Bankruptcy as Implicit Health Insurance

Neale Mahoney

No 18105, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines the implicit health insurance households receive from the ability to declare bankruptcy. Exploiting cross-state and within-state variation in asset exemption law, I show that uninsured households with greater seizable assets make higher out-of-pocket medical payments, conditional on the amount of care received. In turn, I find that households with greater wealth-at-risk are more likely to hold health insurance. The implicit insurance from bankruptcy distorts the insurance coverage decision. Using a microsimulation model, I calculate that the optimal Pigovian penalties are similar on average to the penalties under the Affordable Care Act (ACA).

JEL-codes: H51 I13 K35 (search for similar items in EconPapers)
Date: 2012-05
New Economics Papers: this item is included in nep-cmp, nep-hea and nep-ias
Note: EH LE PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published as Neale Mahoney, 2015. "Bankruptcy as Implicit Health Insurance," American Economic Review, vol 105(2), pages 710-746.

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