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How the Colorado Child Health Plan could save taxpayers $16 million

Colorado’s implementation of the State Children’s Health Insurance Program is the Children’s Health Benefit Plan (a.k.a. Children’s Health Plan Plus). It can save Colorado taxpayers millions of dollars by increasing enrollment fees to be comparable to those in other states.

In the Independent Institute’s Citizen’s Budget Linda Gorman writes:

Though state control over Medicaid co-pays is limited, the state has considerable control over the enrollment fees and co-pays for the [Children’s Basic Health Plan]. As table 3 shows, CBHP enrollment fees are much lower than those in some other states.

Children's Health Plan Plus, Colorado

[table source]

With a FY 2008-09 CBHP caseload of roughly 61,582 children, simply collecting an additional $35 per child per year would increase state revenues by $2.1 million. Switching to the New Hampshire formula of $25 per child per month would generate more than $18 million a year—a net gain of more than $16 million assuming that every CBHP enrollee already pays $25 a year. CBHP enrollment fees also should be indexed for inflation. Adjusted for inflation, a $35 fee in 1999 would be worth almost $46 in 2010.

To put the $16 million perspective, this is $5.33 per non-elderly Coloradan with a “private” health plan (3 million people, according to Kaiser Family Foundation.)

Increase enrollment fees will also reduce crowd out. That is, when parents stop buying private insurance for their kids and enroll them in a government plan largely paid for by taxpayers.  The National Bureau of Economic Research estimates that “for every 100 children who are enrolled in public insurance, 60 children lose private insurance.”  (See this post and video: People who can buy insurance but don’t)

Quoting Linda Gorman in the Citizen’s Budget:

Though state officials claim that health insurance is unaffordable, Bundorf and Pauly used various definitions of affordability to conclude that “while 36 percent of individuals in families with income of two times poverty level or less are uninsured, 44 percent have coverage.” With incomes at or above 175 percent of the poverty line, 51 percent of the uninsured could have afforded coverage.”

State officials could prevent at least some crowd-out by making the $35 CBHP enrollment fee more realistic. In 2009, the average employee cost for a family policy in an employer-based group health plan was $3,515. The average annual employee cost for health insurance without dependent coverage was $779.15 The annual premium for a family health insurance policy in Colorado’s individual market was $5,939. The average annual premium for coverage of a single adult was $2,777.[ref]

Read the health care policy section of the Citizen’s Budget.