The Ohio State University College of Public Health—Division of Health Services Management and Policy
Background: Health insurance crowd-out occurs when individuals enrolled in a public health insurance plan would have enrolled in a private plan but for the public option. The crowding-out of private insurance is often used to criticize state Medicaid and Children’s Health Insurance Program (CHIP) expansion, as already insured children move their coverage to the states at the public’s expense. A difficulty in discussing crowd-out comes from inconsistent estimates. Previous work focusing on the expansion of public programs has led to estimates ranging from 0% to 50% of the children newly insured on public plans being crowded-out.
Methods: We apply a regression discontinuity approach to estimate how many children near the state Medicaid/CHIP threshold are crowded-out of private insurance. This approach allows estimates of crowd-out near the eligibility threshold independent of any expansion. Data from the American Community Survey’s yearly survey of American households allows for state-level estimates of crowd-out.
Results: We find considerable heterogeneity in the crowd-out that occurs in each state, ranging from no crowd-out to over 18% in states with similar eligibility thresholds. Additionally, we found that as state eligibility thresholds increase, children are less likely to be crowded-out. Discussion: This research indicates that national estimates of crowd-out are inappropriate, as state-specific Medicaid and CHIP programs have state-specific crowd-out. Additionally, it indicates that wealthier families that are eligible for public insurance are less likely to switch from private to public coverage than families earning less. Future work should identify reasons for the heterogeneity among states.
Keywords: Children's Health Insurance Program, CHIP, SCHIP, Health Care Financing, Insurance, Premiums, Health Policy, Politics, Law, Regulation, Medicaid, Crowd-Out