Comment--Defining health insurance affordability: Unobserved heterogeneity matters
Affordability is a vague concept. Bundorf and Pauly [Bundorf, M.K., Pauly, M.V., 2006. Is health insurance affordable for the uninsured? Journal of Health Economics 25 (4), 650-673] address this problem by establishing clear working definitions of affordability, and they use these definitions to estimate the percent of the uninsured who can afford insurance. When they establish their definitions of affordability, they use a microeconomic model that omits essential characteristics of the health insurance market. This comment suggests alternative definitions that better incorporate the structure of the health insurance market, discusses both endogeneity and specification problems that might occur when implementing their econometric model to estimate the fraction of "uninsured afforders," and then recommends ways to reduce omitted variable bias and endogeneity bias.
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