"Crowd-Out" Is Not the Same As Voluntarily Dropping Private Health Insurance for Public Program Coverage

Publication Date: September 2007

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Leighton Ku

Research Area: Health

Keywords: Health insurance; Federal budget; Economic projections

Type: Report

Abstract:

The phenomenon of crowd-out related to SCHIP and Medicaid is widely misunderstood. Many people assume that CBO’s estimate of the bipartisan agreement means that the families of 2 million children who currently have private coverage would voluntarily drop that coverage for their children and enroll the children in SCHIP or Medicaid instead. As CBO director Peter Orszag has explained, this is not correct. Some who cite the CBO crowd-out estimates misuse them, contending that all of the children included in CBO’s crowd-out estimate are children who would voluntarily drop existing private health insurance to join SCHIP or Medicaid. At the point that they would enroll in SCHIP or Medicaid, however, many of the children cited in the CBO crowd-out estimate would be uninsured, and they often would remain uninsured for some period of time unless they enrolled in public coverage.