What Does (Formal) Health Insurance Do, and for Whom?

29 Pages Posted: 27 Jan 2018

See all articles by Amy Finkelstein

Amy Finkelstein

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Neale Mahoney

University of Chicago Booth School of Business; National Bureau of Economic Research (NBER)

Matthew Notowidigdo

University of Chicago - Booth School of Business

Multiple version iconThere are 3 versions of this paper

Date Written: June 1, 2017

Abstract

Health insurance confers benefits to the previously uninsured, including improvements in health, reductions in out-of-pocket spending, and reduced medical debt. But because the nominally uninsured pay only a small share of their medical expenses, health insurance also provides substantial transfers to non-recipients (those parties who would otherwise bear the costs of providing uncompensated care to the uninsured). These facts help explain the limited take-up of heavily-subsidized public health insurance, as well as estimates that show that for many recipients the value of formal health insurance coverage is substantially less than the cost to the insurers of providing that coverage. The distributional implications of public subsidies for health insurance depend critically on the ultimate economic incidence of the transfers they deliver to providers of uncompensated care.

Suggested Citation

Finkelstein, Amy and Mahoney, Neale and Notowidigdo, Matthew, What Does (Formal) Health Insurance Do, and for Whom? (June 1, 2017). Becker Friedman Institute for Research in Economics Working Paper No. 2018-2. Available at SSRN: https://ssrn.com/abstract=3110109 or http://dx.doi.org/10.2139/ssrn.3110109

Amy Finkelstein

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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Neale Mahoney (Contact Author)

University of Chicago Booth School of Business ( email )

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National Bureau of Economic Research (NBER) ( email )

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Matthew Notowidigdo

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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