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

Author

Listed:
  • 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)

  • Matthew J. Notowidigdo

    (Department of Economics, Northwestern University, Evanston, Illinois 60208, USA)

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.

Suggested Citation

  • Amy Finkelstein & Neale Mahoney & Matthew J. Notowidigdo, 2018. "What Does (Formal) Health Insurance Do, and for Whom?," Annual Review of Economics, Annual Reviews, vol. 10(1), pages 261-286, August.
  • Handle: RePEc:anr:reveco:v:10:y:2018:p:261-286
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    File URL: https://doi.org/10.1146/annurev-economics-080217-053608
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    Cited by:

    1. Remmerswaal, Minke & Boone, Jan & Bijlsma, Michiel & Douven, R.C.M.H., 2017. "Cost-Sharing Design Matters : A Comparison of the Rebate and Deductible in Healthcare," Discussion Paper 2017-039, Tilburg University, Tilburg Law and Economic Center.
    2. Bijlsma, Michiel & Boone, Jan & Douven, Rudy & Remmerswaal, Minke, 2017. "Cost-Sharing Design Matters: A Comparison of the Rebate and Deductible in Healthcare," CEPR Discussion Papers 12507, C.E.P.R. Discussion Papers.
    3. Minke Remmerswaal & Jan Boone & Michiel Bijlsma & Rudy Douven, 2017. "Cost-Sharing Design Matters: A Comparison of the Rebate and Deductible in Healthcare," CPB Discussion Paper 367, CPB Netherlands Bureau for Economic Policy Analysis.
    4. repec:eee:pubeco:v:170:y:2019:i:c:p:83-97 is not listed on IDEAS

    More about this item

    Keywords

    health insurance; public subsidies; uncompensated care;

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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