|Title||The Financial Impact of Health Insurance|
|Year of Publication||2000|
|Institution||University of California at Berkeley|
|Keywords||Consumption and Savings, Medicare/Medicaid/Health Insurance|
What are the financial benefits of having health insurance? Although health insurance is ostensibly intended to help protect households from economic risks related to poor health, very little is known about the magnitude of this effect. Alternative mechanisms (such as informal health insurance or depleting assets) may be equally important in allowing households to smooth consumption in the event of a health shock. This paper analyzes the role of health insurance in buffering the impact of health shocks on household consumption and wealth. Using data from the Health and Retirement Study, I find very little evidence that household consumption or wealth is affected by the onset of a serious illness regardless of the household s insurance status. This suggests that on average, other insurance mechanisms may be at least as important as formal health insurance in protecting households from health-related economic risk.
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