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Warning Labels for Kidcare

by Naomi Lopez
September 2, 1997

Americans have reason to be wary when the new children's health care program is praised by Senate Minority Leader Tom Daschle, South Dakota Democrat, as "the single biggest health achievement since we passed Medicaid in 1965."


The Balanced Budget Act of 1997, signed into law by the president last month, establishes a new 10-year $48 billion Child Health Assistance Program (CHAP) that provides federal matching funds to states for covering uninsured children. With only four short weeks until Oct. 1, the date when states may begin drawing federal matching funds, states soon will develop their children's health care programs. There has never been a more important time for free-market state legislators to practice what they preach. They must insure against any further government encroachment on our economic and health freedom and should make every effort to preserve health care quality and choice.

How can states best cover uninsured children? The new law allows the states to pursue a variety of options. States may expand their current Medicaid program, establish a separate state child health insurance program, offer a combination of both, or provide health care services directly, through hospitals, for example, or the public schools. This latter option deserves special attention, as the infrastructure for socializing medicine through the public school system is already well entrenched across the nation. According to the Robert Wood Johnson Foundation affiliate Making the Grades March 1997 report, there are more than 900 school-based health centers operating in all but seven states around the country.

Irwin Redlener, president of the New York-based Children's Health Fund revealed his vision for children's health when he told the Bureau of National Affairs, "There are elementary schools everywhere in this country; theoretically we could blanket this country with school-based health services and concentrate on the underserved areas." He added that, "School health care used to function in a vacuum. But now the functions have changed, they are providing counseling, dealing with psychosocial problems, not just bruises and headaches." While this vision may seem efficient, the result will be disastrous. It would remove parents from their children's health, limit physician choice and compromise health care quality, at taxpayers' expense.

The implications of such a system reach well beyond compromising both economic freedom and health quality. This system also threatens individual health privacy, parental rights, and educational choice. According to Sue Blevins, president of the Institute for Health Freedom, "Any state legislator who helps develop school-based health care programs is clearly working toward the goal of socialism." One has to wonder why the same public school systems that fail to educate America's children should be permitted to expand their mission to include medical and psychological treatment of children's health needs.

Even if the school-based programs are not immediately established in every area, there will be a steady and constant pressure to move into the government-sponsored program over time. According to the Congressional Budget Office, as many as half of the program recipients could be lured from private insurance into the government program. As has happened with other government health programs such as Medicare and Medicaid, this "temporary" program that is generally available to children in families having incomes up to 200 percent of the poverty level, will probably not be scaled down or eliminated after the 10-year expiration. If history is any lesson, the opposite will occur: The program's eligibility guidelines will be expanded, additional minimum required benefits will be added, and the program's costs will skyrocket.

If school-based health programs are not the answer, state legislators might be tempted to provide free health care directly through hospitals or HMOs. But according to Harvard health care economist Joseph Newhouse and the Insurance Experiment Group, free health care is not synonymous with good health. Their findings were based on a comprehensive, national health insurance study conducted by the Rand Corp. and U.S.Office of Economic Opportunity between 1974 and 1982. Researchers found that free health care had almost no effect on the health of children. In fact, health services were overutilized. The most important influences on children's health, diet and hygiene, have nothing to do with insurance. State lawmakers can, and should, avoid the strong temptation to provide any additional direct, free medical care.

Rather than pouring resources into efforts to reduce the number of uninsured children through government-sponsored programs, we should pursue free market approaches that would remove barriers to affordable insurance and health care. Such free-market approaches include removing state-mandated insurance benefits and offerings, easing physician licensing requirements, excluding Medical Savings Account contributions from taxes, and providing vouchers for the purchase of private insurance or health services.

It is no longer enough just to hold the line at every opportunity; state lawmakers must immediately reverse this dangerous course. Government health care proponents who were defeated in the 1994 universal health insurance fight may have lost that battle, but they ware winning the war in attaining socialized medicine for the entire nation on a state-by-state basis. Nothing short of a long-term and fierce campaign based on free market principles and choice will reverse this dangerous trend.

Naomi Lopez is a research associate at the Institute for SocioEconomic Studies in White Plains, N.Y. The article appeared in The Washington Times, September 2, 1997. Copied with permission.