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Crowding out private insurance: Medicaid's medically needy program


  • Jessica Holmes



This paper examines the extent to which public health insurance crowds out purchases of private insurance. Specifically, the effect of Medicaid's medically needy program on the probability that an individual will buy private insurance is investigated. Evidence presented here suggests that the presence of the medically needy program and more specifically, its relative generosity significantly reduces the likelihood that an individual will purchase private insurance. For individuals living in more generous medically needy states, the crowd out is particularly evident for individuals whose family incomes lie closest to the eligibility thresholds. This does suggest that expansions of public coverage not only provide a "net" for the targeted uninsured, but also may attract individuals into the "net" who would otherwise seek private insurance. Such crowding out has serious implications for the net benefits of such public expansions.

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  • Jessica Holmes, 2002. "Crowding out private insurance: Medicaid's medically needy program," Middlebury College Working Paper Series 0242, Middlebury College, Department of Economics.
  • Handle: RePEc:mdl:mdlpap:0242

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    References listed on IDEAS

    1. Marilyn Power, 1999. "Parasitic-Industries Analysis and Arguments for a Living Wage for Women in the Early Twentieth-Century United States," Feminist Economics, Taylor & Francis Journals, vol. 5(1), pages 61-78.
    2. repec:mes:jeciss:v:21:y:1987:i:4:p:1739-1779 is not listed on IDEAS
    3. Piet-Hein van Eeghen, 1997. "The Capitalist Case Against the Corporation," Review of Social Economy, Taylor & Francis Journals, vol. 55(1), pages 85-113.
    4. repec:mes:jeciss:v:23:y:1989:i:1:p:7-33 is not listed on IDEAS
    5. Robert Prasch, 2003. "How is Labor Distinct From Broccoli? Some Unique Characteristics of Labor and Their Importance for Economic Analysis and Policy," Middlebury College Working Paper Series 03-30, Middlebury College, Department of Economics.
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