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Colorado SB 11-213: Parents can afford higher child health plan fees

Colorado parents earning up to 250% of the Federal Poverty Level (FPL) are eligible for the tax-funded Child Health Plan Plus. Enrollment fees are $25 per year for one child, and $35 per year for two or more children. The Denver Post reports that  Senate Bill 11-213 would increase the enrollment fees for households with incomes between 205% & 250% of the FPL: $20/month for one child, $10/more for each additional child with a $50/month limit.

[article on its status]

Can parents in this income range afford this?  Data from the Bureau of Labor Statistics says yes.  As I’ve written before:

The 2009 [Bureau of Labor Statistics] Consumer Expenditure Survey data suggests that some Medicaid recipients and parents with kids in CHP+ can afford more. On average, the lowest income households, less than $5,000, spend almost $1,900 on sweets, alcohol, tobacco, and entertainment. (That’s $156 per month) Oddly, households with incomes between $5,000 and $10,000 spend less on these items – around $1,400 ($113/month).

More details: If you look at the BLS data, the average number of people in a “consumer unit,” i.e., household or family is 2, with on average half a person under 18.  Then look at the CHP+ eligibility rules for a family size of 2. The maximum income such a family can have is $3,065 per month, or about $37,000 per year.

Now look back to the BLS data, which splits households according to $10,000 income increments, and look at the spending habits for households with the bracket below $37,000 per year: $20,000 – $30,000 per year. Note that looking at spending of families in this income range underestimates the spending of higher-income CHP+ eligible families with income betweeen $30,000 and $37,000.

For this group ($20,000 – $30,000 per year.), the total spending on alcohol, tobacco, candy, and entertainment is $2,287 per year, or $191 per month.   Such households have, on average half a person under age 18, which means that about half do not have kids.  For sake of argument, say that the childless households account for, say, 3 times as much spending as those with kids.  Even in this case, the spending by households with kids is $95 per month.

(See my calculations here.)

Moreover, the Congressional Budget Office reports that 77% of children in families with incomes between two and three times the FPL have commercial (non-government) health plans.  For the lower-income bracket, between one times and twice the FPL, the rate is 50%.  The CBO report also concludes that the State Health Insurance Program (S-CHIP) crowds out private insurance:

for every 100 children who enroll as a result of SCHIP, there is a corresponding reduction in private coverage of between 25 and 50 children.

(Colorado’s “Child Health Plan Plus” is Colorado’s version of S-CHIP.)

A study co-authored by MIT economist (& past Obama Administration consultant) Jonathan Gruber estimates that SCHIP’s crowd out level is 60%. Or as Michael Cannon puts it, S-CHIP  covers “four uninsured Americans for the price of ten — a lousy deal even by government standards.”

So when people object to SB 11-213 by saying parents will drop enrollment, do they say what happens next?  Some buy insurance themselves. After all, according to the CBO, between 50% and 77% of people with incomes between 205% and 250% of the FPL already buy commercial health plans for their kids.

The enrollment fees of Senate Bill 11-218 are similar to New Hampshire’s “Healthy Kids” program, which charges monthly fee $32 for households between 185%-250% FPL). As I’ve noted before, the program’s co-pays are also higher, and more reasonable.

See also: The Citizens’ Budget by the Independence Institute, health care policy section (page 75 of pdf for CHP+).

Recent news: Last week the Denver Post reported that “Deal on Colorado children’s health care bill faces last-minute snag.”