3 minute read
A large fraction of the eligible working American population chooses to decline employer-sponsored health insurance (ESHI), the main type of private health insurance available to them. While many believe this decision reflects workers’ relative good health, new research from the ANU College of Business and Economics (CBE) suggests otherwise.
CBE’s Dr Elena Capatina sheds light on the characteristics of America’s so-called insurance decliners, their incentives for declining cover and the interaction between private and public health insurance. Using responses from the Medical Expenditures Panel Survey and the National Longitudinal Survey of Youth’97, Elena explores whether insurance take-up is correlated with ex ante health risk after controlling for a range of other characteristics known to affect the price and generosity of coverage.
“Contrary to the common belief, based on the theory of adverse selection, I find that ESHI decliners aged between 25 and 40 have in fact significantly higher ex ante health risk than those who enrol. For those over 40, there is no significant relationship,” Elena explains.
“These results are partly explained by differences in workers’ incomes”, shares Elena “but are also the result of the publicly provided, means-tested Medicaid program crowding out ESHI for high risk workers with low labour force attachment,” she adds.
The introduction of the Affordable Care Act (ACA, or Obamacare) in 2010 had offsetting effects on selection in ESHI, leaving both the fraction of workers declining ESHI and their average risk unchanged.
However, the fraction of completely uninsured workers fell post-ACA as many of these employees got covered by the expanded Medicaid. These findings highlight the importance of considering the potential for different policies to act together when evaluating the overall effects on decisions to take-up health insurance,” Elena explains.
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Main image: Kelly van Dellen, shutterstock.com