Asbury Park Press

Health Coverage For All Kids Makes Fiscal Sense

Asbury Park Press — Sunday, June 8, 2008


New Jersey is at a crossroad. The Legislature has before it a measure under which the state would mandate, and make available, quality, comprehensive and affordable health coverage for all children as the first phase of a larger plan to provide health care for all.

No one is disagreeing with the need. There are 255,000 children in New Jersey without health insurance. A year ago we at New Jersey Policy Perspective issued a report showing the state ranked in the bottom 10 for insuring children. The Commonwealth Fund recently came to the same conclusion.

The weakening economy makes this issue even more urgent. Polling shows that next to the price of gasoline and getting a good-paying job the public reports its most serious financial concerns involve paying for medical care and health insurance. New Jerseyans have said they are more worried about paying their health bills than they are a terrorist attack. This is why the Legislature, before it leaves Trenton for the summer, must provide some relief to struggling working families.

The stumbling block, as is often the case, is money. Some feel New Jersey can't afford the price tag for insuring all children: $11 million the first year and $68 million by the third year under a bill introduced by Sens. Joseph Vitale, D-Middlesex, and Robert W. Singer, R-Ocean, and a companion bill sponsored by Assemblyman Neil M. Cohen, D-Union. It would be shortsighted, however, not to make this investment. And as compelling as the humanitarian reasons are, there also is a strong economic case to be made for passing this legislation.

Several factors combined show that insuring kids would immediately benefit the state's economy when it needs it the most, and will more than pay for itself.

It will result in a major increase in federal funding. Investing in FamilyCare is one of the best deals around: for every million dollars the state puts in, the federal government will match almost $2 million. Also, by spending more federal funds this year, New Jersey will increase its federal funding for the next five years. That is because the federal legislation will be renewed next year and each state's annual funding will be mostly determined based on prior expenditures. It's a frequent complaint that New Jersey gets back few of the tax dollars it sends to Washington. Here is a good way to get a positive return.

It could avoid a loss in revenues. A recent NJPP report estimated that New Jersey will lose more than $200 million in federal funds over five years starting this summer. New rules from the Bush administration won't let the state continue to serve moderate-income kids in FamilyCare unless it enrolls many more low-income children. While the rules are unrealistic and there is strong bipartisan opposition to them in New Jersey, the Legislature should prepare for the possibility they will stick, by increasing enrollment to avoid a much greater loss in federal funds.

It is one of the most effective ways to stimulate the state and local economies. Federal funds have what economists call a "multiplier effect," showing the impact money coming from outside a state has on that state's spending and job creation. Every $1 million in state funds invested in FamilyCare will generate more than $4 million in business activity and $1.5 million in wages. Also, expanding health coverage for the uninsured will permanently reduce charity costs for hospitals which could help slow the trend of hospital closings and staff layoffs that threaten local economies.

It can be done with surplus state funds. Medicaid and FamilyCare had a $180 million surplus this year in state funds, which is far greater than what is needed for this bill. The surplus was generated because the state was successful in fighting cutbacks in Washington and because many families in New Jersey did not know about the programs due to elimination of funds for outreach by the state. It makes sense to use a portion of that surplus to provide affordable health coverage for families that should have been covered in the first place.

It could attract more businesses to New Jersey. Small businesses are rapidly being priced out of the insurance market. The self-employed are abandoning their enterprises to work for large corporations that have health insurance and many businesses are having difficulty competing with those in countries where health insurance is the government's responsibility. Providing a more rational, balanced system of funding health coverage could create an incentive for employers to locate in New Jersey.

It is a financial investment in the state's future. If New Jersey provides the preventive health services children need now, parents will end up needing to take off less time from work. That will result in a healthier, more productive state that can better compete in the 21st century.

When all of this is considered, the question changes from "can we afford to do this?" to "can we afford not to?"

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