State-sponsored programs for the uninsured: Is there adverse selection?

Risk contracting by states for coverage of previously uninsured populations has been hampered by uncertainty regarding likely claims experience. This study reports on the utilization experience of two state programs offering subsidized coverage in commercial managed care organizations to low-income and previously uninsured people. Program participants used services similarly to people enrolled through large employer benefit plans. There was no evidence of pent-up demand or an unusual level of chronic illness. Similarly, there was little evidence of underutilization, although dissatisfaction and reported barriers to service were more frequent among nonwhite enrollees.