Duke 2008 | ASHE | Equity and Efficiency in Health and Healthcare

Conventional economic theory of insurance suggests that individuals who face higher risks of financial uncertainty due to medical care costs will be more likely to purchase insurance, all else equal. This suggests that there will be self selection, and that the long-term uninsured will be more likely to be healthy, with those who have chronic medical conditions more likely seeking consistent health insurance coverage over time if they can obtain it.

This paper explores this hypothesis empirically, using data on the duration of uninsured spells, and the health status of the uninsured. Using more sophisticated measures of health status [the Physical Component Summary Score (PCS), Mental Component Summary Score (MCS), and measures of the chronic conditions individuals have] than the usually-used self-reported health status measures, this study explores the relationship between various health status measures and uninsured spell durations. The study uses data from the Medical Expenditure Panel Study (MEPS) to measure the duration of uninsured spells, and the number of months without health insurance over a period of time, as well as individual health status. The study focuses on measures of risk for individuals and their relationship to long-term uninsurance status, in order to test hypotheses drawn from the Theory of Uncertainty.

The study finds that the long-term uninsured (more than one year) are a heterogeneous group, with some of these long-term uninsured being relatively healthy, while a surprisingly large portion have chronic health conditions. Further exploration, however, finds that the types of chronic conditions that are more prevalent among the long-term uninsured are chronic conditions that are more likely to be maintained without constant medical care attention. In addition, lower-income persons who also have chronic conditions are disproportionately represented among the chronically-ill long-term uninsured. This suggests that economic and employment barriers may be the key factor determining their long-term uninsurance status, even if their preference would be to self-select and obtain health insurance if it was available and affordable. However, if these long-term uninsured forego minimal health care, concerns can be raised about the long-term effects on their health status. These findings raise considerable implications for policy proposals to address the long-term uninsured, and this paper discusses proposals that would be most effective at aiding the long term uninsured.