DOES PUBLIC INSURANCE CROWD OUT PRIVATE INSURANCE

The cost of expanding public sector health programs depends critically on the extent to which public eligibility will cover just the uninsur ed, or will crowd out existing private insurance coverage. We estimate the extent of crowd-out arising from the expansions of Medicaid to pr egnant women and children over the 1987-1992 period. We estimate that approximately 50 percent of the increase in Medicaid coverage was asso ciated with a reduction in private insurance coverage. This occurred l argely because employees took up employer-based insurance less frequen tly. There is also some evidence that employers contributed less for i nsurance and that workers dropped coverage of dependents.