Nancy J. Altman and Merton C. Bernstein
Former senior staff to the 1982-1983 National Commission on Social Security Reform in the United States Senate and Board Members of the National Academy of Social Insurance
President-elect Obama’s proposed health care reform includes a requirement of mandatory, universal, and comprehensive health care coverage for all children. No reform is more urgent, offers greater returns, or is more readily achieved at such low cost.1
We suggest that Medicare offers the readiest and least expensive platform for this advance,2 one already familiar to the nation’s health care providers, insurers, and consumers. A straightforward, universal children’s health plan is extremely efficient. Social Security, which has low administrative costs (less than 1% of outgo), demonstrates how cost effective an objective test like age is. Using Medicare’s simple and low cost machinery, rather than the myriad private and public sector programs, like SCHIP3 and Medicaid,4 will assure universal coverage while eliminating a number of costly and time consuming steps, such as processing hundreds of thousands of billings using innumerable differing formulas. Massachusetts alone, for example, has used eight different eligibility/payment formulas for similar populations. Private plans vary in coverage and procedures. Using but one formula saves effort, time, and lots of money.
Funds now applied to SCHIP and Medicaid will go farther by eliminating the costly means testing that must be done repeatedly – every thirteen weeks in the case of Medicaid. Indeed, the Urban Institute has concluded that Medicare’s administrative costs are about 4 percentage points lower than Medicaid’s.
In addition to its efficiency, a unitary, comprehensive program for children will improve health outcomes. When medical attention is needed, no one need first ascertain which program, if any, will foot the bill; patients can proceed directly to the intake nurse, without first stopping at the financial office.
Reducing the per capita cost of children’s medical care and shifting those costs to Medicare will reduce the financial stress upon families and business. Employers will find the costs of employment-based insurance reduced, as will their employees. Inclusion of children in employment-based insurance has always been a matter of convenience; consequently, it can be modified without violating principle.
Such a program will increase the nation’s productivity. By assuring timely and adequate health care to all of our children, we reduce the disruptions to family life and employment that inevitably accompany child sickness, which can be especially disruptive for single parents. Fewer sick kids mean fewer work absences by adults.
By assuming the cost of the state shares of SCHIP, Medicaid coverage for children, and similar state programs, the federal government can deliver effective assistance to state governments where they urgently need it. Expenditures for Medicaid and the health care costs of public employees have become the largest or second largest outlays by states.
We will all be better off by fully meeting the health needs of all the nation’s children in the most effective, least costly way. Providing health care to children is comparable to our national policy of providing education, free of cost, to all children. As a nation we debated and settled that policy in the 19th century. We decided as a nation that we all have a stake in the education of everyone’s children.
We must recognize children’s health and child education are as much a part of the national infrastructure as our ports, roads and bridges. Medicare provides an efficient, time-tested platform for making this goal a reality.
1In 2006, Medicaid covered more children (29.5 million) than any other beneficiary category and with the lowest per capita cost – $1,070 as compared with $1,310 for adults, $6,630 for aged, and $7,360 for blind and disabled (Congressional Budget Office fact sheet, March 6, 2007). What we propose here would lower per capita cost even further.
2Out-of-control costs are pervasive throughout both public and private health care programs. Controlling all such costs are essential to overall health care reform.
3State Children’s Health Insurance Programs, enacted in 1997, have substantially decreased the numbers of children lacking assured health care. Together, SCHIP and Medicaid have improved coverage of poor children. However, the older the youngster, the less likely such coverage is. Further, both programs are limited by income caps – typically 200% of the federal poverty level. The most dramatic element of the Massachusetts plan is that it raised the cap for subsidized assured health care to 300%. SCHIP and Medicaid coverage keeps changing; a recent study of five states, all with generous standards, found temporary but substantial coverage gaps (How Stable Is Medicaid Coverage for Children?”, Fairbrother, Emerson and Partridge, Health Affairs, March 20, 2007).
4Medicaid provides more extensive care than SCHIP. Both use federal and state funds with the federal share the larger. As with several other economic stimulus measures, this proposed shift of the state contributions would require deficit spending.