Crowding out can occur when public insurance crowds out private insurance.
A) True
B) False
C) Uncertain

Question

Quizplus · Accepted Answer

Crowding out occurs when the government provides a service or good that replaces or competes with private alternatives, causing a decrease in demand for those private alternatives. In the case of public insurance, if it provides similar coverage as private insurance at a lower cost (e.g. Medicare, Medicaid), individuals may be more likely to forego purchasing private insurance and rely solely on public insurance. This can result in decreased revenue for private insurance companies, potentially leading to higher premiums for those who still choose to purchase private insurance.

Crowding Out Can Occur When Public Insurance Crowds Out Private