Health Insurance, Non-Deferrable Health Events and Financial Risk

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Enter the text here that is the new abstract information for your application. This section must be no longer than 30 lines of text. The goal of this study is to estimate the impact of health insurance on financial risk among the young elderly (ages 65-80) relative to the near elderly (ages 50-64). The near elderly are ineligible for Medicare based on age but are more likely than the general population to have serious health conditions and thus be exposed to medical expenditure risk (Williams et al. 2010). While less than 1 percent of the elderly are uninsured, almost 15 percent of the near elderly lacked insurance in 2010 (KFF 2011b). Thus, health insurance has the potential to significantly affect exposure to financial risk for the elderly relative to the near elderly. We will use 15 years (1996-2010) of the Medical Expenditure Panel Survey (MEPS), the highest quality nationally representative data containing information on health insurance coverage, health conditions, and total and out-of-pocket medical spending, both overall and by category (e.g. inpatient, outpatient). We will supplement the MEPS analysis with secondary data on medical- related financial stress from the Health Tracking Household Survey (HTHS) and unique primary data collected on the actual and perceived financial risk associated with health spending from the RAND American Life Panel (ALP). Using these data this exploratory project will address the following aims: (1) Estimate the relationship between health insurance and actual and perceived financial risk in an regression discontinuity framework, exploiting the discontinuity in Medicare coverage at age 65. (2) Investigate heterogeneity in the impact of Medicare on both actual and perceived financial risk across education and race/ethnicity groups as well as its impact on disparities in financial risk. (3) Estimate the welfare change from Medicare-related changes in risk exposure in an expected utility framework and compare this change to the social cost of the program.