GAO: More study needed to see if SCHIP displaces private coverage

A new report by the U.S. Government Accountability Office (GAO) says the federal government needs to improve its efforts to determine whether the State Children’s Health Insurance Program (SCHIP), a key source of funding for Rhode Island’s RIte Care program, is substituting for private coverage, not just serving children who would otherwise be uninsured.
Congress created SCHIP to reduce the number of uninsured children in low-income families that do not qualify for Medicaid. States have flexibility in structuring their SCHIP programs, and their income eligibility limits vary.
In response to concerns about so-called “crowd-out,” when public coverage substitutes for private health insurance, Congress asked the GAO to look at the Centers for Medicare & Medicaid Services’ (CMS) and states’ efforts to gauge and, if needed, reduce that phenomenon.
In a report published last week, the GAO recommended that CMS ensure that states collect and report consistent information on the extent to which SCHIP applicants have private insurance available to them, and that they take steps to determine whether available private health insurance is affordable for SCHIP applicants.
CMS has provided guidance to states regarding crowd-out, including specific requirements for program designs it identified as being riskier, including those with higher income eligibility thresholds. But the GAO found the guidance and information-gathering by CMS to be of little help in resolving questions about the extent of the problem.
For example, the GAO said, a review of 2007 annual reports, found less than half of the 50 states and the District of Columbia provided a percentage in response to CMS’s question on the percentage of applicants who dropped private health insurance to enroll in SCHIP.
Overall, the GAO report says, CMS concurred with the agency’s findings and recommendation, but raised concerns regarding the difficulty of measuring crowd-out, particularly assessing the affordability of private coverage.
The full report is available at www.gao.gov.