Governor Napolitano has proposed expanding the states Medicaid program to cover children in families earning up to $60,000. This plan, however, could have serious consequences for the state.
Economists at Harvard University and the Massachusetts Institute of Technology have found public insurance programs like Medicaid crowd out private alternatives. They estimate between 50 and 75 percent of enrollment increases that resulted from expanding Medicaid came from people who left private sector insurers.
For Arizona, that means many middle class families will naturally jump to this free insurance, even if they truly can afford to pay for it on their own. In turn, the states financial liability balloons. For example, since the 1998 expansion of AHCCS eligibility to families making up to $40,000, the programs inflation adjusted spending has increased more than 100 percent.
A better option for improving access to affordable health insurance would be to allow Arizonans to choose from health insurance plans across the country. If policymakers would permit Arizonans to purchase health insurance from any state, residents could save hundreds of dollars. Just next door, the average individual premium in California is $550 lower than in Arizona. And there are many other states with lower cost options. Right now, Arizonans can choose only from local providers.
Rather than expand government health insurance, Arizona policymakers should open the marketplace to private insurance from all fifty states.
Noah Clarke is an economist with the Goldwater Institute.
-David Cutler and Jonathan Gruber: Does Public Insurance Crowd Out Private Insurance
-Council for Affordable Health Insurance: State Health Insurance Index 2006: A 50-State Comparison of the Nations Health Insurance Market
-Heritage Foundation: The Health Care Choice Act: Eliminating Barriers to Personal Freedom and Market Competition