Exiting the Health Insurance Market as a Rational Choice: Demand for Health Insurance in a Learning Model

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Exiting the Health Insurance Market as a Rational
Choice Demand for Health Insurance in a Learning
Model

• Author Rahul Jain
• Discussant Samuel Hsin-yu Tseng

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Question

• Why do people drop health insurance coverage?
• - Important questions because different causes
  suggest different policy interventions
• - Studies suggest that this dropout is caused by
  adverse shocks to income and/or premium
• - This paper proposes two competing causes
  learning and aging effects of age

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Motivation

• Show whether the dropout of insurance coverage is
  economically significant
• - transition matrix of insurance status

Age Insurance status in (t-1) of uninsured in (t)
50-64 Group coverage 3
35-49 Group coverage
18-34 Group coverage
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Motivation (Contd)

• Examine how much of the dropout can be attributed
  to changes in income, changes in premium, and
  learning and aging effects of age, and other
  factors

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Effects of Job Changes on Coverage

• Data source MEPS data for 1997-2000
• The implementation of HIPAA in 1996 may delay the
  dropout of coverage caused by job changes
• - Acknowledge this institutional feature and may
  incorporate it in the regression
• HIPAA indicates that
• - after leaving the job, workers are entitled to
  COBRA coverage for 18 months
• - after COBRA coverage is exhausted, workers are
  guaranteed coverage in the individual market

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Policy Implications

• Elaborate the implications of the findings on
  healthcare policy