographics of Disenrollment
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Care for the Poor and Underserved, February 2004, 15, (1):
Berman, Steve, Dolins, Judith Tang, Suk-fong,
Yudkowsky, Beth, "Factors That Influence the Willingness of Private
Primary Care Pediatricians to Accept More Medicaid Patients,"
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Linda F. McCaig and Eric W. Nawar, "National
Hospital Ambulatory Medical Care Survey: 2004 Emergency Department
Summary," Centers for Disease Control and Prevention Advance Data
from Vital and Health Statistics No. 372, June 23, 2006, at www.cdc.gov/nchs/data/ad/ad372.pdf (May
For a detailed discussion of child health
care reform, see Stuart M. Butler, Ph.D., and Nina Owcharenko,
"SCHIP Plus a Tax Credit: A Compromise Health Insurance Plan for
Kids," Heritage Foundation WebMemoNo. 1652, October 1, 2007,
For a discussion of this approach, see Robert
E. Moffit, Ph.D., "The More Children, More Choices Act of 2007:
Middle-Class Tax Relief for Families with Kids," Heritage
Foundation WebMemo No. 1681, October 29, 2007, at www.heritage.org/Research/HealthCare/wm1681.cfm.