CHIPPING away at uninsurance

The Arkansas Times named its person of the year all the Arkansans who are newly insured. There was one vignette that stuck with me:

The average high school senior isn’t too worried about insurance coverage, but for Fairfield Bay native Crystal Bles, it was a priority.

When Bles began studying welding last fall at the University of Arkansas Community College at Morrilton, she was on the verge of aging out of ARKids, the state’s program covering low- to middle-income children. (ARKids is mostly paid for with federal dollars, but the funding streams are distinct from those fueling Obamacare.) While many young adults now rely on their parents’ insurance to stay covered until age 26 — thanks to another change created by the Affordable Care Act — Bles’ parents were uninsured….

She “most definitely” knew she needed coverage, she said, given her chosen area of study. “In welding, people tend to get injured.”…

For young Arkansans like Bles, the private option has already become a fact of life [my emphasis]— a vital government service, funded by taxpayers and provided for taxpayers, just like public schools and food stamps, highways and Pell grants, law enforcement and libraries.

There have been numerous liberal attempts to slowly build towards single payer and universal coverage (two very distinct issues that don’t need to relate) by proposals to lower Medicare eligibility age.  The theory of change is that taking the most expensive people off of the private market (60 to 64.99 year olds) and moving them into Medicare with the lower reimbursement rate will save money systemically and not face significant opposition as employers and private insurers will want to dump their most expensive covered lives to someone else. From a system point of view, the biggest problem with American healthcare is pricing of services which leads to massive access problems as lots of people can’t afford to get good care.  So anything that shifts people from the most expensive part of the covered system (employer sponsored insurance) to a less expensive part (Medicare) is a big win.  The final part of the theory of change is that the change to Medicare for 60 year old individuals works well and is not too scary so the next slice of the salami can be pursued for 55 year olds and then repeat until their is universal coverage through a single payer scheme.

What if we are trying to cut the salami from the wrong end?

Kids are adorable, sympathetic and, after they start crawling, dirt cheap to cover.  Kids use lots of low cost services but they are unlikely to need high cost services.

What if  the Childrens’ Health Insurance Program (CHIP) was expanded to be the most probable insurance  to every kid between the ages of birth and nineteen?

This would mean that every kid would be covered.  Kids who are currently covered by their parents’/guardians’ employer sponsored coverage would be able to buy in at cost.  Kids who on Medicare would be shifted over to CHIP.  Kids who are on Medicaid would be shifted over to CHIP.  Kids who are not covered would be automatically enrolled into CHIP with the assumption that CHIP is the pediatric payer of last resort.  Every kid would be covered or be presumed to be covered.  And it would create specialized knowledge on how to pay for care for kids.

It would be universal coverage of kids via multiple payers.  Furthermore, CHIP insurance is good.  It has an actuarial value in the high 90’s which is far better than most employer sponsored plans.

Politically, it may be an easier lift because insuring a kid is far cheaper than bringing the cost of healthcare of a 64 year old onto the books.  On Exchange policies, a 64 year old is 4.5 times as expensive to cover as a 19 year old.  The 3:1 age banding applies to 21-64.  A 19 year old is more expensive than a 12 year old.  Additionally, kids are innocent and the fun game of assigning people to deserving and undeserving of assistance is played at a far lower intensity when kids are involved.  They don’t get to choose their parents.

This plan would have three major goals.  The first is to get every kid covered with usable insurance.  We’re almost there, but there are kids who are still uninsured and even more kids who are significantly underinsured.

The second is to continue to bend the cost curve. US employer sponsored insurance tends to pay providers the most per unit of service.  Medicare and low cost Exchange programs pay significantly less than standard commercial rates.  CHIP varies by state but CHIP tends to pay roughly Medicare to slightly below Medicare rates.  Medicaid pays significantly less than Medicare.  Moving kids from Medicaid to CHIP will lead to higher public expenditures as providers will see higher rates.  However, this should open up networks and make appointment availability a much lower concern for kids on CHIP than if they were on Medicaid.  The big system savings would be the reduction of provider payment rates from kids who are currently covered by employer sponsored insurance.  It would shift a significant number of individuals from plans that pay 150% or 200% of Medicare rates to plans that pay 95% or 105% of Medicare rates.  Employer groups would likely get on board with this as it reduces their covered life head count and their direct costs even if they are paying 100% of the cost of coverage for their employees’ kids.  This would have a nice secondary effect of reducing job lock.  Employers usually like job lock, but it is not a good thing from a social perspective.

The third goal is subtle.  It is to establish long term facts on the ground.  Teenagers would have always have been covered and insured without their parents worrying too much about taking them to the doctors.  As they become young adults would just assume that they should have health insurance and that they should be covered at a reasonably price.  As successive cohorts grow up with universal coverage and are thrown into the mess of the American healthcare system in their mid to late 20s after they age off of their parents ESI, they’ll be pissed and seek to get back what they had.  And that is a powerful political force for universal coverage.






25 replies
  1. 1
    Baud says:

    What kids want is to buy insurance across state lines.

  2. 2
    Baud says:

    Oh, and stop trying to undercut Medicare for All.

  3. 3
    Baud says:

    Kids should be able to put away some of their income into tax-free health savings plans.

  4. 4
    Baud says:

    Couldn’t we just give the kids chickens so they can barter for their healthcare like everyone else?

  5. 5
    NorthLeft12 says:

    I work in a Chemical Plant with proper safety oversight and training. Welders are not allowed to do much of anything until everything is made safe for them, and they are monitored pretty closely. In my +35 years of experience in the industry, a competent and conscientious welder is very unlikely to get injured. Far more likely to get injured at home or driving.
    Now if you are incompetent, careless, and work in an environment where safety precautions are considered a waste of time and an infringement on your freedumb……yeah, you could have a problem.

    Last thought; of course she should have medical coverage. Good Dog man! I’m Canadian and take that for granted. I also take for granted that the company I work for will place a high priority on workplace safety, not only for my sake, but for the sake of their bottom line.

  6. 6
    Mike says:

    Richard, I don’t know if the idea is uniquely your own but it’s a great one. Thanks for that and how do we get others advocating for it?

  7. 7
    FlipYrWhig says:

    This sounds like an excellent idea. What would it cost?

  8. 8

    @FlipYrWhig: @Mike:

    Not sure on cost. On net, it is a system money saver as there is more money spent on ESI where provider reimbursement would get cut than on Medicaid where provider payment rates would increase by a smaller increment.

    There are about 75 million kids in the US. 31 million are already covered by Medicaid/CHIP. close to 38 million are covered by ESI or individual market plans.

    Assuming ESI would pay full cost, the net cost would be covering the 5+ million kids who are not covered. at $150PMPM that is roughly $10 billion net new dollars per year. Total spend on SUPER CHIP would be $110 billion but 40% is already spent on CHIP/MEDICAID, 50% would be ESI contributions, and 10% would be new spending.

    From a social POV, net costs (mainly savings from ESI rates getting chopped to CHIP rates) would be a system savings of 10 to 15 billion per year. It is at worst a system wide break even and more likely a system wide savings even as all kids are covered.

  9. 9

    @Mike: Let’s popularize it first, get it explained and then figure out where the leverage points are… I’ll think about that after the 2nd cup of coffee this morning

  10. 10
    chris m says:

    “The theory of change is that taking the most expensive people off of the private market (60 to 64.99 year olds) and moving them into Medicare with the lower reimbursement rate will save money systemically and not face significant opposition as employers and private insurers will want to dump their most expensive covered lives to someone else.”

    And a very sound theory too. Unfortunately our allegedly liberal President suggested doing exactly the opposite by raising the Medicare eligibility age. I would not at all be suprised to see Hillary embrace this same idiocy in the name of entitlement reform.

  11. 11

    @chris m: The same President also tried to drop Medicare buy-in to 55, and that got vetoed by Lieberman (Douche-CT) reality is complex

  12. 12
    patrick II says:

    Politically, it may be an easier lift because insuring a kid is far cheaper than bringing the cost of healthcare of a 64 year old onto the books.

    I like everything about your plan, but, for exactly the opposite reason you think it would be, I am not sure it is an easier lift politically. Too much profit opportunity loss for private insurance companies by not letting them insure cheap costs. Chip is a federal program (though like medicaid, state managed) that would take away profit opportunities from health insurance companies. And for the same reason conservative governors won’t expand medicaid (until they can make it profitable for their friends by taking it private) they won’t expand chip either. If we ever get a democratic house and senate — then yes in a split second.

  13. 13
    alan says:

    How about BOTH? A classic high-low attack!

  14. 14
    wvng says:

    @Richard Mayhew: How rude of you to remember the attempt to get Medicare buy-in to 55 and spoil a perfectly good “Obama is a republican” narrative. Facts are inconvenient.

  15. 15
    burnspbesq says:

    I’m getting a first-hand look at The World of Republican Health Insurance today: the kid, who goes to school in the U.K., needed the attention of a specialist and couldn’t wait the six weeks it would have taken to arrange through NHS.

    I have 425 reasons to hate Republicans more today than i did yesterday.

  16. 16
    Hillary Rettig says:

    @Baud: I think Richard’s idea is very smart, but your comments are why I’m strongly supporting the Bernie/Baud ticket in 2016. I’d also consider Baud/Bernie. :-)

    Although I must confess I’d dump you in heartbeat if Liz Warren signed on. Unless you could all figure out a threesome…

  17. 17
    daveNYC says:

    I think you might be over estimating how much protection that children will provide as far as deservabity (cromulent!) goes.

    Hitting the parents for having more kids than they can support and busting out the crocodile tears as they basically use the kid’s suffering as a way to teach the parents a lesson in responsibility seems like a standard core bit of the Republican playbook.

    Question: Where does dental coverage fit in this? Does CHIP cover that,a nd if so what? Because dental work always seems to be in one of two categories: pretty cheap (cleanings, the random cavity) and house payment land (braces). And good teeth is one of those things that has a huge impact all over the place. Especially if you’re a kid who has some pretty gnarly gnashers.

    This plan would be a bitch to get passed, but the slight upside is if you bound the CHIP expansion tightly to the Medicare expansion, you might be able to get the AARP and insurance companies helping out with the lobbying.

    Practically, the 2016 election is going to be about holding the line. 2020 is the one that’s going to be for all the marbles. One hopes that the DNC realizes this and will spend the next four years getting ground games in place in all the states.

  18. 18

    @daveNYC: Its more protection than extending Medicaid to 28 year olds, but not absolute protection

  19. 19
    pseudonymous in nc says:

    How about states cover antenatal, childbirth and post-natal care? No exceptions: rich, poor, the lot.

    C’mon, ‘pro-life’ governors and legislatures: money where your mouth is.

    (The one thing about healthcare that makes jaws drop in the actual developed world is that Americans receive a five-figure medical bill for having a child.)

  20. 20
    Berto says:

    @wvng:
    Next thing you know, that same Joe Lieberman will be known as the real reason Gore lost in 2000, not the fable about Ralph Nader.
    In a national election, where people were pointing out that there were no differences between the Democratic Party and the GOP, Gore chose Joe Lieberman to be his VP. Gore deserved to lose for trolling the electorate.

  21. 21
    joel hanes says:

    Kids are adorable, sympathetic and, after they start crawling, dirt cheap to cover. Kids use lots of low cost services but they are unlikely to need high cost services.

    But the most important reason to invest our national health-insurance budget in kids is that it would have a high social-good payout for the subsequent sixty or seventy years. If you get ’em healthy and get them good preventive care, vaccinations, dentistry, nip inflammation in the bud, then they’re healthier (and happier, and more productive, and more attractive, and more successful) for the rest of their lives.

  22. 22
    jl says:

    Question for RM: from my anecdotal experience and several studies, the ‘patch-em up and pass-em off to Medicare’ is a real effect for older adults.

    If you lowered Medical eligibility to 60 there would be fewer chronically ill older adults who receive adequate care on paper, but not in real live. These people would not enter Medicare as wrecks due to private care that is not efficient in the long run. Do you think there is enough saving there to help with that approach to Medicare-for-all.

    I’m not criticizing your approach, which I find intriguing and want to subscribe to the newsletter, but why not slice away at the salami from both ends?

  23. 23
    Miss Bianca says:

    I love this idea. Smart, compassionate, and good politics. Plus, if you’re talking long game, it makes sense to invest in a generation of kids growing up being able to access health care.

  24. 24

    […] Over at Balloon-Juice, Richard Mayhew has another great “automatic” idea, at least when it comes to covering children: expanding Childrens’ Health Insurance Program (CHIP) to essentially cover every kid. […]

  25. 25

    […] Over at Balloon-Juice, Richard Mayhew has another great “automatic” idea, at least when it comes to covering children: expanding Childrens’ Health Insurance Program (CHIP) to essentially cover every kid. […]

Trackbacks & Pingbacks

  1. […] Over at Balloon-Juice, Richard Mayhew has another great “automatic” idea, at least when it comes to covering children: expanding Childrens’ Health Insurance Program (CHIP) to essentially cover every kid. […]

  2. […] Over at Balloon-Juice, Richard Mayhew has another great “automatic” idea, at least when it comes to covering children: expanding Childrens’ Health Insurance Program (CHIP) to essentially cover every kid. […]

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