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

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While the question of how to deal with America’s growing uninsured problem makes headlines daily, designing and implementing policies that will provide health care coverage to the uninsured are enormous tasks frought with political and practical challenges. High on that list of challenges is how to use finite public resources to provide cost-effective coverage to the most people. Is that challenge being met, however, when public dollars are used by low-income children and families with access to private coverage? There are many reasons why a family might forgo private health coverage to enroll in a publicly funded program, but the phenomenon of substituting publicly funded insurance coverage for privately paid coverage has been labeled as “crowd-out.”