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Arizona Is Finally Fixing Its Massive Child Health Care Mistake

Until last week, Arizona was still the only state without a Children’s Health Insurance Program.

By Dwyer Gunn


(Photo: Ken Lund/Flickr)

Last Friday, after a false start earlier in the week, Arizona restored its State Children’s Health Insurance Program, a jointly funded program that serves the working poor (those who earn too much to qualify for Medicaid). Arizona froze enrollment in the program in 2010, citing recessionary budget concerns. Arizona’s decision is a smart one, both for economic reasons — though SCHIP is state-administered, it receives substantial levels of federal funding — and because the evidence clearly indicates that low-income children, their families, and the local economy benefit tremendously from access to health insurance.*

According to a report released last year by the Center for Children and Families at Georgetown University, 10 percent of Arizona’s children are uninsured. That’s approximately 160,000 kids. Only two other states (Alaska and Texas) have a higher percentage of uninsured children, and Arizona’s dismal ranking is due in large part to its failure to participate in SCHIP in recent years.

The recent effort to re-start the state’s program was inspired by a Congressional decision last year that substantially increased the federal funding match rate, and meant that Arizona would be eligible for full federal reimbursement of any money spent on the program. The Republican-controlled Arizona House overwhelmingly voted in favor of restoring the program, but the president of the state senate, Andy Biggs, had refused to allow a vote on the proposed change. Lawmakers reached a compromise attaching the provision to a bill on school vouchers for disabled students, and Biggs allowed a Senate vote on the measure on Friday — 11 Democratic and five Republican state senators voted in favor of the measure, although conservative politicians in the state continued to express their opposition.

Biggs and other conservative senators were reportedly concerned about possible future decreases in federal funding.

“The national debt is at an all-time high, the federal government is still engaging in massive spending, and KidsCare is one of the examples of a program that they have no revenue to pay for,” Republican State Senator John Kavanagh told the New York Times. “We don’t want our children and grandchildren to foot the bill.”

The evidence clearly indicates that low-income children, their families, and the local economy benefit tremendously from access to health insurance.

A substantial body of economic evidence suggests these concerns may be misplaced. Perhaps not surprisingly, researchers have found that expansions in public health insurance coverage reduce infant and child mortality, improve other health outcomes, and boost the overall financial stability of eligible families (itself always a boon for children). But researchers have found that increasing access to health insurance in childhood also improves the long-term economic and education outcomes of low-income children, as well as their ability to pay taxes later in life.

In the 1980s and ’90s, both the Medicaid and SCHIP programs were expanded, and several papers published in the last few years have shed light on the long-term outcomes of those expansions.In a working paper released in 2014 by the National Bureau of Economic Research, researchers studied how the expansions impacted the education outcomes of low-income kids. They found that the expanded health insurance coverage increased the rates of high school and college completion. They also presented some evidence that eligible children were healthier as teenagers — exhibiting lower rates of risky behaviors and mental health issues, and lower body mass index measurements—factors that might have contributed to the children’s academic performance.

“Our estimates suggest that the long-run returns to providing health insurance access to children are larger than just the short-run gains in health status, and that part of the return to these expansions is a potential reduction in inequality and higher economic growth that stems from the creation of a more skilled workforce,” the researchers concluded.

So what do these long-term effects mean for the taxpayers of tomorrow, those children and grandchildren that Arizona’s lawmakers are concerned about?

It turns out that children who are healthier and better-educated grow up to be adults with higher earnings who are less likely to be dependent on government assistance. In a different NBER working paper, released in 2015, a team of researchers examined how the same Medicaid and SCHIP expansions impacted the long-term tax receipts of eligible children. They found that children who were newly eligible due to the program expansions had higher cumulative wages by the age of 28, paid more cumulative taxes, and collected less government assistance in the form of Earned Income Tax Credit payments. In fact, the researchers calculated that the government will eventually recoup “56 cents of each dollar spent on childhood Medicaid by the time these children reach age 60.”

The state’s restoration of SCHIP means that children in many of Arizona’s working poor families will now have access to medical care, which is good news for children, their families, and the taxpayers of tomorrow.



*Update — May 9, 2016: This article has been updated to reflect Arizona’s restoration of the State Children’s Health Insurance Program.