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Manhattan Institute

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How to Increase Health-Insurance Coverage by Reducing ACA Crowd-Out

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How to Increase Health-Insurance Coverage by Reducing ACA Crowd-Out

January 23, 2018
Health PolicyAffordable Care Act

Abstract

Public health-care entitlements in the U.S. have traditionally been designed to supplement rather than to supplant privately purchased health insurance. About 40% of the entitlement funds disbursed under the Affordable Care Act (ACA), however, have gone to individuals who already had private coverage. This displacement of private-sector spending by public-sector activity is called “crowd-out.” While the ACA has reduced the share of the American population without health insurance, its spending has been poorly-targeted to fill gaps in care, and 28 million remain uninsured.

This paper reviews estimates of ACA crowd-out and examines the potential for block grants to allow states to target assistance at individuals otherwise lacking coverage. Under such a reform, the same level of federal funding could do more to expand access to care and to provide protection from catastrophic medical costs for those who need help the most.

READ FULL REPORT

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Chris Pope is a senior fellow at the Manhattan Institute. Follow him on Twitter here.

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