Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. III. Review of the research on substitution

12/09/1997

A number of national research organizations and academic researchers have examined the issue of substitution utilizing the Current Population Survey (CPS) and the Survey of Income and Program Participation (SIPP) data. Such studies have produced varying estimates of substitution and have generated discussion regarding appropriate methodologies in order to estimate accurate levels of substitution. The following section briefly discusses definitions of substitution, estimations of substitution based on existing literature, the lack of consensus in estimating substitution, and the usefulness and generalizability of the current research estimates.

The paper focuses on what has been learned from states' prior experiences with substitution, not on a comprehensive review of the literature. Therefore, we have provided an overview of recent literature that has identified the causes and estimations of substitution based on national data sets.

In addition, the paper examines state research focused on estimating levels of and identifying reasons for substitution within state programs. The data cited are population-based and not organization-focused. While substitution literature to date may not have focused on the economic incentives behind employers' decisions to sponsor health insurance and other benefits, there is a considerable amount of literature that separately examines these issues.