Revisiting Crowd-Out

Publication Date:

Publisher:

Author(s): L.A. Blewett; K.T. Call

Research Area: Health

Type: Report

Abstract:

Public programs such as Medicaid and SCHIP are designed to provide affordable health insurance to low-income individuals and families. One concern with these programs is that they might unduly displace or "crowd-out" private insurance. Recent policy discussions on SCHIP reauthorization have focused attention on how to limit crowd-out, especially as states expand eligibility beyond low-income children.



This brief updates a previous Research Synthesis on crowd-out, reviewing recent findings on the size of crowd-out, the effectiveness of anti-crowd-out measures and the trade-offs policy-makers face.



Key Findings:



* Some level of crowd-out will always occur in public program expansions. The potential for crowd-out is greater for programs enrolling higher-income individuals or families.
* Measures to reduce crowd-out (waiting periods and premiums) discourage the uninsured as well as the privately insured from enrolling in public programs. This is a clear issue for the nation's 8.7 million uninsured children, 69 percent of whom are eligible for public coverage.
* While discouraging enrollment in public programs, anti-crowd-out measures have not been effective in increasing private coverage. Providing incentives so that low-wage workers can purchase affordable coverage may be a more effective way to stem the erosion of private insurance.