Working Paper: NBER ID: w14309
Authors: John F. Cogan; R. Glenn Hubbard; Daniel P. Kessler
Abstract: Subsidies for health insurance for chronically ill, high-cost individuals may increase coverage in the broader population by improving the functioning of insurance markets. In this paper, we assess an historical example of a policy intervention of this sort, the extension of Medicare to the disabled, on the private insurance coverage of non-disabled individuals. We use data on insurance coverage from the Panel Study of Income Dynamics from before and after the extension of Medicare to the disabled to estimate the effect of the program on private insurance coverage rates in the broader population. We find that the insurance coverage of individuals who had a health condition that limited their ability to work increased significantly in states with high versus low rates of disability. Our findings suggest that that subsidizing individuals with high expected health costs is an effective way to increase the private insurance coverage of other high-cost individuals.
Keywords: Medicare; Private Insurance; Health Policy; Disability; Insurance Coverage
JEL Codes: I1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Extension of Medicare to disabled individuals (I13) | Increase in private insurance coverage rates for work-limited individuals in high-disability states (G52) |
| Extension of Medicare to disabled individuals (I13) | Increase in comprehensiveness of private insurance coverage in high-disability states (I13) |
| Extension of Medicare to disabled individuals (I13) | Increase in private insurance coverage rates for work-limited individuals in low-disability states (G52) |
| Increase in private insurance coverage rates for work-limited individuals in high-disability states (G52) | Increase in private insurance coverage rates for work-limited individuals in low-disability states (G52) |