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

Amy Finkelstein (), Neale Mahoney and Matthew Notowidigdo
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Amy Finkelstein: Department of Economics, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139, USA
Neale Mahoney: Department of Economics, Booth School of Business, University of Chicago, Chicago, Illinois 60637, USA

Annual Review of Economics, 2018, vol. 10, issue 1, 261-286

Abstract: Health insurance confers benefits to the previously uninsured, including improvements in health, reductions in out-of-pocket spending, and reduced medical debt. However, because the nominally uninsured pay only a small share of their medical expenses, health insurance also provides substantial transfers to nonrecipient parties who would otherwise bear the costs of providing uncompensated care to the uninsured. The prevalence of uncompensated care helps explain the limited take-up of heavily subsidized public health insurance and the evidence that many recipients value formal health insurance at substantially less than the cost to insurers of providing that coverage. The distributional implications of public subsidies for health insurance depend critically on the ultimate economic incidence of the transfers that they deliver to providers of uncompensated care.

Keywords: health insurance; public subsidies; uncompensated care (search for similar items in EconPapers)
JEL-codes: H22 H42 H51 I11 I13 (search for similar items in EconPapers)
Date: 2018
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Working Paper: What Does (Formal) Health Insurance Do, and For Whom? (2017)
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