The Effect of Medicare Coverage for the Disabled on the Market for Private InsuranceSubsidies for health insurance for chronically ill, high-cost individuals may increase coverage in the broader population by improving the functioning of insurance markets. In this paper, we assess an historical example of a policy intervention of this sort, the extension of Medicare to the disabled, on the private insurance coverage of non-disabled individuals. We use data on insurance coverage from the Panel Study of Income Dynamics from before and after the extension of Medicare to the disabled to estimate the effect of the program on private insurance coverage rates in the broader population. We find that the insurance coverage of individuals who had a health condition that limited their ability to work increased significantly in states with high versus low rates of disability. Our findings suggest that that subsidizing individuals with high expected health costs is an effective way to increase the private insurance coverage of other high-cost individuals. |
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0.5 percentage points 13.3 percentage point allowing for within-state broader population calculated using PSID cn/ca comprehensiveness of private coverage of non-disabled DDD estimate Descriptive statistics difference in trends disabled individuals Effect of Medicare eligible for Medicare estimate the effect expected health costs extending Medicare extension of Medicare Ɛjt fixed effects FL GA KY Glenn Hubbard heads of household Heteroscedasticity-consistent standard errors high expected health high-cost individuals High-disability Income Dynamics indicator variables individuals with high insurance coverage rates interquartile range kind or amount low-cost individuals Medicaid enrollment rates Medicare extension MO MS NC NBER number of nonelderly number of SSDI omitted group Panel Study percent percentage point increase private coverage private insurance coverage private insurance market rates in high rates of SSDI Rothschild-Stiglitz standard errors allowing Study of Income target efficiency trends in coverage versus low rates versus low-disability versus not work-limited Wijt within-state correlation work-limited individuals work-limited versus