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Capitol Comment 161 – The Senate and House Kiddycare Schemes Are a Bad Deal for Kids

Parents had better put the kids to bed early this week. Otherwise, youngsters might happen across C-SPAN in time to watch the United States Senate and House of Representatives cast their most damaging votes ever against children’s health. Armed with faulty data on the status of children’s health coverage, Congress is set to spend $16 billion or more over the next five years to create a new federal “Kiddycare” program. While claiming to provide health coverage for children, Kiddycare will actually waste billions of dollars, and provide no health benefit to children.

A misguided debate. Kiddycare initiatives are Congress’ response to the supposed 10 million children without health coverage. Yet the Census Bureau reports that only 2.8 million children are chronically uninsured. The rest of those 10 million are only temporarily uninsured and regain coverage within four months.1 Moreover, the General Accounting Office estimates 2.9 million “uninsured” children are already eligible for Medicaid (and effectively covered) but do not enroll.2

Two disastrous proposals. In the budget deal with President Clinton, Congress agreed to target $16 billion toward children’s health insurance. However, the proposals drafted by the House Commerce and Senate Finance Committees are exactly the wrong approach. These new government programs will take control over children’s health care away from consumers (in this case, parents), cause hundreds of thousands of children to lose their private health coverage, waste billions of dollars and ignore the real health needs of children.

Parents know their children’s health needs better than policymakers and bureaucrats. Living on a budget, they meet their children’s most pressing needs first: a healthy diet, adequate clothing, and a clean and safe home. While health coverage can be beneficial, taxing families to provide government health coverage for children cripples parents’ ability to meet their children’s most basic health care needs. As a result, many children will be worse off with government health coverage.

House Kiddycare
Senate Kiddycare

Five-year cost $14.4 billion
$16 billion

Annual cost per child covered $7,579

Annual cost of private child coverage $2,292

Children forced out of private coverage 245,000

Control of Program Federal government must approve all plans

Budgetary Status All mandatory spending

Unfunded Mandates States must put up 20 percent of federal spending, or $2.9 billion over five years States must match federal spending at a modified Medicaid matching rate

The Congressional Budget Office (CBO) estimates the Senate Kiddycare program will reduce the number of uninsured children by 560,000, at a cost of $5,714 per child per year,3 or over twice the cost of covering a child with private insurance ($2,292).4 The CBO estimates the House Kiddycare program will reduce the number of uninsured children by 380,000, at a cost of $7,579 per child per year — over three times the cost of covering those children privately.

Worse, the CBO estimates the House and Senate programs would force 245,000 and 380,000 children (respectively) to lose their private health coverage.

Promoting children’s health means putting power in the hands of those with the most information on children’s health needs: parents. Instead of creating a wasteful new federal program that will take control away from consumers, Congress should devote the $16 billion targeted for children’s health to tax relief for families. Parents will spend those billions of dollars more wisely — and with greater benefit to America’s children — than Washington

1U.S. Census Bureau, “Dynamics of Economic Well-Being: Health Insurance Statistics, 1992 to 1993 Table 5; All Persons, by Age and Health Insurance Coverage: 1992 to 1994,”, June 25, 1996; and “Dynamics of Economic Well-Being: Health Insurance, 1992 to 1993, Table 11; Spells Without Health Insurance Coverage, by Selected Characteristics: 1991 and 1992 Panels,”, June 25, 1996.

2U.S. General Accounting Office, “Health Insurance For Children: Private Insurance Coverage Continues to Deteriorate,” GAO/HEHS-96-129, June 17, 1996, p. 3.

3Citizens for a Sound Economy calculations based on CBO estimates: total cost divided by net increase in children covered.

4Estimate is the annual cost of a typical child-only policy in the mid-South (the most expensive region), including premiums, deductible, and maximum co-payment. Source: Council for Affordable Health Insurance.