Sure enough, as Jonathan Gruber of MIT and Kosali Simon of Cornell demonstrated in a recent paper for the National Bureau of Economic Research, six of every ten families enrolled in SCHIP in recent years already had private health insurance, meaning that subsidized insurance was crowding out private insurance. As Michael Cannon, director of health policy studies at the libertarian Cato Institute put it to us, "Only in government is a program deemed to 'work' when it covers four uninsured children for the price of ten."
The other fallacy embodied in SCHIP (and other programs) is that providing health insurance is the key to improving the health of poor and near-poor children. Helen Levy of the University of Michigan and David [Meltzer] of the University of Chicago medical school have explored extensively the fact that improving health is more complex than generally acknowledged. It turns out that targeted programs, policies that lead to increased incomes and even improved education offer more bang for the buck than providing insurance.
Given all this, it is not difficult to imagine that the real reason to expand SCHIP is to crowd out private health insurance, and when families are faced with fewer and less affordable choices, they'll opt for a government-run or "single-payer" system. As P.J. O'Rourke once warned us, however, "If you think health care is expensive now, wait until it's free."
I would say that increasing incomes, improving education, or targeted health programs may be more cost-effective than expanding access to health insurance. No one really knows, which makes adopting a one-approach-fits-all strategy like SCHIP rather foolish.
I think it's time to induct the Orange County Register's editorial page into the Anti-Universal Coverage Club.