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Title: Bankruptcy as Implicit Health Insurance

Citation Type: Journal Article

Publication Year: 2015

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Abstract: This paper examines the implicit health insurance that households receive from the ability to declare bankruptcy. Exploiting multiple sources of variation in asset exemption law, I show that uninsured households with a greater financial cost of bankruptcy make higher out-of-pocket medical payments, conditional on the amount of care received. In turn, I find that households with greater wealth at risk are more likely to hold health insurance. The implicit insurance from bankruptcy distorts the insurance coverage decision. Using a microsimulation model, I calculate that the optimal Pigovian penalties are three-quarters as large as the average penalties under the Affordable Care Act.

Url: https://www.aeaweb.org/articles.php?doi=10.1257/aer.20131408

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Authors: Mahoney, Neale

Periodical (Full): American Economic Review

Issue: 2

Volume: 105

Pages: 710-746

Data Collections: IPUMS CPS

Topics: Health, Other

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