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Values Judgments: $85 Billion for AIG--How About for Kids Coverage?

By Hanh Kim Quach
Health Care Policy Coordinator
Health Access California

So I know that we're just loaning American International Group, Inc. $85 Billion (that's with a B) for two years while they sort out the mess they're in. And I know it comes from the federal governments reserve fund, not the main fund that pays for all of our programs. I get that.

And to be sure, officials are not sanguine about their decision to rescue the insurance giant. They came to it reluctantly after careful deliberation. That said, I still can't help but notice that the $85 billion that the feds are putting up to keep the gigantic insurer AIG from roiling the markets is about the same amount (actually, it's a little more) than what health and children's advocates have been asking for the past couple of years to help fund children's health insurance (SCHIP) -- and provide universal children's coverage -- that's the remaining 10 million uninsured children -- for five (5) years.

It's interesting to look at the panicked language associated with the decision to rescue the insurer. From the New York Times:

“If A.I.G. had collapsed — and been unable to pay all of its insurance claims — institutional investors around the world would have been instantly forced to reappraise the value of those securities, and that in turn would have reduced their own capital and the value of their own debt. Small investors, including anyone who owned money market funds with A.I.G. securities, could have been hurt, too. And some insurance policy holders were worried, even though they have some protections.

“It would have been a chain reaction,” said Uwe Reinhardt, a professor of economics at Princeton University. “The spillover effects could have been incredible.” [Uwe Reinhardt, by the way, is also very interesting and entertaining when speaking of health policy and economics...]

Ok. We're worried there's going to be lots of pain everywhere. Lots of people with investments aren't going to have as much anymore. Lots of people, who have been paying for insurance, on the case that their factory goes down in flames would be SOL if their factory went down in flames after AIG declared bankruptcy. It's very sad when people lose their money. I don't like losing money, ESPECIALLY when I've played by the rules. It took regulators a couple days, but the came to the table and said they said, "We have to do this. It's too important not to do."

The public is annoyed, but gets it. We don't want the economy to get any worse. We want to be number 1 again.

By contrast, the issue of whether to insure children -- with roughly the same amount of public resources (Again, I recognize it's a totally different process and comes from a totally different fund) remains a subject of intense debate. Ten million children, the majority of whom are in working families who play by the rules, need health coverage. But there is no rush to their side. I would argue that the "spillover effects" of uninsurance are just as tragic as a fallen market.

Children can't see a dentist to get cavities filled. They get abscesses and die. Children can't get to an eye doctor. They can't see the chalkboard. They get behind and frustrated in school. They can't live up to their intellectual potential. Children get asthma. They can't see a doctor. They can't get an inhaler. They miss school. They get behind. Schools lose money.

I'm not saying that money used to rescue AIG should be redirected to children's healthcare. I'm just miffed at the level of frenzy surrounding financiers, and I'm not sure why that frenzy and drive to take action is not as strong when it comes to those born to families that can't afford health insurance.

Hanh Kim Quach is the Health Care Policy Coordinator for Health Access California. Before joining the organization, she worked as a journalist for nearly 9 years covering issues in California. Health Access California is a statewide health care consumer advocacy coalition of over 200 groups. This article has also been published on the Health Access Weblog.

Posted on September 21, 2008

Comments

It is very sad that the Feds are willing to bail out huge corporations that have failed but not the children that need healthcare. Heck, just yesterday I received a letter from AIG promising me a 20.00 gas card if they could not save me money on my insurance. They can't and I probably could stick them for the card, but I would rather not take part. California State government and our Fedral Government are seriously flawed and need fixing. However the US is still the best place to live, if you have money!! Think about it when you go to the polls!!

Posted by: James at September 21, 2008 11:05 AM

The difference is...AIG will pay it back. (Also...it's not a loan, it's a line of credit. They aren't being given $85billion. Check your facts.)
You're also talking about a completely different set of circumstances. AIG can pay it's claims, if you checked your facts. The problem is with the subprime loans, not the actual insurance or annuity subsidiaries.
Check the National Association of Insurance Carriers for actual facts, rather than suppositions. www.naic.org

Posted by: Desiree at September 21, 2008 03:36 PM

The world in which we are living is so absurd that as soon as one atrocious situation comes by, it is immediately outdone by another even worse. Here is a perfect example. Yes, it is absolutely ridiculous that we can bail out AIG for $85 billion, and we "don't have" enough money for children's health care. But that was then, this is now. We are now talking about bailing out every crumbling financial institution for $700 bill. (not counting $300 bil. already spent). Why? Because too many people will suffer if we don't. So I guess sick kids just don't count, or else they don't suffer as much as banks. This is so obvious that it could be figured out by ... well, a sick child. I am nauseous. Could we at least get the government to pay for medication which will help those of us who are gagging, choking, and fainting over this whole, wretched situation? I'll take as much of it as they're willing to give me.

Posted by: Bill Rowen at September 24, 2008 04:02 PM

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