Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. D. States have identified the need for additional research.


The implementation of state strategies to expand coverage for children has been too recent to fully assess the actual impacts on individual- and employer-based substitution. Therefore, states have identified a number of areas in need of additional research:

  • Factors associated with individual (family) decisions regarding participation in employer-based or public insurance. States have identified individuals opting out of employer-sponsored insurance coverage as a greater concern than employers pushing individuals out of coverage. Therefore, states have suggested the importance of collecting information that will describe the factors that influence the complex decisions families are making with respect to purchasing insurance coverage for their children.
  • Whether and how the availability of public programs affect employers dropping coverage. Little data currently is available to describe why employers decide to drop coverage and the affect the availability of public programs may have on those decisions. Therefore, state specific information focused on where, when and why some employers drop coverage would assist in the understanding of employer-based substitution.
  • How different mechanisms work to encourage enrollment of individuals in state programs, yet limit crowd out. Much of the current information on state strategies to limit substitution are based on anecdotal evidence. The effectiveness of mechanisms may be confined to the demographics, economics, and general characteristics of a particular state. However, an understanding of why and how certain mechanisms work in specific situations is necessary in order to identify the usefulness of these or variations of these mechanisms in other settings.
  • The insurance status of individuals that leave state programs. States have identified the need to acknowledge where individuals go to receive health insurance after they have disenrolled from state programs. It is important to understand whether or not individuals are leaving state-subsidized programs for private insurance or whether they are again becoming uninsured. States need to understand whether or not they are meeting the goals of their programs. In addition, this information will assist in shaping Title XXI programs into either long-term or transition programs based on the overall needs of the target population.
  • Issues related to the affordability of state programs and the implications of price sensitivity among potential and current enrollees. As indicated earlier, most research does not address this issue, although a recent article by economists at the Agency for Health Care Policy and Research identified the importance of examining the affordability of private coverage. However, states have also identified the importance of affordability in state programs to insure children. Several states have found that increasing monthly premiums by a few dollars resulted in increased disenrollment rates. As states are focused on insuring larger numbers of uninsured children, affordability is an important issue that directly impacts the enrollment of eligible children in some income ranges. This issue is related to the complex decisions families make that are substantially based on cost.