Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. B. Despite past difficulties in quantifying the substitution effect, states must evaluate the nature, scope, and levels of substitution as required under Title XXI.


States are required under Title XXI to evaluate the effectiveness of their efforts to limit substitution. States must design and implement plans to evaluate how well their programs are reducing the number of uninsured children without substituting for private coverage. With any assessment it is necessary to identify the actual impact of substitution directly related to specific measures versus other unique state-specific issues (e.g., income, cost of living, structure of the labor market, wage levels, characteristics of the insurance market). Through expanded state efforts under Title XXI funding, states will be required to evaluate and estimate the nature of substitution, the scope of the problem, and the actual levels of substitution among employees and employers. The collection of state-specific information will assist state program directors, researchers, and federal agencies in measuring the actual impact of employee- and employer-based substitution, and if consistently measured, will allow for comparison across states.