May 11, 2007

Crowd out

The Congressional Budget Office reports here that for every 100 children enrolled in the federal-state health program for low-income children, between 25 and 50 children are taken out of private insurance by their parents because they can get a better deal from the government. Supporters of the program have said they don't care, as long as more poor kids are helped. But if the taxpayers are spending money to subsidize coverage for middle class children whose families were already buying it on their own, the question arises: is there a better use for that money, either within the health care sphere or someplace else? The numbers also suggest that any analysis of a proposed universal health plan has to look very carefully at the degree of "crowd out" that will occur as the public program displaces private insurance. The more that happens, the higher the costs are going to go.

Posted by dweintraub on May 11, 2007 1:42 PM