Health Insurance and Financial Risk

Silvia H. Barcellos, RAND Corporation
Mireille Jacobson, University of California, Irvine

Despite a large literature on the impact of health insurance on health, we know remarkably little about the protection health insurance offers from financial risk. This study estimates the impact of health insurance on financial risk among the young elderly (ages 65-80) relative to the near elderly (ages 50-64). The near elderly are ineligible for Medicare based on age but are more likely than the general population to have serious health conditions and thus be exposed to medical expenditure risk. We use a regression discontinuity framework and 15 years of the Medical Expenditure Panel Survey, the highest quality nationally representative data containing information on health insurance coverage, health conditions, and total and out-of-pocket medical spending, both overall and by category. To isolate the causal effect of insurance from any behavioral effects of coverage on the timing of care, we focus specifically on non-deferrable health events (e.g., heart attacks and stroke).