Is it really worse to have public health insurance than to have no insurance at all? Health insurance and adult health in the United States

Using prospective cohort data from the 1979 National Longitudinal Survey of Youth, this study examines the extent to which health insurance coverage and the source of that coverage affect adult health. While previous research has shown that privately insured nonelderly individuals enjoy better health outcomes than their uninsured counterparts, the same relationship does not hold for those publicly insured through programs such as Medicaid. Because it is unclear whether this finding reflects a true causal relationship or is in fact due to selection bias on socioeconomic status and health, previous estimates of the contribution of health insurance to inequities in health may have been biased. This study attempts to disentangle these competing hypotheses of causation or selection bias by using fixed effects models with sibling clusters to corroborate--or contradict--the results of a conventional OLS regression. By controlling for unobserved factors shared by siblings, such as parental genetic influences, sibling models estimate health insurance effects that are less affected by selection bias. Findings suggest that, among the US. birth cohorts of 1957 to 1961, the negative relationship between public health insurance and health is not causal, but rather due to prior health and socioeconomic status. Conversely, the lack of health insurance coverage has a strong cumulative negative impact on adult health.     

INDIVIDUAL WELFARE WHEN CONSUMERS CAN SHOP FOR HEALTH INSURANCE

The statewide system of health insurance exchanges established by the Affordable Care Act (ACA) of 2010 will allow millions of U.S. citizens to change their health care policies more easily than they can switch automobile or homeowner insurance coverages, because deniability based on prior claim history is illegal. Focusing on this consumer endogeneity of health insurance policy choice, we examine the individual moral hazard welfare implications of a reduction in the price of medical care, which is a potential consequence of the ACA. We show that endogenous policy choice plays a key role in determining the welfare outcome. While moral hazard welfare improvement is not precluded, a distinctly possible outcome is that the consumer revises his/her choice of insurance policy so as to retain some portion of the reduction in expenditure risk caused by the medical care price decrease. In this event, moral hazard welfare loss is higher than it was before the price decrease, although the increased loss is tempered by the endogenous contract choice effect. This result resuscitates an old conventional wisdom. (JEL I11, I13, I30)     

PRICE ELASTICITY AND ADVERSE SELECTION IN THE DEMAND FOR SUPPLEMENTARY HEALTH INSURANCE

Probit regression estimates show the effects of the price of insurance, anticipated medical expenditures, and other factors on reported decisions about purchasing hypothetically offered supplementary insurance policies. The demand estimates can characterize how much supplemental insurance would be purchased under different tax policies affecting health insurance purchases. Although eliminating the current tax subsidy to insurance is shown to decrease demand, the results indicate a substantial demand for supplementary insurance even in the absence of present tax incentives. However, our results on adverse selection raise concerns about the potential stability of supplemental insurance markets.     

Building Health Insurance Literacy: Evidence from the Smart Choice Health Insurance™ Program

With the passage of the Patient Protection and Affordable Care Act (ACA) of 2010, the health insurance literacy of Americans became a critical issue. In response, a consumer education program was created and tested by university researchers and educators associated with Cooperative Extension. This article draws extensively on the emerging literature on health insurance literacy and on data from participants in the Smart Choice Health Insurance? program. The intent of the study was to understand socio-demographic and environmental variables that predict initial health insurance literacy and gains in health insurance literacy. A standardized instrument measuring health insurance literacy was used to collect the data. Multivariate analysis showed higher income consumers demonstrated greater initial health insurance literacy scores compared to middle income consumers, whereas younger, male and lower educated consumers reported lower initial health insurance literacy. After participating in the Smart Choice Health Insurance? program, consumers who made greater gains in their health insurance literacy tended to be female, higher income, and consumers residing in states that showed supportiveness of the ACA. The findings highlight the importance of considering sociodemographic characteristics in program design and delivery, as well as how contextual issues, such as the political environment, might impact the delivery of educational efforts. Findings from the analyses help inform ways to adapt and tailor educational opportunities that focus on health insurance literacy for a range of consumers.     

Questions and answers on health insurance benefit issues

This Issue Brief addresses eight topics in the areas of health insurance and health care costs. Using a question and answer format, the discussion draws largely on EBRI research and the EBRI Databook on Employee Benefits, third edition. In 1993, U.S. expenditures on health care were $884.2 billion, and they are projected to reach $2,173.7 billion by 2005, increasing at a projected average annual rate of 7.8 percent. Health care spending accounted for 13.9 percent of Gross Domestic Product (GDP) in 1993 and is projected to reach 17.9 percent of GDP by 2005. Among the factors contributing to the increase in health care costs are the growth in the number of individuals with traditional reimbursement health insurance coverage, the rapid expansion of technology and treatment options, and demographic factors such as the aging of the population. In 1993, employers, both public and private, spent $235.6 billion on group health insurance, accounting for 6.2 percent of total compensation. Group health insurance is the fastest growing component of total compensation, increasing at an average annual rate of 13.7 percent from 1960 to 1993. An increasing number of employees are required to make a cash contribution to their health insurance plan premium. In 1993, 61 percent of full-time employees in medium and large private establishments who participated in an employee only health insurance plan were required to make a contribution to the premium, up from 27 percent in 1979. In 1993, 185.3 million persons under age 65 had health insurance coverage, while 40.9 million people--or about 18.1 percent of the nonelderly population--received neither private health insurance nor publicly financed health coverage. Of those individuals who had health insurance coverage, 60.8 percent, or 137.4 million persons, received their health insurance through an employment-based plan. In 1993, 15.2 percent of the nonelderly population without health insurance coverage were noncitizens. In six states noncitizens represented a higher proportion of the total uninsured population than individuals in the nation as a whole. An increasing number of employers are self-funding their health insurance plans. In 1994, 74 percent of employers with 500 or more employees self-funded their health insurance plans, up from 63 percent in 1993. An estimated 22 million full-time employees in private industry and state and local governments participated in a self-funded employment-based health insurance plan.(ABSTRACT TRUNCATED AT 400 WORDS)     

Characteristics of the nonelderly with selected sources of health insurance and lengths of uninsured spells

This Issue Brief examines the characteristics of individuals with selected sources of coverage and combinations of sources of coverage over a 12-month period. In addition, it examines the characteristics of individuals who experience spells without health insurance and the lengths of these spells. It uses the most recent 12-month period from the Survey of Income and Program Participation and builds on previous research on the lengths of spells with and without health insurance. Analysis of individuals' health insurance coverage from October 1994 to September 1995 showed that approximately 77.6 percent of the nonelderly had health insurance coverage during this entire period. In addition, 22.4 percent of the nonelderly were uninsured for at least one month during this period, and 7.4 percent of the nonelderly were uninsured for the entire period. Of those with health insurance coverage for the entire year, approximately 83 percent were covered by private health insurance, with at least 81 percent of this group receiving the coverage from employment-based sources. Eighty-five percent of the spells without health insurance with an observed beginning and end lasted for 4 months or less, and 99 percent lasted for 8 months or less. When examining the spells with either an observed beginning or end, 55 percent of these spells were found to last for 4 months or less, and 87 percent were found to last for 8 months or less. However, investigation of all spells without health insurance showed that approximately one-half of all spells without health insurance coverage lasted for 8 months or longer. This report found that two-thirds of spells without health insurance last for less than one year, confirming previous research that a majority of these spells are for less than a year. However, this report also confirms the existence of a significant number--approximately one-third of all individuals with a spell of noncoverage--of chronically uninsured individuals. These individuals are the most likely to delay seeking treatment for illnesses and to use the emergency room as their only site of care. Because they are in poverty or near poverty, much of this care is uncompensated. Thus, to the extent that providers can shift these costs onto other payers, all individuals and employers share in these costs through higher health insurance premiums or higher taxes to finance public hospitals and public insurance programs. Recent major health insurance legislation has addressed access to health insurance, and in many cases focused solely on continued access to employment-based coverage, but has done very little to address the affordability of coverage. However, as this report demonstrates, many individuals experiencing spells without health insurance have low incomes. Thus, to obtain coverage, individuals need not only increased access to health insurance but also the ability to afford this health insurance.     

Index insurance and climate risk management: Addressing social equity

Fair distribution of benefits from index insurance matters. Lack of attention to social equity can reinforce inequalities and undermine the potential index insurance holds as a tool for climate risk management that is also pro‐poor. The aims of this article are to: (a) examine social equity concerns raised by index insurance in the context of climate risk management, (b) consider how greater attention can be paid to social equity in index insurance initiatives, and (c) reflect on the policy challenges raised by taking social equity into account as a mechanism for climate risk reduction. The article draws on learning from the CGIAR's Research Program on Climate Change, Agriculture and Food Security (CCAFS) and presents the cases of the Index Based Livelihoods Insurance (IBLI) and Agriculture and Climate Risk Enterprise Ltd. (ACRE) in East Africa. It proposes a framework for unpacking social equity related to equitable access, procedures, representation and distribution within index insurance schemes. The framework facilitates identification of opportunities for building outcomes that are more equitable, with greater potential for inclusion and fairer distribution of benefits related to index insurance. The article argues that systematically addressing social equity raises hard policy choices for index insurance initiatives without straightforward solutions. Attention to how benefits and burdens of index insurance are distributed, suggests the unpalatable truth for development policy that the poorest members of rural society can be excluded. Nevertheless, a focus on social equity—facilitated by the framework—opens up opportunities to ensure index insurance is linked to more socially just climate risk management. At the very least, it may prevent index insurance from generating greater inequality. Taking social equity into account, thus, shifts the focus from agricultural systems in transition per se to systems with potential to incorporate societal transformation through distributive justice.     

Expanding the focus of health insurance education for Medicare beneficiaries

Health insurance education plays an important role in helping consumers make informed decisions about their need for supplemental coverage. This article reviews findings on the knowledge of Medicare beneficiaries about their health insurance coverage. Then, current health insurance education programs are examined with regard to their ability to meet the needs of a competition-based public policy. Barriers outside the control of individuals that impede the growth of the long-term care insurance market are identified and the need for an alternative, broader form of health insurance education is suggested. Changes in the scope and content of health insurance education are proposed that would educate the elderly to their own needs as well as the larger policy issues. An expanded model of education based on the concept of the Swedish study circle is discussed to illustrate the possibility of combining individual knowledge and public debate about complex social issues.     

Expanding the Focus of Health Insurance Education for Medicare Beneficiaries

Health insurance education plays an important role in helping consumers make informed decisions about their need for supplemental coverage. This article reviews findings on the knowledge of Medicare beneficiaries about their health insurance coverage. Then, current health insurance education programs are examined with regard to their ability to meet the needs of a competition-based public policy. Barriers outside the control of individuals that impede the growth of the long-term care insurance market are identified and the need for an alternative, broader form of health insurance education is suggested. Changes in the scope and content of health insurance education are proposed that would educate the elderly to their own needs as well as the larger policy issues. An expanded model of education based on the concept of the Swedish study circle is discussed to illustrate the possibility of combining individual knowledge and public debate about complex social issues.     

The importance of employer sponsorship in the long-term care insurance market

Medicare and Medicaid are major sources of long-term care payments and thus will bear much of the burden from the growth in long-term care service use. The large future demand for long-term care services is of great concern among policymakers due to its expense and the use of public program dollars. It is argued that the individual purchase of long-term care insurance can help alleviate the increasing financial pressure on public programs responsible for the majority of longterm care financing. However, consumers have shown little interest in insuring against the high costs of long-term care. This analysis examines the effect of several factors on the decision to purchase a long-term care insurance policy: knowledge and attitudes of long-term care insurance and the long-term care financing system, the perceived risk for longterm care, financial planning behavior, and the availability of long-term care insurance. The interim results indicate the factor most likely to affect the decision to purchase long-term care insurance is access to employer-sponsored long-term care insurance. This suggests tht the availability of affordable and high quality coverage is more important than demand-side factors such as awareness of long-term care insurance and a perceived greater risk for long-term care.     

Trends in health insurance coverage

This Issue Brief presents data on trends in health insurance coverage between 1987-1995. In 1995, 70.7 percent of the nonelderly population had private health insurance coverage, compared with 75.9 percent in 1987. During this period, the percentage of the nonelderly population with employment-based health insurance declined from 69.2 percent to 63.8 percent, while the percentage covered by Medicaid program increased from 8.6 percent to 12.5 percent. The percentage of the nonelderly population without any form of health insurance increased from 14.8 percent in 1987 to 17.4 percent, or 40.3 million individuals, in 1995. The percentage of nonelderly Americans with employment-based coverage fell for both individuals with coverage in their own name and those with coverage as dependents. In 1995, 32.7 percent of the nonelderly population had coverage in their own name, compared with 33.8 percent in 1987. Similarly, 31.1 percent of the nonelderly population had employment-based health insurance as dependents in 1995, compared with 35.4 percent in 1987. One of the most important determinants of health insurance coverage is work status and hours of work. While employment-based health insurance received directly from worker's employer decreased between 1987 and 1995 from 66.2 percent of 63.2 percent among full-time workers, the percentage of part-time workers with employment-based health insurance coverage in their own name increased from 17.2 percent to 20.1 percent. The percentage of workers with dependent coverage fell for both full-time and part-time workers, as did the percentage of nonworkers with dependent coverage. Workers in the manufacturing industry are most likely to have employment-based health insurance; they are also the workers most likely to have experienced a decrease in employment-based coverage between 1987 and 1995. In contrast, workers employed in most of the service sectors, experienced an increase in employment-based health insurance, self-employed workers experienced a decrease, and government workers experienced a slight increase. Cost is one of the primary factors contributing to the decline in employment-based health insurance coverage. While health insurance premium cost increases have slowed during the past three years, many health care analysts are predicting an increase in health insurance premiums during the next few years. Inflationary pressure may come from health care providers, health insurers, consumers, and/or policymakers. If inflationary pressure increases health insurance premiums, we are likely to see a continued decline in employment-based health insurance and a subsequent increase in both Medicaid and uninsured populations.     

Youth Perspectives on Social Insurance in Egypt: Qualitative Insights on the Gap between Legal and Effective Coverage

A gap between legal and effective coverage rates is a common challenge facing social insurance systems in Low‐ and Middle‐Income Countries. This article draws on an exploratory qualitative study with youth in Egypt to examine how labour market dynamics and worker preferences contribute to this gap. Labour market factors, particularly instability of employment and job mobility, were found to reduce the perceived value of social insurance. Poor understanding of how social insurance works was another contributing factor. However, youth displayed a high level of trust in the public social insurance system and saw pensions as valuable in the abstract. In combination with awareness promotion, eliminating penalties to discontinuous labour force participation could make social insurance more attractive to youth.     

Health,Health Insurance,and Decision to Exit from Farming

The purpose of this paper is to study the influence of health and health insurance on farmers’ exit decision-making process. Using data from 2000 to 2007 Medical Expenditure Panel Survey, we tested the following three hypotheses: (1) Health condition affects farmers’ exit decision; (2) Having health insurance discourages farmers from exiting; (3) Obtaining health insurance helps farmers with physical health problems to continue farming. Empirical results indicated that having health insurance has a positive effect on encouraging farmers to continue farming regardless of health condition. The study results also suggested that farmer’s health condition and access to health insurance have noticeably larger marginal impacts on farmer’ exit decision than income and other commonly-considered socio-economic and demographic variables.     

The Case for Insurance Reimbursement of Couple Therapy

A case is made for why it may now be in the best interest of insurance companies to reimburse for marital therapy to treat marital distress. Relevant literature is reviewed with a considerable focus on the reasons that insurance companies would benefit from reimbursing marital therapy – the high costs of marital distress, the growing link between marital distress and a host of related physical and mental health problems, as well as the availability of empirically supported treatments for marital distress. This is followed by a focus on the major reasons insurance companies cite for not reimbursing marital therapy, along with a discussion of advances in several growing bodies of research to address these concerns. Main arguments include the direct medical offset costs of couple and family therapy (including for high utilizers of health insurance), and the fact that insurance companies already find it cost effective to reimburse for prevention of other health and psychological problems. This is followed by implications for practitioners and researchers.     

A Mandatory Student Health Insurance Program at a Large State University

Abstract

A new compulsory-with-waiver health insurance plan at the State University of New York at Buffalo (SUN-YAB) was designed in 1976 after assessing available literature on students' insurance, morbidity, health care costs, attitudes, data from past SUNYAB insurance plans and health service statistics. Previous findings that the morbidity of this population is low is corroborated by the data available on the students considered within this project. Illnesses common to this age group are predominantly acute, and require a low rate of hospitalization. The new insurance program cost an unmarried single student $67.00 and was a success by several criteria. Approximately 5,000 more students were enrolled in the complusory plan than in the previous voluntary one. Among students interviewed, both those who enrolled and those who did not, felt that the idea of compulsory health insurance for students was a good idea. Virtually all full-time students in the university were covered by some health insurance.     

The role of life experience in long-term care insurance decisions

This study uses data from a unique survey of the retirement planning behaviors of late middle-aged individuals living in New York State, to test hypotheses regarding the role of earlier life experiences on the demand for long-term care insurance. Our primary focus is on previous provision of informal long-term care, which some studies have found to be correlated with demand for long-term care insurance. We add to the literature by providing a test for causal relationships between previous care-giving and insurance demand, and by exploring the more generally the mechanisms through which previous life experiences are linked to insurance demand. Results are robust to a variety of empirical specifications and estimation methods, including consideration of current care-giving roles and endogenous selection into previous care-giving, and strongly support a causal relationship between previous long-term care-giving and demand for insurance. Our estimates also provide evidence that lifetime health trajectories and family relationships are associated with long-term care insurance demand, and suggest that both emotional and informational forces influence demand.     

The adequacy of college health insurance coverage

This analysis of private health insurance plans offered in 100 four-year colleges and universities in 1988 indicates a tremendous diversity in plan options, benefits covered, cost-sharing requirements, and catastrophic protections. Consistent with relatively low premium prices, most student health insurance plans offer limited benefits and expose students to significant out-of-pocket medical cost liabilities. Only a minority of schools use financial incentives, such as preferred provider arrangements, to integrate their health insurance plans with their university health service system. We conclude that universities should carefully reexamine the adequacy of their health insurance plans and their relationship to student health centers. As more students rely on student health insurance as their only source of coverage, the quality of these plans assumes an even greater importance.     

HOW HEALTH INSURANCE AFFECTS HEALTH CARE DEMAND—A STRUCTURAL ANALYSIS OF BEHAVIORAL MORAL HAZARD AND ADVERSE SELECTION

Individuals with health insurance use more health care. One reason is that health care is cheaper for the insured. Additionally, having insurance can encourage unhealthy behavior via moral hazard. Previous work studying the effect of health insurance on medical utilization has mostly ignored behavioral changes due to having health insurance, and how that in turn affects medical utilization. This paper investigates the structural causal relationships among health insurance status, health behavior, and medical utilization theoretically and empirically, and separates price effects from behavioral moral hazard effects. Also distinguished are the extensive versus intensive margins of insurance effects on behavior. (JEL C51, I12, D12)     

THE DEMISE OF HOSPITAL PHILANTHROPY

We develop a one-period model of hospital and donor behavior to analyze how insurance for hospital care, various public subsidies, and other factors affect donations to hospitals. Theoretically, increased insurance coverage has an ambiguous effect on private giving. Empirical tests using time series and cross-sectional data show that the growth of private insurance and especially the introduction of Medicare and Medicaid substantially reduces private giving to hospitals. Effects of public subsidies for construction depend on whether the subsidy more closely resembles a matching or lumpsum grant.     

Life insurance, the medical examination and cultural values

This paper is concerned with the commodification of the risk of death which occurred with the development of life insurance and with the role of the medical examination in making life insurance a viable commodity. Using British and Australian data, it shows how the medical profession and the medical examination were crucial to nineteenth century life insurance institutions in the calculation of the value of human lives. Life insurance institutions combined a developing ideology of health with the knowledge of health statistics and applied both for a developing institutional finance market. The calculation and preservation of the value of individual human lives by the pooling of risks on selected lives is the service which life insurance sells and which underpins finance capital. The knowledge developed from health and morbidity statistics was a process both of social surveillance and of market-oriented monitoring for economic risk-reduction. At the level of the individual the necessity for life insurance was the dissolution of traditional community and familial support as industrial capitalism developed.