Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. 1. Economic and Political Factors


As the marketplace varies by region throughout the United States, it is plausible that substitution also varies based on the unique economic and political environment within each state. For example, wage and cost-of-living differences in the North and South translate into different earning power for families at 200% of poverty. States with a proclivity to more service-oriented industries are likely to have a greater percentage of workers without access to health insurance. The Healthy Kids program, situated in Florida where tourism and farming drive the marketplace, found that the majority of their participants were from families employed in service-related jobs that do not typically offer employee coverage, i.e., waitressing, landscaping, the fast food business, hotel maintenance staff, and small businesses geared toward tourism. Similarly, the RIteCare representative theorized that many of their participants come from Rhode Island's textile, jewelry, and fishing industries, which are not likely to offer coverage.

Other market conditions such as the nature of unemployment may also affect insurance levels. For example, the economy in Oregon is relatively strong which has tightened the competition for employees. This has resulted in increased benefits and improved incentives being offered by employers. In other cases, where there is less competition for labor, employers may attempt to limit costs, including benefit costs, resulting in better product pricing. Such conditions are likely to affect the nature of insurance offered by employers, and the costs to employees, especially for dependent coverage.