Read the full report | As Congress debates a dramatic expansion of the State Children’s Health Insurance Program (SCHIP), Maine’s experience shows that SCHIP expansion is unnecessary, would dramatically raise taxpayer costs for the already expensive Maine SCHIP, further raise premiums for those with private health insurance, and reduce Maine’s private sector share of personal income.
As shown in Chart 1, almost every Maine child (under age 18) has health coverage or is eligible for Medicaid/SCHIP. Of all Maine children, 16,900, 6.1 percent, are uninsured and only 7,300, 2.6 percent, are uninsured and not already eligible for retroactive Medicaid/SCHIP coverage. Three-quarters of children who become uninsured will be re-insured within a year.
Expanding Maine SCHIP to 300 percent of poverty would cost $20 million—a 60 percent increase in SCHIP spending over current levels. Additionally, evidence shows that states with SCHIP income eligibility levels at 300 percent of poverty have similar rates of uninsured children, but many more children on Medicaid/SCHIP. Put simply, SCHIP crowds-out private sector health insurance. SCHIP/Medicaid underpayment causes a 13 percent increase in private insurance premiums.
A five-year $75 billion federal SCHIP expansion, as some in Congress advocate, is not only unnecessary, but will likely result in higher Maine taxes. SCHIP expansion could mean up to a 294 percent increase in FY2006 Maine SCHIP spending, requiring an annual increase in state spending of $25 million. Such a state spending increase will further erode Maine’s private sector share of personal income to 65.3 percent in 2013 from 66.1 percent in 2006 (latest year of actual data).
Policy Recommendations for Maine
• Do not expand SCHIP income eligibility beyond the current 200 percent of poverty, despite any increase in federal SCHIP funds.
• Allow child-only individual health insurance plans to be sold on a non-guaranteed issue basis, such as those available in Washington, D.C. Additionally, these plans should not be community-rated with adult individual health plans.
• Institute monthly premiums at four percent of family income for all Medicaid/SCHIP recipients (children and parents) earning more than 150 percent of poverty.
• Simplify SCHIP income eligibility. Make $42,500 the eligibility level for all Maine families, regardless of family size.
• Educate people about private health insurance availability, its costs, and facilitate enrollment in private plans if the families so desire, as part of any Medicaid/SCHIP outreach.