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

John F. Cogan, Robert Hubbard and Daniel P. Kessler

No 14309, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: I1 (search for similar items in EconPapers)
Date: 2008-09
New Economics Papers: this item is included in nep-hea and nep-ias
Note: EH
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Published as John F. Cogan & R. Glenn Hubbard & Daniel P. Kessler, 2010. "The effect of Medicare coverage for the disabled on the market for private insurance," Journal of Health Economics, vol 29(3), pages 418-425.

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