April 24, 2008
Medical Insurance Crowd Out

The abstract of a paper (ungated verson here) by Jonathan Gruber and Kosali Simon in the Journal of Health Economics:

Ten years ago, Cutler and Gruber [Cutler, D., Gruber, J., 1996. Does public health insurance crowdout private insurance? Quarterly Journal of Economics 111, 391–430] suggested that crowd-out might be quite large, but much subsequent research has questioned this conclusion. Our results using improved data and methods clearly show that crowd-out is still significant in the 1996–2002 period. This finding emerges most strongly when we consider family level measures of public insurance eligibility. We also find that recent anti-crowd-out provisions in public expansions may have had the opposite effect, lowering take-up by the uninsured faster than they lower crowd-out of private insurance.

Something to keep in mind when candidates prattle on about universal coverage--what they really mean is universal government coverage.

Posted by E. Frank Stephenson at 12:42 PM in Economics

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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