Participation in a Public Insurance Program: Subsidies, Crowd-Out, and Adverse Selection

• Published in: Inquiry (Chicago) Vol. 39; no. 3; pp. 243 - 257
• Main Authors: Long, Stephen H., Marquis, M. Susan
• Format: Journal Article
• Language: English
• Published: Los Angeles, CA Excellus Health Plan, Inc 2002; SAGE Publications; SAGE PUBLICATIONS, INC; SAGE Publishing
• Subjects: Adolescent; Adult; Adults; Adverse selection; Child; Children; Community Participation - economics; Community Participation - statistics & numerical data; Design; Eligibility Determination; Employer provided health insurance; Enrollments; Families & family life; Family income; Female; Government subsidies; Health care access; Health care policy; Health insurance; Health Services Research; Health Status; Humans; Insurance Coverage; Insurance premiums; Insurance Selection Bias; Low income groups; Male; Managed Care Programs - economics; Managed Care Programs - utilization; Medicaid; Medicaid - organization & administration; Medically Uninsured - statistics & numerical data; Mental health; Middle Aged; Organizational Case Studies; Participation; Pharmacy; Poverty; Poverty - classification; Pre-existing conditions; Program Evaluation; Public health; State Health Plans - economics; State Health Plans - utilization; Studies; Subsidies; Uninsured people; United States; Variance analysis; Washington; United States > US; Washington (state)
• ISSN: 0046-9580; 1945-7243
• DOI: 10.5034/inquiryjrnl_39.3.243

This paper examines how varying the level of subsidies affects participation in a public insurance program, crowd-out of private insurance, and adverse selection. We study the experience in Washington's Basic Health program in 1997. Findings show that adverse selection is not a problem in voluntary public programs. Increasing subsidies have only modest effects on participation in subsidized programs, though the gains are not at the expense of the private market. Overall participation in the subsidized plan is also modest, even though participants benefit from it. The challenge to policymakers is to find program design characteristics, beyond subsidies, that attract the uninsured.