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The Impact of Macroeconomic Conditions on the Health Insurance Coverage of Americans

In: Frontiers in Health Policy Research, Volume 6

  • John Cawley
  • Kosali I. Simon

In March 2001, the longest economic expansion in U.S. history ended, and an economic recession began. This paper seeks to provide a better understanding of the historical relationship between macroeconomic variables and health insurance coverage.We use data from two nationally representative samples: the Survey of Income and Program Participation (SIPP) and the National Longitudinal Survey of Youth (NLSY). The longitudinal nature of our data allows us to remove individual-specific, time-invariant heterogeneity and to focus on changes in health insurance status in response to changes in macroeconomic variables.The results confirm our prediction that the probability of any health insurance coverage is negatively associated with unemployment rate. We find that a one percentage point increase in the state unemployment rate is associated with a decrease in the probability of health insurance coverage, through any source, of 0.62 percent for men, 0.54 percent for women, and 1.1 percent for children. However, our prediction that an indicator variable for national recession would be negatively correlated with the probability of health insurance coverage is not supported by the data. We find that changes in employment status explain roughly one-quarter of the correlation between health insurance coverage and unemployment rates. Our estimates imply that 440,000 men, 436,000 women, and 494,000 children have lost health insurance coverage during the current recession.

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This chapter was published in:
  • David M. Cutler & Alan M. Garber, 2003. "Frontiers in Health Policy Research, Volume 6," NBER Books, National Bureau of Economic Research, Inc, number cutl03-1, December.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 9865.
    Handle: RePEc:nbr:nberch:9865
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
    Phone: 617-868-3900
    Web page: http://www.nber.org
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