Revisiting Crowd-Out

Crowd-out occurs when the existence of public insurance causes people to shift from private to public coverage, thus stretching scarce government resources to insure those who could access private plans. This update looks at the research published since the 2004 synthesis was released. Key findings include: Some level of crowd-out will always occur with public program expansions. There is a wide range of estimates of crowd-out with lower estimates for low-income children (0 to 15%) and higher rates for higher-income children and longer-term enrollees (35% to 50%). Recent studies confirm the most common anti-crowd-out measures—waiting periods and increased public-plan premiums—discourage both the uninsured and the privately insured from enrolling in public coverage. Crowd-out is more likely when eligibility is expanded to include higher-incomes and entire families. Crowd out can occur based on employers’, as well as employees’ behaviors, but it appear the recent decline in ESI is more a result of employee take-up rather than employers dropping health benefits. Finally, there is limited research that suggests children with public coverage are better off than those with private insurance.