DubayView Graph # 1 OVERVIEW What is Crowd-Out and Why Do We Care About it? What Do State Officials Need to Know About Crowd- Out? What Does the Literature Tell Us About Crowd-Out? What Strategies Have States Used to Prevent Crowd- Out in the Past and Did They Work? What Are States Planning to Do to Prevent Crowd-Out? What Are the Advantages and Disadvantages of Crowd- Out Prevention? What Should States Do?

DubayView Graph # 2 Crowd-Out Is a Phenomenon Whereby New Public Programs or Expansions of Existing Public Programs Designed to Extend Coverage to the Uninsured Prompt Some Privately Insured Persons to Drop Their Private Coverage and Take Advantage of the Expanded Public Subsidy Crowd-Out Can Also Occur When Such Programs Encourage Some Employers to Contribute Fewer Dollars to Employees’ Health Insurance Coverage in an Effort to Prompt Employees to Enroll Their Children in the New Program WHAT IS CROWD-OUT ABOUT?

DubayView Graph # 3 The Substitution of Public Coverage for Private Coverage May Lead To: - Fewer improvements in access to care and health status than expected - Greater increases in public expenditures than expected - Lower cost effectiveness of the program than expected POLICY IMPORTANCE OF CROWD-OUT

DubayView Graph # 4 Low-Income Children Gain Access to Affordable, Comprehensive, Health Insurance That Always Covers Preventive Care Low-Income Families Who Have Been Paying for Insurance Coverage Get Financial Relief Employers Who Have Historically Provided Health Insurance Coverage to Their Low Wage Employees May Have Lower Health Insurance Costs WHO BENEFITS FROM CROWD-OUT?

DubayView Graph # 5 Employer-sponsored coverageUninsured New Program ELIGIBLE CHILDREN

DubayView Graph # 6 Literature Focuses on the Medicaid Expansions for Children and Pregnant Women No Literature on the Effects of Firm Behavior Studies Attempt to Answer Different Questions Which Has Lead to Considerable Confusion No Study Has Comprehensively Addressed What Share of Those With Private Coverage Dropped As a Result of the Expansions. WHAT DOES THE LITERATURE TELL US ABOUT THE POTENTIAL FOR CROWD-OUT UNDER CHIP?

DubayView Graph # 7 CROWD-OUT ESTIMATES

DubayView Graph # 8 6% - 15% Blumberg, Dubay, and Norton (Survey of Income and Program Participation) WHAT PERCENTAGE OF THE CHILDREN WHO BECAME ELIGIBLE FOR MEDICAID THROUGH NON- AFDC ELIGIBILITY PATHS AND HAD PRIVATE INSURANCE COVERAGE DROPPED THEIR COVERAGE AND ENROLLED IN THE MEDICAID PROGRAM?

DubayView Graph # 9 Hard to Use These Analyses to Predict Crowd-Out Under CHIP CHIP Eligible Children Have Higher Incomes Than Those Who Were Eligible Under the Medicaid Expansions CHIP Programs May Be Different Than Medicaid in Terms of Benefits, Providers, and Cost Sharing States Are “Required” to Develop Strategies to Reduce Crowd-Out Under CHIP HOW IS THE EXISTING LITERATURE RELEVANT TO CHIP?

DubayView Graph # 10 Almost Nothing WHAT CAN STATES THAT EXPAND THEIR MEDICAID PROGRAMS UNDER CHIP DO TO PREVENT CROWD-OUT?

DubayView Graph # 11 Institute Waiting Periods Subsidize Employer-Sponsored Coverage Make Coverage and Premiums Comparable to Employer-Sponsored Coverage Monitor Crowd-Out and Implement Prevention Strategies If Crowd-Out Is a Problem WHAT CAN STATES THAT CREATE SEPARATE CHIP PROGRAMS DO TO PREVENT CROWD-OUT?

DubayView Graph # 12 Limited Eligibility to Uninsured or Under-Insured-- Tennessee and Rhode Island Instituted Waiting Periods--Minnesota Imposed Premiums--Tennessee, Rhode Island, Hawaii, Minnesota, Vermont WHAT HAVE STATES DONE IN THE PAST TO PREVENT CROWD-OUT?

DubayView Graph # 13 TWO EVALUATIONS OF CROWD-OUT IN SUCH STATES

DubayView Graph # 14 CROWD-OUT PREVENTION STRATEGIES Note: Most states requiring waiting periods make exceptions under certain conditions. Source: Children’s Defense Fund

DubayView Graph # 15 May Prevent Crowd-Out May Create Inequities in the Program May Be Difficult to Administer May Reduce Participation Among the Uninsured ADVANTAGES AND DISADVANTAGES OF CROWD-OUT PREVENTION

DubayView Graph # 16 FEDERAL CHIP ALLOCATIONS AND PROJECTED EXPENDITURES IN BILLIONS Source: CBO

DubayView Graph # 17 Employer-Uninsured Sponsored(millions) (millions) Number of Children: Participation Rate: 20% 60% Crowd -out = 36% of New Entrants Participation Rate: 10% 60% Crowd-out = 22% of New Entrants CHIP INCOME ELIGIBLE CHILDREN

DubayView Graph # 18 STATES FACE A DILEMMA State Budget Constraints Are Real Crowd-Out Prevention Mechanisms Will Create Inequities and Dampen Participation Among the Uninsured This Dilemma Suggests a Delicate Balance of Policies

DubayView Graph # 19 Any Equitable and Administratively Workable Program Will Crowd-Out Private Coverage Children Will Come Out Ahead With Greater Insurance Security and Coverage That Always Includes Preventive Care There Will Be Benefits of Financial Relief to Families Who Had Previously Purchased Health Insurance STATES FACE A DILEMMA (cont.)

DubayView Graph # 20 The Focus on Crowd-Out, While Important From a Budget Perspective, Draws Attention Away From Other Challenges States Face Under Both Their Medicaid and CHIP Programs Offering Health Insurance Alone Is Not Sufficient Programs Must Get Uninsured Children to Participate and Provide Access to High-Quality, Effective Medical Care in Order to Realize Improvements in Child Health STATES FACE A DILEMMA (cont.)