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Health Risk, Income, and Employment-Based Health Insurance

Author

Listed:
  • Bundorf M. Kate

    () (Stanford University)

  • Herring Bradley

    () (Johns Hopkins University)

  • Pauly Mark V.

    () (University of Pennsylvania)

Abstract

While many believe that an individuals health plays an important role in both their willingness and ability to obtain health insurance in the employment-based setting, relatively little agreement exists on the extent to which health status affects coverage rates, particularly for those with lower incomes. In this paper, we examine the relationship between health risk and the purchase of group health insurance and whether that relationship differs by a persons income and whether they obtain coverage in the small, medium, or large group market. Using the panel component of the 1996-2002 Medical Expenditure Panel Survey (MEPS), we find that health risk is positively associated with private health insurance across the different markets, and that this positive relationship is stronger for low and middle income people, particularly in the large group market. Our results are consistent with the existence of adverse selection in the group market in the form of low rates of coverage among low risks due to an absence of risk rating of premiums. We conclude that pooled premiums for low risks, particularly those with low incomes, may represent a more important financial barrier to coverage in voluntary group insurance than high premiums for high risks.

Suggested Citation

  • Bundorf M. Kate & Herring Bradley & Pauly Mark V., 2010. "Health Risk, Income, and Employment-Based Health Insurance," Forum for Health Economics & Policy, De Gruyter, vol. 13(2), pages 1-35, September.
  • Handle: RePEc:bpj:fhecpo:v:13:y:2010:i:2:n:13
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    References listed on IDEAS

    as
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    Cited by:

    1. Bolhaar, Jonneke & Lindeboom, Maarten & van der Klaauw, Bas, 2012. "A dynamic analysis of the demand for health insurance and health care," European Economic Review, Elsevier, pages 669-690.
    2. Stanciole, Anderson, 2007. "Health Insurance and Life Style Choices: Identifying the Ex Ante Moral Hazard," IRISS Working Paper Series 2007-10, IRISS at CEPS/INSTEAD.
    3. repec:pri:crcwel:wp06-10-ff is not listed on IDEAS
    4. Hope Corman & Anne Carroll & Kelly Noonan & Nancy E. Reichman, 2006. "The Effects of Health on Health Insurance Status in Fragile Families," NBER Working Papers 12197, National Bureau of Economic Research, Inc.
    5. Ines Läufer, 2014. "Another perspective on the high uninsured-rate in the USA: Crowding out of long term health insurance by the institutional setting of the U.S. health insurance system," Otto-Wolff-Institut Discussion Paper Series 02/2014, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.
    6. Robert Helms, 2006. "Health Reform in the US," PharmacoEconomics, Springer, vol. 24(2), pages 5-14, December.
    7. repec:eee:jhecon:v:55:y:2017:i:c:p:95-107 is not listed on IDEAS

    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health

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