News: SCHIP expansion

The State Children's Health Insurance Program (SCHIP) was originally set up as a stop gap to cover children in families that made too much to be covered under medicaid programs, but presumably, not enough to afford health insurance. Currently, the U.S. Senate is getting ready to consider a bill passed by the House that would expand SCHIP after provisions to protect private insurance companies were removed.

At issue is the concern that public insurance "crowds" out private insurance. Several studies conclude that the effect of this crowding leads to more expensive insurance for those in the private market. Here is the reference to one such study for which I couldn't find an online source: David M. Cutler and Jonathan Gruber, "Does Public Insurance Crowd-out Private Insurance?" Quarterly Journal of Economics, Vol. 111, No. 2 (May 1996), pp. 391-430.

In my opinion, this represents a dangerous trend that will be nearly impossible to undo. Generally, this sudden rush to move private business into the public sector saps vital market energy from the productive segments of our economy--all at a time when our economy needs all the energy it can get. Click here for some solid analysis of the SCHIP expansion by the Heritage Foundation.

Dr. Gooch