Understanding the Dynamics of "Crowd-Out": Defining Public/Private Coverage Substitution for Policy and Research

June 2001

Crowd-out—the substitution of public for private insurance—is a complicated issue that in recent years has become increasingly relevant to state and federal policymakers. The policy and politics of crowd-out entered the spotlight during the Medicaid expansions of the 1980s, and the 1997 enactment of the State Children’s Health Insurance Program (SCHIP) focused renewed attention on the issue. Now, as states use their SCHIP funds to expand eligibility to include more, higher-income children and their families, policymakers are hungrier than ever for answers about how often crowd-out occurs and how much of it is acceptable in public programs.