Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. 4. Employee Contributions


The affordability of insurance influences families' decisions to maintain or opt out of employer-sponsored insurance. The increasing amount of employee premium contributions may be encouraging families to substitute public coverage. From 1992 to 1996, the average percentage of the premium paid by workers for individual coverage increased from 17.5% to 21.7%. The percentage of the premium paid by workers for family coverage increased from 23.7% in 1992 to 32% in 1995, but dropped to 29.5% in 1996. Similarly, increases in patient cost sharing requirements may influence individual-based substitution. Although patient cost sharing has remained relatively stable for managed care plans, there have been significant increases in indemnity plans: the median maximum out-of-pocket amount for individuals increased from about $1,200 in 1994 to $1,300 in just one year and the percentage of indemnity plans with an individual out-of-pocket maximum for individuals in excess of $1,500 per year increased from 35% in 1993 to 48% in 1995.