Like the hottest New York fashion designers, Washington
politicians have decided that the "in" issue this political season
will be "KidCare," providing health insurance for uninsured
children. But rather than examining this issue from medical or
economic approaches, the issue will likely be addressed politically.
KidCare proponents want to force members of Congress to vote on the
emotionally charged question, "Are you for or against health
insurance for children?" As one union official put it, "We want to
use KidCare the way we used Medicare last year." The media should
not get caught in that trap. They should start by asking some
Is there an uninsured children "crisis"?
The catalyst for KidCare is the supposed explosion in the number
of children lacking health insurance and, therefore, presumably
receiving inadequate care. However, in reality, the percentage of
uninsured children rose less than one percent from 1990 to 1995,
from 13 percent to 13.8 percent -- hardly an explosion. Of the ten
million children who lack health insurance, three million are
eligible for, but not participating in, Medicaid, the federal/state
health insurance program that covers children of families whose
incomes fall below 130 percent of the poverty line. It is estimated
that another 1.5 million uninsured children live in households with
incomes over $40,000 per year. Most of these families simply prefer
paying their children's health care expenses out-of-pocket. Over
half of all these uninsured Americans go without insurance for less
than six months.
Furthermore, the low cost of child-only health care policies
indicates that many families who do not insure their children have
decided to spend their money in other areas. A recent survey found
that child-only policies cost about $100 per month, with some as low
as $50 per month.
Does a lack of insurance mean no health care?
Lack of health insurance does not necessarily preclude children
from obtaining health care. Federal, state, and local governments
operate countless programs to promote health. Health services for
poor children are specifically targeted by dozens of those programs,
including the Maternal and Child Health Services Block Grant to the
States, the Residents of Public Housing Primary Care Program,
Childhood Immunization Grants, and Emergency Medical Services for
Children. Are KidCare proponents willing to exchange these
government programs for government-sponsored health insurance?
In addition, private organizations, such as the Shriners, operate
hospitals to care for seriously ill children -- at no cost to their
families. Doctors and private hospitals often donate services to
families in need.
What is the real solution?
The answer for uninsured children -- indeed for uninsured
Americans of all ages -- lies not in a massive and expensive new
federal intrusion into the health care system, but in changing the
tax treatment of health insurance. Currently, employer-provided
health care is purchased with tax-free dollars, while workers who
purchase health insurance on their own must do so with after-tax
dollars. That difference in tax treatment creates a disparity that
effectively doubles the cost of health insurance for people who must
purchase their own. For example, a small business might purchase
each employee a $4,000 health insurance policy using tax-free
dollars. A person working for a small business that offers no health
insurance would have to earn over $8,000 before taxes to pay for the
same $4,000 policy. As a result, Americans have been increasingly
driven to pay for their health care through third-party insurers and
to purchase insurance through their employers. That, in turn, has
led to rising health care costs and made it harder for Americans
without employer-provided insurance to obtain coverage.
Congress took the first tentative step toward alleviating that
problem last year by enacting a limited pilot program of medical
savings accounts under which individuals may spend pretax dollars,
drawn from their own personal accounts, on routine health care
expenses. One of the best things Congress could do for children this
year would be to expand that program.
The media should not get caught in the trap of sensationalizing
this fabricated crisis. Rather, they should examine free-market
health care reform options that would benefit not only children, but
all Americans. Asking these three questions would be a good place to
Michael Tanner is director of health and welfare
studies and Naomi Lopez is an entitlements policy analyst with the