The Economic Rationale for Investing in Children: A Focus on Child Care. Did Public Health Insurance Extensions Improve Children's Utilization of Health Care?


Although it is argued above that the goal of child health policy should be to improve health rather than merely to increase the utilization of care, in some cases, improvements in health are most likely to be obtained through increases in the use of medical care. Hence, this section considers the evidence regarding the effectiveness of the public health insurance expansions in increasing the utilization of care.

The first subsection offers a brief overview of these expansions. The second section deals with the problem of "takeup." The implication of this discussion for child care policy is that a policy that was like Medicaid, in that it made some children eligible for free or reduced price child care, would presumably also fail to achieve full takeup among eligibles, and might have particularly low takeup among some groups, such as immigrants.

As in Medicaid, low takeup might be due to the transactions costs associated with establishing eligibility for means-tested programs; to lack of information about eligibility for the programs or about the benefits of the programs (problems which could be addressed via outreach); or to a lack of supply of providers in some areas or for some children, at the government mandated price. A state-sponsored universal child care program (such as the system of creches in France) would overcome many of these problems since parents would know about it; transactions costs associated with enrolling would be minimal; and supply would be assured by the state as it is for public schools.

The third subsection deals with the problem of crowd out of private health insurance by the Medicaid program. Similarly, a large-scale publicly funded child care program is likely to replace a good deal of current private spending on child care. From a social perspective, one's view of such crowdout may differ depending on whether the care crowded out is better or worse on average than the care provided by the government. This issue may be politically charged in the case of child care, since some of the care "crowded out" is likely to be mother care.