A U.S. Government Accountability Office director says federal regulators should do more to assess whether public children’s health coverage is substituting for private coverage.

The GAO prepared the report in response to concerns that the State Children’s Health Insurance Program might be crowding out private health insurance. SCHIP critics say crowd-out could affect the ability of the program to reduce the total number of uninsured children.

The GAO looked at the efforts of states and the Centers for Medicare & Medicaid Services, the federal agency that oversees SCHIP and Medicaid, to measure and minimize crowd-out.

“CMS did not collect certain indicators of the potential for crowd-out in SCHIP annual reports, such as the extent to which private health insurance was available and affordable to families,” James Cosgrove, GAO health care director, writes in a report prepared for Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee.

“States’ responses to CMS were inconsistent: GAO’s review of annual reports for 2007 found that less than half of the 50 states and the District of Columbia provided a percentage in response to CMS’s question on the percentage of applicants who dropped private health insurance to enroll in SCHIP,” Cosgrove writes.

GAO officials interviewed administrators in 9 states and found that 4 have been making no direct effort to measure crowd-out.

The other 5 have tried to measure crowd-out, “but they all used different methodologies to develop their estimates,” Cosgrove writes.

The GAO is recommending that CMS collect more information about whether SCHIP applicants have access to affordable private health insurance for their children.

One step CMS should take is to require states to collect such information from SCHIP applicants, and another step is to make efforts of its own to assess the availability of private health coverage, Cosgrove writes.

CMS officials are questioning how practical implementing the GAO’s suggestions would be.

“We have concerns with requiring the additional collection of information related to access and affordability,” Acting CMS Administrator Charlene Frizzera writes. “While states may ask applicants if they have access to private coverage, or if that coverage is affordable, the reliability of this data would be suspect if it were self-reported. The only way to ensure that it is reliable would be to contact the applicant’s employer. Additionally, there is no national definition of ‘affordability.’”

Developing a national affordability standard would be difficult, Frizzera writes.

A copy of the GAO report is available here.