Academic journal article Contemporary Economic Policy

Measuring Health Insurance Benefits: The Case of People with Disabilities

Academic journal article Contemporary Economic Policy

Measuring Health Insurance Benefits: The Case of People with Disabilities

Article excerpt

Since 2012, the Congressional Budget Office has included an estimate of the market value of government-provided health insurance coverage in its measures of household income. We follow this practice for both public and private health insurance to capture the impact of greater access to government-provided health insurance for working-age people with disabilities, whose market value rose in 2010 dollars from $11.7 billion in 1980 to $114.3 billion in 2012. We then consider the more general implications of incorporating estimates of the market price of insurance, equivalent to that provided by the government, into policy analyses in a post-Affordable Care Act world. (JEL D31, H24, I18, J31)

I. INTRODUCTION

A crucial aspect of many recent policy debates in the United States focuses on the distribution and redistribution of financial resources. This can be seen in recent discussions of health care policies (Aaron and Burtless 2014), tax policies (Nunns, Eng, and Austin 2014), and income support policies (MaCurdy 2015). However, for such discussions to be meaningful, it is necessary to first establish an accurate assessment of how resources are currently distributed. To this end, starting in 2012, the Congressional Budget Office (CBO) has included an estimate of the market value of government-provided health insurance coverage in its measure of household resources (CBO 2012, 2013). However, there is considerable debate in the academic literature over the importance of including the market value of health insurance (i.e., the cost to employers and government of providing health insurance) in measures of economic resources and their distribution (see Burkhauser, Larrimore, and Simon 2013, for a discussion of this debate).

A small academic literature shows that the inclusion of the market value of health insurance impacts resource levels, but has little effect on trends outside of the bottom of the distribution (Armour, Burkhauser, and Larrimore 2014; Burkhauser, Larrimore, and Simon 2013; Burtless and Milusheva 2013; Burtless and Svaton 2010; Sommers and Oellerich 2013). However, placing a resource value on health insurance may be more important for specific segments of the population than it is for the whole population and to date no analyses have been done on its importance on these segments of the population. Here, we focus on an obvious one--working-age people with self-reported work activity limitations (i.e., working-age people with disabilities). In doing so, we assess the impact of the new CBO approach of including the market value of government-provided health insurance in measures of economic resources. Following this approach to valuing health insurance, we demonstrate the impact that increased access to private and public health insurance has had on the observed economic resources of individuals with disabilities since 1980, both absolutely and relative to the rest of the working-age population. This growth in the share of resources of those with disabilities that are devoted to medical costs matters for a number of policy debates, including discussions of the distribution of resources across population groups as well as discussions over how program rules affect the behavior of those receiving these benefits who may consider entering the labor market or those who are considering applying for these benefits.

Using our findings as an example, we then discuss the merits of valuing health insurance coverage as an economic resource based on its price in the market place, and consider how the Affordable Care Act (ACA) fundamentally changes the market values under this approach.

II. BACKGROUND ON THE WORKING-AGE POPULATION WITH DISABILITIES

The working-age population (aged 18-64) with disabilities that we focus on in this paper is important both as a share of the overall population (8.2% of working-age adults reported having a work activity limitation in 2011) and as a share of government expenditures. …

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