Abstract
This paper investigates the difference in the health conditions and the health care consumption of uninsured individuals as compared to individuals with private insurance, using a nationally representative data set of inpatient hospital admissions from the US. In line with the previous literature, our results indicate that uninsured individuals are, on average, in worse health conditions. However, if we compare individuals within the same diagnosis category, the uninsured are actually healthier, with a lower number of chronic conditions and a lower risk of mortality. This indicates that the uninsured are admitted to the hospital only for more serious conditions. In addition, our results show that uninsured individuals consume less health care. In particular, conditional on being admitted to a hospital and controlling for health conditions, the uninsured have lower total charges, fewer procedures, and a higher mortality rate.
Highlights
The Affordable Care Act is the most comprehensive reform of the U.S healthcare system in the last decades and, when fully implemented, it is expected to have a substantial impact on the healthcare system
As has been noted in the literature, it can be challenging to identify the causal effect of having health insurance on health care consumption because insured and uninsured individuals may have different characteristics
Our identification strategy is based on carefully controlling for health conditions, essentially comparing the health care consumption of individuals with the same set of diagnoses
Summary
The Affordable Care Act is the most comprehensive reform of the U.S healthcare system in the last decades and, when fully implemented, it is expected to have a substantial impact on the healthcare system. The adverse selection problem predicts that individuals with a higher probability of requiring medical care are more likely to buy health insurance. This prediction would imply that the uninsured are healthier compared to the insured. The other key factor is income, as individuals with low incomes may not be able to afford health insurance. It is not clear if the individuals with no insurance are in better or worse health conditions than the individuals with health insurance
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