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Alliance for Health Reform Briefing on the Crowd-Out and the State Children’s Health Insurance Program. Presented by Janet Trautwein, Executive Vice President & CEO National Association of Health Underwriters. Crowd-out of Private Coverage
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Janet Trautwein, Executive Vice President & CEO
National Association of Health Underwriters
Occurs when individuals who were previously covered by private health plans (funded in part by their employers) leave that coverage to move to public programs
Occurs when individuals do not enroll in plans offered and subsidized by their employers and enroll instead in a public programWhat is Crowd-Out?
It impacts the cost of coverage for those who remain insured in the private plans
It removes a large number of young and healthy individuals from the risk pool thus spreading the cost of high risk individuals across a smaller and older pool
This problem is worsened when parents are also eligible under the S-CHIP programWhat is the Impact of Crowd-Out on Private Plans
These parents are frequently already covered under these plans due to the large employer subsidy but can’t afford their share of the cost to cover their children.The Impact of Premium Assistance
One reason for this problem is that some parents of already eligible children are unwilling to enroll their children in S-CHIP because they associate it with other public programs such as welfareThe Impact of Premium Assistance on Those Already Eligible but Not Covered
Premium assistance to allow S-CHIP dollars to subsidize employer sponsored coverage could help to reach these children who aren’t covered anywhere nowThe Impact of Premium Assistance on Those Already Eligible but Not Covered
These parents at some point may be faced with costs greater than they can absorb on their own.
In spite of their preference for keeping the family insured together, they will be forced to move their children to coverage under the S-CHIP program.
The employer dollars that previously subsidized the cost of the children’s coverage will be left on the table.The Impact of Premium Assistance on Those Who Are Already Covered
A large number of those newly eligible will leave their employer sponsored coverage and move to the S-CHIP program.
The employer dollars already subsidizing current coverage will be left on the table.The Impact of Premium Assistance on Those Who Are Already Covered
Unfortunately, there are so many hurdles to be overcome in current law when using this option that few states have taken advantage of it
Current rules on cost-sharing, cost-effectiveness, employer contributions and benchmarks have made the process administratively burdensome for states and employers.Premium Assistance and Current Law
This is particularly true when there is more than one eligible child in the family
The public/private partnership in using premium assistance is fiscally responsible for federal and state governments and provides an affordable private option for eligible children.Cost-Effectiveness of Premium Assistance
It would maintain and encourage private coverage
It would maintain and increase private funding (through employers) of private coverage
It is fiscally responsible and will result in greater stability for the S-CHIP program
The negative impact of crowd-out on private plans for those currently insured can be avoidedPremium Assistance and Crowd-Out