title: Does the US health care safety net discourage private insurance coverage?
abstract: The large and growing uninsured population poses an alarming threat to the US health care system, and is a major target of the Obama health reform. This paper investigates analytically and empirically the degree to which the absence of health insurance in the US reflects the availability of the health care safety net, such as the guaranteed or charitable care provided by emergency rooms, community health centers and physicians. Our theoretical model demonstrates that the safety net can be a real alternative to health insurance, thus discouraging private insurance purchase in the market setting. In particular, when the community premium rate fails to reflect the value of such resources, not purchasing insurance becomes a rational decision for a sizeable portion of the population. The calibrated simulation based on US statistics indicates about 15.75% of the uninsured population, or 7.2 million people in US, are attributable to the existing safety net system. Further empirical analysis using nationally representative data shows consistently that the presence of local safety net resources may reduce the probability of individual insurance purchase by as much as 45.9%.
authors.affiliation: School of Economics, Peking University, Beijing, China. qin.econpku@gmail.com
authors.forename: Xuezheng
authors.initials: X
authors.lastname: Qin
authors.forename: Gordon G
authors.initials: GG
authors.lastname: Liu
mesh_terms: D000328:Adult; D004465:Economic Competition; D004636:Emergency Service, Hospital / Q000706:statistics & numerical data; D005260:Female; D017048:Health Care Costs / Q000706:statistics & numerical data; D018166:Health Care Reform / Q000191:economics; D006304:Health Status; D006801:Humans; D019458:Insurance Coverage / Q000706:statistics & numerical data*; D007348:Insurance, Health / Q000706:statistics & numerical data*; D008297:Male; D017057:Medically Uninsured / Q000706:statistics & numerical data*; D008875:Middle Aged; D008962:Models, Theoretical; D011203:Poverty / Q000706:statistics & numerical data; D064876:Safety-net Providers / Q000191:economics* / Q000458:organization & administration / Q000706:statistics & numerical data*; D012959:Socioeconomic Factors; D014481:United States