AG’s Child Support Insurance Scheme Passes Senate State Affairs Committee

UPDATED EDITOR’S NOTE: There has been some confusion today related to a segment at the end of this post with a quote from the CEO of the Texas Academy of Family Physicians. To clarify, the comments quoted came from the Austin American-Statesman more than a month ago and did not refer to Senator Nelson’s SB 66, which hadn’t yet been written at the time of the Statesman story. For clarity’s sake, we’ve added strikes to the confusing comments and remind readers that our quote from the Statesman was addressing the concept at issue and not SB 66.

Legislation which would create a private health insurance program for children in the state’s child support system passed out of the Senate State Affairs Committee on Monday.

The bill, SB 66 by State Sen. Jane Nelson (R-Flower Mound), is based off an idea that Texas Attorney General Greg Abbott was using to fuel speculation about his bid for Lieutenant Governor as early as January 2008. Prior to the start of the 81st Session of the Texas Legislature, Abbott dragged the idea out of mothballs and it still smelled like a moldy sock.

The version passed by the Senate State Affairs Committee is no better:

The coverage would be provided by a private health plan that the attorney general’s office selects via a competitive bidding process.

[...]

Scott McCown, executive director of the Center for Public Policy Priorities, which advocates for low- and middle-income Texans, told the panel that the program is innovative, but that it’s too early to know whether it will be helpful.

Since the bill doesn’t mandate specifically what the health plan must cover, “we don’t have a clear idea about what … we may be requiring these low-income families to purchase,” said McCown, a former state district judge.

McCown also said he was worried that the bill says that the health insurance program could cost up to 9 percent of the non-custodial parent’s income. He said 5 percent would be more reasonable.

“We’re a little concerned that going to 9 percent is asking too much of these low-income families,” McCown said.

About 1.2 million children are in the state’s child support system. Not all Texas children whose parents pay child support are in that system. The state tracks families who apply for Temporary Assistance for Needy Families and those who ask for help setting, enforcing or modifying a child support order.

Somehow, the two phrases “Attorney General” and “competitive bidding” don’t seem to match well, and that is just a snippit of what is wrong with this program.

State Rep. Garnet Coleman (D-Houston) remains correct:

Coleman compared the proposal — which Abbott says is designed to provide private coverage to the 200,000 uninsured children in the system — to the Texas Healthy Kids Corporation, a public-private program mandated by the Legislature in 1997. That program dissolved not long after the start of the Children’s Health Insurance Program in 2000.

Texas Healthy Kids was not just for families in the child support system. But Coleman said the program relied financially on the participation of noncustodial parents who received court orders to pay for their children’s health care coverage.

The program didn’t work because many of the noncustodial parents couldn’t afford to pay for the health insurance, Coleman said, adding that Abbott’s proposal, which would require parents to buy insurance, is also unlikely to work.

Under Abbott’s plan, a private insurance company would contract with the state, and a court could order parents to buy the private insurance based on their ability to pay.

“It sounds very good and I applaud the attorney general for thinking about it,” Coleman said. “However, our experience was that, unfortunately, it did not work.”

Abbott’s proposal would require legislative action. The attorney general said Wednesday that the idea “addresses a pressing need for children in Texas in a way that keeps a watchful eye on taxpayer dollars.”

But Tom Banning, CEO of the Texas Academy of Family Physicians, called the plan “a good political soundbite lacking substance.”

“With premiums rising faster than the rate of inflation, parents don’t have the money to purchase health insurance, and a court order isn’t going to change that,” he said.

Coleman put it this way: “You can’t get blood from a turnip.”