Cost and Coverage: The Impact of Implementing Various State Health Care Reform Proposals Nationally. Coverage Impact


A national premium subsidy program that includes the crowd-out provision described above would reduce the number of uninsured by approximately 15.5 million (Figure 1).  Of the 18.2 million who enroll, 15.5 would have been previously uninsured, 1.5 million would drop non-group coverage and endure 6 months “bare” before enrolling, and 1.2 would drop group (employer) coverage and endure 6 months “bare” before enrolling.  While the crowd-out provision does not entirely eliminate the phenomenon of people dropping private coverage for subsidized public coverage, these individuals make up less than 15% of the participating population.

A national premium subsidy program that does not include the crowd-out provision would result in a net reduction in the number of uninsured of only 7.5 million.  This is because employers would be more inclined to drop their insurance coverage since there is no waiting period of uninsurance required before enrolling.  As a result, while 15.5 million people who were previously uninsured will enroll in the program, 8 million people will become newly uninsured and not be eligible to enroll in the subsidy program or other public insurance programs.  Overall, it is estimated that 43 million people will participate in the program, over 22 million of whom previously had employer coverage.  Without the crowd out provision, previously insured people make up almost 64% of the participating population.

  With Crowd-Out Rules Without Crowd-Out Rules
Figure 1. Changes in Enrollment under a Voluntary Subsidy Program With and Without a Waiting Period Requirement (in millions)
Number of People who take the Subsidy (< 300% of FPL) 18. 43.0
   Previously uninsured 15.5 15.5
   Previously non-group 1.5 5.2
   Previously ESI coverage 1.2 22.3
Workers and dependents whose employer drops coverage a/ -- 39.0
   Take non-group coverage -- 27.8
   Enroll in Medicaid and SCHIP -- 3.2
   Go uninsured -- 8.0
Take up ESI coverage b/ -- --
   Currently decline ESI who take it -- --
   Firms who start offering coverage -- --
Net Reduction in uninsured 15.5 7.5
   Newly covered from Medicaid or SCHIP b/ -- --
   Newly covered people eligible for subsidy 15.5 15.5
   Newly covered people ineligible for subsidy b/ -- --
   Become uninsured from employer dropping coverage -- (8.0)

a/ Impact of insurance market reforms on employer coverage.
b/ Not applicable for these particular policy options.

Source: Lewin Group estimates using the Health Benefits simulation model (HBSM).

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