Sunday, March 26, 2006

NJ Budget - Expanding Health Insurance for Children II

In our last installment, I noted that

Family Care has added 278,928 kids and 141,516 adults due to the enactment of the "Family Health Care Coverage Act," boosting its penetration to 25% of the total market for children's health insurance.
The Governor's budget proposes spending $5,000,000 to recruit 50,000 more children into the program. That's $100 for each and every child added.

Enlighten New Jersey and Paul Nelson of NJ Fiscal Folly have uncovered some additional facts showing that this increase will do nothing for our fiscal problems. First, in the comments on my first post, Enlighten notes a line from the Budget in Brief:
"$70 million – Medicaid and a FamilyCare shortfall caused by higher than anticipated enrollments, increased drug costs, and a shift to the General Fund of costs that are no longer supported by the Health Care Subsidy Fund."
Based on this data, we could conclude that the additional 280,000 kids cost the state at least $250 each. Spending $5,000,000 to recruit 50,000 more would thus cost the state an additional $12,500,000. for a total expenditure of $17,500,000. This is not exactly a wise choice in the eyes of the typical investment banker, but there may be more to it than that.

Fortunately, Paul Nelson found that there is more to it. He researched the legislation that caused the drastic increase in FY06 costs, and found this [emphasis mine]:
The Office of Legislative Services (OLS), which provides professional, nonpartisan staff support services to the NJ Legislature, analyzed various costs related to the NJ FamilyCare program (go to page 6 of this June 2005 Senate Budget Committee report). The OLS found that the state spends $113 per month for each child in the program. For every additional 10,000 children, the gross annual cost (paid with both state and Federal funds) would be $13.6 million. Thus, the cost of an additional 50,000 children would be $68 million per year, not $14.3 million as Corzine claims in his proposed budget.
One thing that Paul missed, is that the $14,300,000 increase is not all intended to pay for the recurring cost. As I noted above, $5,000,000 of that total is intended to support growing a losing business, and the governor has irresponsibly planned an additional $9,300,000 for an additional expense which he surely knows will be significantly larger.

Given that this expenditure cannot possibly be motivated by fiscal reasons, I can only conclude that it is being made for political ones. The far left has long been enamored with the failing single-payer health care system of Canada and other quasi-socialist states. They attempted to enact one nationwide early in the Clinton administration. I believe Governor Corzine's goal is to create such a system here in New Jersey. Why else would he be spending the taxpayers' money in an attempt to corner the health insurance market for children? He's already got 24% of the 18-and-under crowd locked in, and wants to expand his "customer" base by 10% this year.

Governor Corzine, the state is losing money on each and every person added. Children are not a loss-leader, and you can't make it up on volume. Drop your plan to take over state-wide health insurance.

Tags: New Jersey, Budget, Corzine, Health Care, Children