Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. 4. Employee Contributions
The affordability of insurance influences families' decisions to maintain or opt out of employer-sponsored insurance. The increasing amount of employee premium contributions may be encouraging families to substitute public coverage. From 1992 to 1996, the average percentage of the premium paid by workers for individual coverage increased from 17.5
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. 3. Types of Employment, Firm Size, and Employee Status
Another major factor underlying the declining rates of employer coverage is the shift of employment from high coverage industries such as manufacturing to lower coverage industries such as service industries. Job market trends toward small business employment, part-time work, and lower-wage industries contribute to the increasing numbers of employ
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. 2. Managed Care
The increased use of managed care may potentially reduce substitution effects. Managed care penetration, which impacts the affordability of insurance, varies by region and also may impact substitution. Oregon, which has actually witnessed an increase in employer-sponsored insurance, has a relatively high-managed care penetration rate of approxim
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. 1. Economic and Political Factors
As the marketplace varies by region throughout the United States, it is plausible that substitution also varies based on the unique economic and political environment within each state. For example, wage and cost-of-living differences in the North and South translate into different earning power for families at 200% of poverty. States with a procl
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. C. Substitution may also be linked to secular trends in the job market, insurance industry, and the general state of the economy.
While research has shown varying estimates of substitution, few investigations have examined the motivating factors behind employer- and individual-based decisions regarding health insurance. At least some of the apparent substitution of public coverage may be linked to secular trends in the job market, insurance industry and the general economy.
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. B. There is a disconnect between state experiences and research.
The discrepancy between state experiences and research findings may be attributed to an overall lack of data and inconsistencies in existing data. Information collected from the states reveals a disconnect between state experiences with substitution and research findings. While research has yielded varying estimates of crowding out private coverag
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. A. The comparison of benefit packages and program costs drive parental decisions to substitute public programs for private insurance.
MinnesotaCare determined that of the 7.1% substitution of public for private coverage, 2.8% was employment-based and 4.2% was self-insured, with the majority of respondents reporting that they could not afford the insurance to which they technically had access. Of those sampled in MinnesotaCare's evaluation, 86% applied due to cost, 67% due to be
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. V. Estimating the Amount of Substitution
Currently, there are minimal data on the levels of substitution resulting from individual states' efforts in providing children's health insurance. A few states have some initial estimates of the effects on their programs, but important data gaps exist.
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. Mechanism 7: Reimbursements To Small Businesses
Assisting employers through reimbursement plans is another strategy geared toward helping small employers purchase health coverage. Massachusetts has planned the implementation of an experimental program in the year 1999, entitled the "Insurance Reimbursement Plan" to be administered through the Medical Assistance program. The Plan will be structu
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. Mechanism 6: Employer Buy-Ins
Allowing employers to directly buy into state programs at reasonable costs is another means of encouraging employers to take responsibility for sponsoring workers' insurance. The Washington Basic Health Plan (BHP) established provisions in which employers can buy into the program. As BHP is generally less expensive than private insurance for most
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. Mechanism 5: Purchasing Cooperatives
Health insurance purchasing cooperatives, which assist employers in purchasing insurance at more affordable rates, are enabling small employers to offer benefits in Oregon and Rhode Island. The State supported Associated Oregon Industries’ (AOI) efforts to develop a privately sponsored Health Insurance Purchasing Cooperative (HIPC) targeted at s
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. B. 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. Exhibit 2 exemplifies state mechanisms to limit employers from dr
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
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. Mechanism 3: Use of Subsidies
Some states are designing their programs to work in tandem with employer-sponsored coverage as a means of limiting substitution. Assisting families to purchase private coverage with public funds may deter families from dropping, or not pursuing employer-sponsored insurance beyond their economic reach. While subsidies support families in purchasing
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. Mechanism 2: Using Periods of Uninsurance, Access to Employer-Sponsored Insurance, and Employer Contributions
Several states have established requirements based on access to employer-sponsored insurance, employer contributions, and/or specific periods of uninsurance as a means to limit substitution. MinnesotaCare has instituted relatively stringent time and cost requirements, described by some as "firewalls" in order to prevent the crowd out of employer-s
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. Mechanism 1: Identifying the Affordability of Private Coverage: Setting Premiums and Copayments That Do Not Deter Utilization or Enrollment
Several states have identified the affordability of employer-sponsored insurance as an important consideration in the implementation of mechanisms to limit crowd out. Affordability is usually defined as the percentage of family income that is believed families could or are willing to use to purchase health care. Although states are interested in
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. A. States have developed a variety of strategies to limit individual-based substitution.
State mechanisms to limit individual-based substitution primarily target those dynamics that prompt family decisions to opt out of private coverage such as: the cost comparisons of copayments and premiums; the affordability of private coverage; and the comprehensiveness of benefits. The majority of states’ efforts to curb substitution has focuse
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. IV. State Mechanisms To Limit Substitution
This section reviews the nine mechanisms states identified as strategies to address substitution. Exhibit 1 exemplifies the range of state mechanisms used to limit substitution. States investigated various mechanisms that either purposefully or inadvertently limited substitution. States have also emphasized the importance of distinguishing between
Examining Substitution: State Strategies to Limit "Crowd Out" in the Era of Children's Health Insurance Expansions. C. National research informed the policy debate and raised important issues, yet it has not been focused on addressing state concerns with substitution.
Debates in the 105 th Congress regarding the numerous legislative efforts to insure children were focused on extending health insurance to uninsured children without replacing existing insurance coverage. Substitution was viewed as an inherent concern in the debates, as it was an issue in prior congressional expansions of social insurance program
