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Wiley InterScience | ||||||||||||||||||
  Health Services ResearchVolume 39 Issue 5, Pages 1547 - 1570 Published Online: 26 Aug 2004 © 2009 Health Research and Educational Trust Published on behalf of Health Research and Educational Trust in cooperation with AcademyHealth.
Abstract | References | Full Text: HTML, PDF (Size: 193K) | Related Articles | Citation Tracking  Subsidies and the Demand for Individual Health Insurance in California Address correspondence to M. Susan Marquis, Ph.D., Senior Economist, RAND, 1200 South Hayes St., Arlington, VA 22202-5050. Melinda Beeuwkes Buntin, Ph.D., is an Economist with RAND, Arlington, Virginia. José J. Escarce, M.D., Ph.D., is Professor of Medicine, Department of Medicine, Division of General Internal Medicine, University of California, Los Angeles, and RAND, Santa Monica, California. Kanika Kapur, Ph.D., is an Economist with RAND, Santa Monica. Jill M. Yegian, Ph.D., is a Senior Program Officer, California Health Care Foundation, Oakland, California. Copyright © 2004 Health Research and Education Trust. All rights reserved KEYWORDS Demand for health insurance • safety net • tax credits ABSTRACTObjective. To estimate the effect of changes in premiums for individual insurance on decisions to purchase individual insurance and how this price response varies among subgroups of the population. Data Source. Survey responses from the Current Population Survey (http://www.bls.census.gov/cps/cpsmain.htm), the Survey of Income and Program Participation (http://www.sipp.census.gov/sipp), the National Health Interview Survey (http://www.cdc.gov/nchs/nhis.htm), and data about premiums and plans offered in the individual insurance market in California, 1996–2001. Study Design. A logit model was used to estimate the decisions to purchase individual insurance by families without access to group insurance. This was modeled as a function of premiums, controlling for family characteristics and other characteristics of the market. A multinomial model was used to estimate the choice between group coverage, individual coverage, and remaining uninsured for workers offered group coverage as a function of premiums for individual insurance and out-of-pocket costs of group coverage. Principal Findings. The elasticity of demand for individual insurance by those without access to group insurance is about −.2 to −.4, as has been found in earlier studies. However, there are substantial differences in price responses among subgroups with low-income, young, and self-employed families showing the greatest response. Among workers offered group insurance, a decrease in individual premiums has very small effects on the choice to purchase individual coverage versus group coverage. Conclusions. Subsidy programs may make insurance more affordable for some families, but even sizeable subsidies are unlikely to solve the problem of the uninsured. We do not find evidence that subsidies to individual insurance will produce an unraveling of the employer-based health insurance system. | 
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