The Effect of Medicare Coverage for the Disabled on the Market for Private Insurance

29 Pages Posted: 8 Sep 2008 Last revised: 8 Aug 2010

See all articles by John F. Cogan

John F. Cogan

Stanford University - The Hoover Institution on War, Revolution and Peace; National Bureau of Economic Research (NBER)

Daniel P. Kessler

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

R. Glenn Hubbard

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Date Written: September 2008

Abstract

Subsidies for health insurance for chronically ill, high-cost individuals may increase coverage in the broader population by improving the functioning of insurance markets. In this paper, we assess an historical example of a policy intervention of this sort, the extension of Medicare to the disabled, on the private insurance coverage of non-disabled individuals. We use data on insurance coverage from the Panel Study of Income Dynamics from before and after the extension of Medicare to the disabled to estimate the effect of the program on private insurance coverage rates in the broader population. We find that the insurance coverage of individuals who had a health condition that limited their ability to work increased significantly in states with high versus low rates of disability. Our findings suggest that that subsidizing individuals with high expected health costs is an effective way to increase the private insurance coverage of other high-cost individuals.

Suggested Citation

Cogan, John F. and Kessler, Daniel Philip and Hubbard, Robert Glenn, The Effect of Medicare Coverage for the Disabled on the Market for Private Insurance (September 2008). NBER Working Paper No. w14309. Available at SSRN: https://ssrn.com/abstract=1264571

John F. Cogan (Contact Author)

Stanford University - The Hoover Institution on War, Revolution and Peace ( email )

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Daniel Philip Kessler

Stanford Graduate School of Business ( email )

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Robert Glenn Hubbard

Columbia Business School - Finance and Economics ( email )

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New York, NY 10027
United States

HOME PAGE: http://www.gsb.columbia.edu/faculty/ghubbard

National Bureau of Economic Research (NBER)

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United States

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