IDEAS home Printed from https://ideas.repec.org/p/hrv/faseco/2660660.html
   My bibliography  Save this paper

Increasing Health Insurance Costs and the Decline in Health Insurance Coverage

Author

Listed:
  • Chernew, Michael
  • Cutler, David
  • Keenan, Patricia S.

Abstract

Objective. To determine the impact of rising health insurance premiums on coverage rates. Data Sources & Study Setting. Our analysis is based on two cohorts of nonelderly Americans residing in 64 large metropolitan statistical areas (MSAs) surveyed in the Current Population Survey in 1989–1991 and 1998–2000. Measures of premiums are based on data from the Health Insurance Association of America and the Kaiser Family Foundation/Health Research and Educational Trust Survey of Employer-Sponsored Health Benefits. Study Design. Probit regression and instrumental variable techniques are used to estimate the association between rising local health insurance costs and the falling propensity for individuals to have any health insurance coverage, controlling for a rich array of economic, demographic, and policy covariates. Principal Findings. More than half of the decline in coverage rates experienced over the 1990s is attributable to the increase in health insurance premiums (2.0 percentage points of the 3.1 percentage point decline). Medicaid expansions led to a 1 percentage point increase in coverage. Changes in economic and demographic factors had little net effect. The number of people uninsured could increase by 1.9–6.3 million in the decade ending 2010 if real, per capita medical costs increase at a rate of 1–3 percentage points, holding all else constant. Conclusions. Initiatives aimed at reducing the number of uninsured must confront the growing pressure on coverage rates generated by rising costs.

Suggested Citation

  • Chernew, Michael & Cutler, David & Keenan, Patricia S., 2005. "Increasing Health Insurance Costs and the Decline in Health Insurance Coverage," Scholarly Articles 2660660, Harvard University Department of Economics.
    • Handle: RePEc:hrv:faseco:2660660
    as

    Download full text from publisher

    File URL: http://dash.harvard.edu/bitstream/handle/1/2660660/cutler_increasinghealth.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Farber, Henry S. & Levy, Helen, 2000. "Recent trends in employer-sponsored health insurance coverage: are bad jobs getting worse?," Journal of Health Economics, Elsevier, vol. 19(1), pages 93-119, January.
    2. Sherry Glied & Kathrine Jack, 2003. "Macroeconomic Conditions, Health Care Costs, and the Distribution of Health Insurance," NBER Working Papers 10029, National Bureau of Economic Research, Inc.
    3. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
    4. Janet Currie & Aaron Yelowitz, 1999. "Health Insurance and Less Skilled Workers," NBER Working Papers 7291, National Bureau of Economic Research, Inc.
    5. Jonathan Gruber & James M. Poterba, 1993. "Tax Incentives and the Decision to Purchase Health Insurance: Evidence from the Self-Employed," NBER Working Papers 4435, National Bureau of Economic Research, Inc.
    6. Nyman, John A., 1999. "The value of health insurance: the access motive," Journal of Health Economics, Elsevier, vol. 18(2), pages 141-152, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David M. Cutler, 2011. "Where Are the Health Care Entrepreneurs? The Failure of Organizational Innovation in Health Care," NBER Chapters, in: Innovation Policy and the Economy, Volume 11, pages 1-28, National Bureau of Economic Research, Inc.
    2. Duggan, Mark & Starc, Amanda & Vabson, Boris, 2016. "Who benefits when the government pays more? Pass-through in the Medicare Advantage program," Journal of Public Economics, Elsevier, vol. 141(C), pages 50-67.
    3. van der Star, Sanne M. & van den Berg, Bernard, 2011. "Individual responsibility and health-risk behaviour: A contingent valuation study from the ex ante societal perspective," Health Policy, Elsevier, vol. 101(3), pages 300-311, August.
    4. Jeffrey Clemens, 2015. "Regulatory Redistribution in the Market for Health Insurance," American Economic Journal: Applied Economics, American Economic Association, vol. 7(2), pages 109-134, April.
    5. Cutler, David M., 2010. "Where Are the Health Care Entrepreneurs? The Failure of Organizational Innovation in Health Care," Scholarly Articles 5345877, Harvard University Department of Economics.
    6. Fairlie, Robert W. & Kapur, Kanika & Gates, Susan, 2011. "Is employer-based health insurance a barrier to entrepreneurship?," Journal of Health Economics, Elsevier, vol. 30(1), pages 146-162, January.
    7. Jessica Vistnes & Alice Zawacki & Kosali Simon & Amy Taylor, 2010. "Declines in Employer Sponsored Coverage Between 2000 and 2008: Offers, Take-Up, Premium Contributions, and Dependent Options," Working Papers 10-23, Center for Economic Studies, U.S. Census Bureau.
    8. Chernew, Michael & Keenan, Patricia & Cutler, David, 2005. "Charity Care, Risk Pooling, and the Decline in Private Health Insurance," Scholarly Articles 2640562, Harvard University Department of Economics.
    9. Laura Bucila, 2008. "Employment-Based Health Insurance and the Minimum Wage," Working Papers 0812, College of the Holy Cross, Department of Economics.
    10. Thanh Duc Nguyen & Andrew Wilson, 2017. "Coverage of health insurance among the near-poor in rural Vietnam and associated factors," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 62(1), pages 63-73, February.
    11. Robert Town & Douglas Wholey & Roger Feldman & Lawton R. Burns, 2006. "The Welfare Consequences of Hospital Mergers," NBER Working Papers 12244, National Bureau of Economic Research, Inc.
    12. Michael Chernew & David Cutler & Patricia Seliger Keenan, 2005. "Charity Care, Risk Pooling, and the Decline in Private Health Insurance," American Economic Review, American Economic Association, vol. 95(2), pages 209-213, May.
    13. G. Edward Miller & Thomas M. Selden & Jessica S. Banthin, 2014. "Employer-Sim Microsimulation Model: Model Development and Application to Estimation of Tax Subsidies to Health Insurance," Working Papers 14-46, Center for Economic Studies, U.S. Census Bureau.
    14. Neale Mahoney, 2011. "Bankruptcy as Implicit Health Insurance," Discussion Papers 10-023, Stanford Institute for Economic Policy Research.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mindy S. Marks, 2011. "Minimum Wages, Employer-Provided Health Insurance, and the Non-discrimination Law," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 50(2), pages 241-262, April.
    2. Tomas J. Philipson & George Zanjani, 2013. "Economic Analysis of Risk and Uncertainty induced by Health Shocks: A Review and Extension," NBER Working Papers 19005, National Bureau of Economic Research, Inc.
    3. Fligstein, Neil & Shin, Taek-Jin, 2003. "The shareholder value society: A review of the changes in working conditions and inequality in the U.S., 1976-2000," Institute for Research on Labor and Employment, Working Paper Series qt0z85d717, Institute of Industrial Relations, UC Berkeley.
    4. Jonathan Gruber & Michael Lettau, 2000. "How Elastic is the Firm's Demand for Health Insurance?," NBER Working Papers 8021, National Bureau of Economic Research, Inc.
    5. Meyer, Bruce D. & Rosenbaum, Dan T., 2000. "Making Single Mothers Work: Recent Tax and Welfare Policy and Its Effects," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(4), pages 1027-1062, December.
    6. David Powell, 2019. "The Distortionary Effects of the Health Insurance Tax Exclusion," American Journal of Health Economics, University of Chicago Press, vol. 5(4), pages 428-464, Fall.
    7. David M. Cutler, 2003. "Employee Costs and the Decline in Health Insurance Coverage," NBER Chapters, in: Frontiers in Health Policy Research, Volume 6, pages 27-54, National Bureau of Economic Research, Inc.
    8. Sherry Glied, 2003. "Health Care Costs: On the Rise Again," Journal of Economic Perspectives, American Economic Association, vol. 17(2), pages 125-148, Spring.
    9. Thomas P. Lyon, 1999. "Quality Competition, Insurance, and Consumer Choice in Health Care Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(4), pages 546-580, December.
    10. David Cutler & Jonathan Gruber, 2001. "Health Policy in the Clinton Era: Once Bitten, Twice Shy," NBER Working Papers 8455, National Bureau of Economic Research, Inc.
    11. James M. Poterba, 1994. "A Skeptic's View of Global Budget Caps," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 67-73, Summer.
    12. Thomas C. Buchmueller & John Dinardo & Robert G. Valletta, 2002. "Union Effects on Health Insurance Provision and Coverage in the United States," ILR Review, Cornell University, ILR School, vol. 55(4), pages 610-627, July.
    13. Amitabh Chandra & Jonathan Skinner, 2012. "Technology Growth and Expenditure Growth in Health Care," Journal of Economic Literature, American Economic Association, vol. 50(3), pages 645-680, September.
    14. Yiyan Liu & Ginger Zhe Jin, 2013. "Employer Contribution and Premium Growth in Health Insurance," NBER Working Papers 19760, National Bureau of Economic Research, Inc.
    15. Anne Beeson Royalty, 2000. "Do Minimum Wage Increases Lower the Probability that Low-Skilled Workers Will Receive Fringe Benefits?," JCPR Working Papers 172, Northwestern University/University of Chicago Joint Center for Poverty Research.
    16. Liu, Yiyan & Jin, Ginger Zhe, 2015. "Employer contribution and premium growth in health insurance," Journal of Health Economics, Elsevier, vol. 39(C), pages 228-247.
    17. Amitabh Chandra & Jonathan S. Skinner, 2011. "Technology Growth and Expenditure Growth in Health Care," NBER Working Papers 16953, National Bureau of Economic Research, Inc.
    18. Jonathan Gruber & Helen Levy, 2009. "The Evolution of Medical Spending Risk," Journal of Economic Perspectives, American Economic Association, vol. 23(4), pages 25-48, Fall.
    19. Molly Frean & Mark Pauly, 2018. "Does High Cost-Sharing Slow the Long-term Growth Rate of Health Spending? Evidence from the States," NBER Working Papers 25156, National Bureau of Economic Research, Inc.
    20. Royalty, Anne Beeson & Hagens, John, 2005. "The effect of premiums on the decision to participate in health insurance and other fringe benefits offered by the employer: evidence from a real-world experiment," Journal of Health Economics, Elsevier, vol. 24(1), pages 95-112, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hrv:faseco:2660660. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Office for Scholarly Communication (email available below). General contact details of provider: https://edirc.repec.org/data/deharus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.