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Bankruptcy as Implicit Health Insurance

  • Neale Mahoney
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    This paper examines the implicit health insurance households receive from the ability to declare bankruptcy. Exploiting cross-state and within-state variation in asset exemption law, I show that uninsured households with greater seizable assets make higher out-of-pocket medical payments, conditional on the amount of care received. In turn, I find that households with greater wealth-at-risk are more likely to hold health insurance. The implicit insurance from bankruptcy distorts the insurance coverage decision. Using a microsimulation model, I calculate that the optimal Pigovian penalties are similar on average to the penalties under the Affordable Care Act (ACA).

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    File URL: http://www.nber.org/papers/w18105.pdf
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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18105.

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    Date of creation: May 2012
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    Handle: RePEc:nbr:nberwo:18105
    Note: HC HE LE PE
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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    Web page: http://www.nber.org
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    1. Amy Finkelstein & Sarah Taubman & Bill Wright & Mira Bernstein & Jonathan Gruber & Joseph P. Newhouse & Heidi Allen & Katherine Baicker, 2012. "The Oregon Health Insurance Experiment: Evidence from the First Year," The Quarterly Journal of Economics, Oxford University Press, vol. 127(3), pages 1057-1106.
    2. Cardon, James H & Hendel, Igal, 2001. "Asymmetric Information in Health Insurance: Evidence from the National Medical Expenditure Survey," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 408-27, Autumn.
    3. Gruber, J. & Poterba, J., 1994. "Tax Incentives and the Decision to Purchase Health Insurance: Evidence from the Self-Employed," Working papers 94-10, Massachusetts Institute of Technology (MIT), Department of Economics.
    4. Anderson, Michael L., 2008. "Multiple Inference and Gender Differences in the Effects of Early Intervention: A Reevaluation of the Abecedarian, Perry Preschool, and Early Training Projects," Journal of the American Statistical Association, American Statistical Association, vol. 103(484), pages 1481-1495.
    5. Michelle J. White, 2007. "Bankruptcy Reform and Credit Cards," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 175-200, Fall.
    6. Jonathan T. Kolstad & Amanda E. Kowalski, 2014. "Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform," Upjohn Working Papers and Journal Articles 15-219, W.E. Upjohn Institute for Employment Research.
    7. Jonathan Gruber, 2008. "Covering the Uninsured in the United States," Journal of Economic Literature, American Economic Association, vol. 46(3), pages 571-606, September.
    8. Kowalski Amanda E. & Congdon William J. & Showalter Mark H., 2008. "State Health Insurance Regulations and the Price of High-Deductible Policies," Forum for Health Economics & Policy, De Gruyter, vol. 11(2), pages 1-26, November.
    9. Michelle J. White, 2007. "Bankruptcy Reform and Credit Cards," NBER Working Papers 13265, National Bureau of Economic Research, Inc.
    10. Marquis, M. Susan & Long, Stephen H., 1995. "Worker demand for health insurance in the non-group market," Journal of Health Economics, Elsevier, vol. 14(1), pages 47-63, May.
    11. Gruber, Jonathan & Rodriguez, David, 2007. "How much uncompensated care do doctors provide?," Journal of Health Economics, Elsevier, vol. 26(6), pages 1151-1169, December.
    12. Gruber, Jonathan & Simon, Kosali, 2008. "Crowd-out 10 years later: Have recent public insurance expansions crowded out private health insurance?," Journal of Health Economics, Elsevier, vol. 27(2), pages 201-217, March.
    13. Jonathan Gruber & David Rodriguez, 2007. "How Much Uncompensated Care do Doctors Provide?," NBER Working Papers 13585, National Bureau of Economic Research, Inc.
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