Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. Mechanism 4:Limiting the Scope of the Benefit Package


Limiting the scope or comprehensiveness of the benefit package is another mechanism that seems to deter families from opting out of employer coverage. The CaliforniaKids program, the Massachusetts Children’s Medical Security Plan, and until recently, New York’s Child Health Plus program, declined to offer inpatient care with the rationale that it was better to provide a more modest benefit package to greater numbers of children. Although CaliforniaKids and Child Health Plus were primarily concerned with stretching their funding to meet the basic health care needs of as many children as possible, representatives from both programs believed that excluding inpatient care deterred substitution. These programs were comfortable with offering a limited benefit package, knowing that Medicaid would serve as a safety net for children requiring inpatient care or extended benefits.

Three types of mechanisms are being used by states to enhance the affordability of employer-sponsored insurance: While there is no evidence to suggest that employers are strategically eliminating health coverage so that their workers may receive public insurance, several states have been proactive in designing mechanisms to encourage the availability of affordable employer-sponsored insurance.