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Wednesday, August 18, 2004

Enrollment Caps: Cruel, but Smart Politics

Ever since the recession began, progressives have urged Bush and the Congress to increase aid to the states, both to address urgent local needs and as a pump-priming measure to stimulate the economy. Bush and the Congress, of course, have chosen to focus on tax cuts for the rich instead.

So what's been happening in the states in the meantime? A recent report from the Urban Institute says,
...States were dealing with their most serious fiscal crises since World War II. The pressures facing states were particularly acute as they enacted their fiscal 2003 budgets. Conditions were, in most states, just as severe if not worse as they prepared their fiscal 2004 budgets...
Although economic conditions have somewhat improved, states have largely used up rainy-day funds and various one-shot revenue measures (such as borrowing against tobacco settlement money). Besides raising taxes, states have been cutting higher education, aid to localities, medical programs, and laying off workers. In particular, the study notes that "In the past year, states had responded to rising Medicaid expenditures much more aggressively than they had in the past."

For example, Florida's compassionate governor Jeb Bush has been cutting medical care for poor kids:
Enrollment in [Florida's SCHIP program, Health Kids] was capped with spending limited to the appropriation...Outreach was eliminated, and a waiting list was established, which, by November 2003, had over 44,000 names.
Cutting outreach and capping enrollment seems to me particularly cynical and unfair, but politically smart. There are many fairer alternative ways to cut spending, such as increasing premiums across the board, or for those with the highest incomes. Coverage of certain medical procedures could be eliminated. Florida is doing both (no more coverage of circumcision, for example) but is aiming the largest cuts at kids poor enough to be eligible but not currently enrolled. Enrollment caps are the largest cuts possible per child affected, keeping the unlucky ones entirely out of the program.

Across the board increases in premiums affect a lot of people in a very visible way. But eliminating outreach means that many will never hear about the program in the first place, so they can hardly be upset about cuts. People are generally loss averse -- much more upset about losses than happy about gains -- so the public would probably be angrier about small cuts to everybody than they would be happy about increasing the number of kids enrolled. And since everybody only gets one vote, it's probably politically wisest to concentrate the pain on as small a group as possible.

In all, six states -- Alabama, Colorado, Florida, Maryland, Montana and Utah -- have frozen enrollment in children's health insurance programs.


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