SCHIP of State: President Obama and most of the press cheered the passage of the State Children's Health Insurance Program, but can SCHIP (pronounced "ship") stay afloat long-term?(HEALTHCARE)(Barack Obama)

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President Barack Obama said when he signed into law a new expanded version of the State Children's Health Insurance Program on February 4: "No child should be receiving his care in the emergency room in the middle of the night." Obviously, he doesn't realize that children with SCHIP coverage very often get their medical care in emergency rooms--at all times of the day, even more frequently than uninsured people do. The Heritage Foundation reported in 2007: "Data from the Centers for Disease Control (CDC) show that Medicaid and SCHIP enrollees are twice as likely as the uninsured and four times as likely as those who have private insurance to use the emergency department for non-urgent problems."

One likely reason for the heavy reliance on emergency rooms by Medicaid and SCHIP enrollees is that they are less worried about out-of-pocket expenses (they aren't required to cover many). Another is that approximately one-third of pediatric primary-care physicians will not see any new Medicaid or SCHIP patients because of the low reimbursement rate by the government, so even though the enrollees are "insured," doctors won't see them.

SCHIP is intended to publicly cover healthcare for families that make too much to be covered by Medicaid, but not enough to purchase private insurance. Its intent is used to justify the great reliance on emergency-room treatment for primary-care problems: it is deemed a necessary evil because if kids weren't getting their basic health needs met in emergency rooms, their health problems would likely get worse and lead to very serious and expensive emergency-room treatment later. This is, in fact, a primary justification for both Medicaid and SCHIP--that and the fact that children should not have to suffer for the failings of their parents.

Gobs of Money

But even if one accepts both points--and it's hard not to when one-quarter of all children in the United States obtain healthcare coverage through Medicaid and SCHIP, and that's a lot of kids to simply deprive of health coverage and much medical care--one cannot argue with the fact that Medicaid and SCHIP both cost gobs of money for the amount of services they actually provide. And they both have far-reaching consequences that will (along with Medicare), without exaggeration, functionally destroy medical care in the United States if they continue down the same path.

Behind the doom-and-gloom prognosis for medical care are cost incentives and disincentives associated with Medicaid and SCHIE Both programs pay to medical providers--doctors and hospitals--only a fraction of the actual cost of care provided, meaning these providers either suffer a loss on such care or transfer those losses to people who have private health coverage. The Child Policy Research Center, which strongly advocates for SCHIR said that "the American Academy of Pediatrics reported that Medicaid/SCHIP reimbursement rates are only 70% of Medicare rates and are even a smaller fraction of typical commercial rates."