Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. B. Due to limited data and the complexity of the issue, the discussion of substitution has been based upon the perceivedeffect of crowding out private coverage.


Research has attempted to assess the amount of substitution, suggested ways to limit its effects, and weighed the benefits and costs of expanding Medicaid with the potential of crowding out private insurance. Limited data and the complexity of the issue make it difficult to accurately measure the crowd out of public programs for employer-sponsored insurance. Actual substitution is complicated by secular trends including the following: the decline in employer-sponsored insurance; increasing levels of employee premium contributions; the decrease of unionization; and the shift from manufacturing to lower wage service industries. The complexity of measuring substitution and limited state-specific data contributes to conflicting estimates of substitution making it challenging for State governments to address substitution in the design and implementation of their children's health insurance programs. It has also been difficult to apply research focusing on Medicaid expansions to other models of providing low-income children with health coverage. With few conclusive estimates indicating the degree of actual substitution and very little data on the demographic profile of the "substituters," the discussion on substitution has been primarily based on the perceived effect of crowding out private coverage.