NCPA - National Center for Policy Analysis

The Effect Of Health Insurance Coverage On The Use Of Medical Services

August 6, 2010

In their new study, Michael Anderson, Carlos Dobkin and Tal Gross, researchers with the National Bureau of Economic Research (NBER), exploit the abrupt change in third-party coverage that occurs between ages 18 and 19 -- the result of young adults "aging out" of their parents' insurance plans -- to estimate the effect of health insurance coverage on the use of medical services. 

The researchers conclude: 

  • "Aging out" results in an abrupt 5 percentage point to 8 percentage point reduction in the probability of having health insurance.
  • Not having health insurance leads to a 40 percent reduction in emergency room visits and a 61 percent reduction in inpatient hospital admissions. 

The researchers examined data on hospital emergency room use and inpatient visits from hospital censuses in Arizona, California, Iowa, New Jersey, New York, Texas and Wisconsin between 1990 and 2007.  This data was augmented by information from the National Health Interview Survey (NHIS) and the Medical Expenditure Panel Survey (MEPS).   According to the researchers: 

  • The NHIS data suggest that the proportion of the total population that is uninsured increases by 4.6 percentage points at age 19.
  • The emergency room and hospital inpatient data imply that the proportion uninsured visiting those venues increases by 8.1 percentage points and 2.7 percentage points respectively at age 19.
  • Overall, a 10 percentage point decrease in the insurance coverage rate is associated with a 4 percent decrease in emergency room visits.  

The net decrease in emergency room visits by 19-year-olds suggests that newly uninsured patients do not substitute emergency room care for primary care in significant numbers.  According to the researchers: 

  • Hospital admissions through the emergency room also drop by 1 percent to 2 percent at age 19.
  • Direct inpatient admissions, which are more likely to be elective, fall by 6.7 percent for men and 6 percent for women (excluding pregnant women, almost all of whom are covered by either private insurance or Medicaid).  

Source: Linda Gorman, "The Effect of Health Insurance Coverage on the Use of Medical Services," NBER Digest, July 2010; based upon:  Michael Anderson, Carlos Dobkin and Tal Gross, "In The Effect of Health Insurance Coverage on the Use of Medical Services," National Bureau of Economic Research, Working Paper No. 15823, March 2010. 

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