CHIP – Is it Good for Children?


What’s the best healthcare system for low-income children? The recent GOP tax reform bill extended the Children’s Health Insurance Program (CHIP) for another six years. Is this a good thing?

John C. Goodman, healthcare economist, writing in Forbes, thinks it is not.

CHIP covers roughly 9 million children. It is a government-run healthcare system administered by the states. State governments choose the benefits and dictate the prices paid to the providers. The money parents receive cannot be used to purchase private health insurance or enroll their children in an employer-sponsored plan.

This is single-payer healthcare for kids. If you follow this blog regularly, you know how I feel about single-payer healthcare systems, like Canada. If you’re not a regular reader, please see my archives under “single-payer.”

Goodman says there are two ways to insure children in low and moderate income families:

  • Offer a tax break to parents – who provide insurance for the children but leave them free to choose the type of insurance: employer plan, public program (Medicaid) or private insurance from the marketplace
  • Offer a public plan – directly funded by the government


CHIP is widely supported by the public, especially Democrats, because they believe it is the answer for universal coverage. But it was actually created by the Republican-controlled Congress of 1997 under the Clinton presidency. This bipartisan plan called CHIP was created mainly for low and moderate income families who earned too much for Medicaid eligibility.

Goodman says the problem is there was no requirement made for parents to insure their children in order to claim the tax credit. Parents may be financially better off but the children are not necessarily insured nor does this money make the economy larger.

The tax credit has been extended in the new tax reform bill from $1000 to $2000, with $1400 refundable (not based on taxes paid). But this is still not contingent upon the children receiving health insurance. Moreover, there has been no reform of CHIP. CHIP funds still cannot be used for private insurance, and Health Savings Accounts (HSAs) have not been expanded.

All of the limitations of single-payer healthcare still apply to the children, as well. Costs are controlled by delays in treatment and the government controls all treatment decisions. If it doesn’t work well for adults, why do we think it will work any better for children?

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