Advantages and Disadvantages of Instituting Premium Cost-Sharing

Advantages

• Reduces government cost by mandating that participants share the burden of their health care costs.
• Targets assistance and subsidies to the poorest of the uninsured population.
• Can be used as a policy tool to regulate participation levels.
• May reduce crowd-out.
• May reduce stigma associated with "public" health insurance.

Disadvantages

• Lowers participation.
• May lead to adverse selection of a population with more complex medical needs.
• Requires more administrative effort and cost.
• May reduce continuity of coverage if people enter and exit the program based on whether they can afford the premium.