Considerations about HEALTH INSURANCE with Canadian Health&Care Mall
Posted on 21st January and posted in
Category: HEALTH INSURANCE
This paper suggests that the initial effects of the 1954 tax subsidy go beyond that of increasing the relative amount of health insurance coverage purchased by decreasing its relative price. The prices on drugs on Canadian Health&Care Mall are lower in comparison with other drug stores. Results indicate that the tax subsidy promoted the growth of group insurance, and correspondingly enabled more households to gain access to health insurance coverage than before the changes occurred. Further, after 1954, people with access to group insurance were even more likely to purchase coverage, and people with employer contributions purchased more coverage than they did before. In the NORC sample, the number of people with access to group insurance rose 18.9 percentage points, from 47.8 percent to 66.7 percent. Both union members and employed persons in 1958 were statistically significantly more likely to have access to group health insurance than either group in 1953. Results indicate that up to 41 percent of the rise in the predicted probability of having insurance over the period may be attributable to changes in access to group insurance.
To some degree, this increase in access to group insurance may have made health insurance markets more complete by reducing risks of adverse selection and by lowering the administrative costs of insurance companies. These savings are in turn reflected in lower premiums for consumers relative to those of individual insurance coverage. Furthermore, people who may not have been able to buy insurance individually (in effect facing an infinite price) might have been able to do so with the less stringent group enrollment process. Results show that households with access to group insurance were 46 percent more likely to have health insurance than households without the opportunity to purchase group insurance. The effect of having access to group insurance is a strong one, then and now. If the tax subsidy encouraged the growth of group insurance, then it did far more than just lower the cost of insurance coverage by exempting employer contributions from income taxes— it also enabled many more people to have access to health insurance. If it is indeed the case that the effect of the tax subsidy in contributing to the growth of employment-based group insurance was important, then the tax subsidy may have actually engendered institutional change, and shaped the modern health insurance market. Given this, any modern policy decision that affects the tax subsidy must be evaluated not only with respect to how it would affect the relative price of health insurance, but also with respect to what ramifications it might have on group insurance and access to health insurance coverage.
Table A1: Limited Sample Descriptive Statistics,1953 (n=1171) and 1958 (n=971)
Variable |
Mean, 1953 |
Std. Dev, 1953 |
Min, 1953 |
Max, 1953 |
Mean, 1958 |
Std. Dev, 1958 |
Min, 1958 |
Max, 1958 |
Age | 50.984 | 15.879 | 19 | 90 | 46.670 | 15.527 | 18 | 90 |
Age2 | 2851 | 1663 | 361 | 8100 | 2419 | 1537 | 324 | 8100 |
Coverage | 18.268 | 35.251 | 0 | 197.934 | 49.093 | 62.970 | 0 | 348.45 |
Education | 0.276 | 0.447 | 0 | 1 | 0.257 | 0.437 | 0 | 1 |
Employed | 0.741 | 0.438 | 0 | 1 | 0.826 | 0.379 | 0 | 1 |
Family Size | 2.974 | 1.706 | 1 | 13 | 3.391 | 1.880 | 1 | 14 |
(Family Size)2 | 11.753 | 14.675 | 1 | 169 | 15.033 | 18.674 | 1 | 196 |
Female Head | 0.227 | 0.419 | 0 | 1 | 0.106 | 0.308 | 0 | 1 |
Group | 0.268 | 0.443 | 0 | 1 | 0.471 | 0.499 | 0 | 1 |
Income | 3492 | 2857 | 100 | 50000 | 4957 | 4095 | 37 | 57000 |
Insured | 0.290 | 0.454 | 0 | 1 | 0.475 | 0.500 | 0 | 1 |
Lodge Member | 0.166 | 0.372 | 0 | 1 | 0.230 | 0.421 | 0 | 1 |
Married | 0.717 | 0.450 | 0 | 1 | 0.826 | 0.379 | 0 | 1 |
MTR | 0.150 | 0.111 | 0 | 0.75 | 0.160 | 0.092 | 0 | 0.38 |
Overten | 0.044 | 0.204 | 0 | 1 | 0.074 | 0.262 | 0 | 1 |
Premium | 7.036 | 4.127 | 0.5 | 35.27 | 6.156 | 5.070 | 0.85 | 27.18 |
Black | 0.135 | 0.342 | 0 | 1 | 0.103 | 0.304 | 0 | 1 |
Trunc. Income | 3450 | 2487 | 100 | 10000 | 4623 | 2752 | 37 | 10000 |
Union Member | 0.260 | 0.439 | 0 | 1 | 0.252 | 0.435 | 0 | 1 |
Occupation Dummies | ||||||||
Professional 0.168 | 0.374 | 0 | 1 | 0.100 | 0.300 | 0 | 1 | |
Farmer | 0.149 | 0.356 | 0 | 1 | 0.094 | 0.292 | 0 | 1 |
Clerical | 0.044 | 0.206 | 0 | 1 | 0.061 | 0.239 | 0 | 1 |
Sales | 0.035 | 0.184 | 0 | 1 | 0.049 | 0.217 | 0 | 1 |
Craftsman | 0.143 | 0.350 | 0 | 1 | 0.206 | 0.405 | 0 | 1 |
Service | 0.088 | 0.283 | 0 | 1 | 0.087 | 0.281 | 0 | 1 |
Laborer | 0.070 | 0.255 | 0 | 1 | 0.093 | 0.290 | 0 | 1 |
Operative | 0.132 | 0.338 | 0 | 1 | 0.184 | 0.388 | 0 | 1 |
Industry Dummies | ||||||||
Agriculture | 0.173 | 0.379 | 0 | 1 | 0.132 | 0.338 | 0 | 1 |
Mining | 0.099 | 0.299 | 0 | 1 | 0.027 | 0.162 | 0 | 1 |
Manufacturing | 0.178 | 0.383 | 0 | 1 | 0.277 | 0.448 | 0 | 1 |
Finance | 0.019 | 0.136 | 0 | 1 | 0.036 | 0.186 | 0 | 1 |
Service Industry | 0.112 | 0.315 | 0 | 1 | 0.165 | 0.371 | 0 | 1 |
Public | 0.036 | 0.186 | 0 | 1 | 0.059 | 0.235 | 0 | 1 |
Trade | 0.136 | 0.343 | 0 | 1 | 0.133 | 0.340 | 0 | 1 |
Transportation | 0.056 | 0.231 | 0 | 1 | 0.066 | 0.248 | 0 | 1 |
Regional Dummies | ||||||||
Northeast | 0.194 | 0.395 | 0 | 1 | 0.179 | 0.384 | 0 | 1 |
Northcentral | 0.264 | 0.441 | 0 | 1 | 0.247 | 0.432 | 0 | 1 |
Southeast | 0.185 | 0.389 | 0 | 1 | 0.179 | 0.384 | 0 | 1 |
Southcentral | 0.215 | 0.411 | 0 | 1 | 0.225 | 0.417 | 0 | 1 |
Mountain | 0.046 | 0.210 | 0 | 1 | 0.046 | 0.210 | 0 | 1 |
Pacific | 0.094 | 0.292 | 0 | 1 | 0.120 | 0.326 | 0 | 1 |
Table A2: Pooled Probit Estimation of Health Insurance Purchase, Limited Sample
Variable | Marginal Effect | Std.Error | P-Value |
Family Size | 0.0526 | 0.0262 | 0.0450 |
(Family Size)2 | 0.0526 | 0.0262 | 0.0450 |
Age | -0.0061 | 0.0028 | 0.0310 |
(Age)2 | 0.0134 | 0.0053 | 0.0120 |
Income | –0.0001 | 0.0001 | 0.0190 |
Education | 0.0000 | 0.0000 | 0.0000 |
Black | 0.0142 | 0.0314 | 0.6490 |
Professional | -0.0661 | 0.0393 | 0.1050 |
Clerical | 0.0544 | 0.0459 | 0.2270 |
Sales | 0.1140 | 0.0656 | 0.0730 |
Craftsman | 0.1326 | 0.0690 | 0.0470 |
Service | 0.0759 | 0.0416 | 0.0620 |
Laborer | 0.1054 | 0.0538 | 0.0440 |
Operative | 0.0088 | 0.0550 | 0.8720 |
Overten | 0.1636 | 0.0449 | 0.0000 |
Northeast | -0.1446 | 0.0520 | 0.0150 |
North Central | -0.0536 | 0.0619 | 0.3980 |
Southeast | -0.0027 | 0.0626 | 0.9650 |
South Central | 0.0744 | 0.0673 | 0.2600 |
Pacific | 0.0995 | 0.0672 | 0.1310 |
Group | -0.1160 | 0.0608 | 0.0800 |
Group*Year=58 | 0.5463 | 0.0305 | 0.0000 |
MTR*Year=58 | 0.1395 | 0.0560 | 0.0110 |
MTR | 0.4488 | 0.2799 | 0.1090 |
Year=58 | 0.0703 | 0.2079 | 0.7350 |
-0.0750 | 0.0536 | 0.1640 |
Table A3: Results from Estimating Equations 6.1 and 6.2
1953 | ||
Hospital Benefits | ||
Age Category | Estimate of a | Estimate of P |
under 17 | -0.7346 | 1.3731 |
17-58 | -1.5714 | 2.7626 |
59-65 | -0.3857 | 2.9813 |
65 and over | -1.5714 | 4.7626 |
Surgical Benefits | ||
Age Category | Estimate of a | Estimate of P |
under 17 | 0 | 0.04 |
17-65 | 0 | 0.04 |
over 65 | 0 | 0.06 |
1958 | ||
Hospital Benefits, Male | ||
Age Category | Estimate of a | Estimate of P |
18-24 | 0 | 1.52 |
25-29 | 0 | 1.60 |
30-34 | 0 | 1.72 |
35-39 | 0 | 1.80 |
40-44 | 0 | 2.20 |
45-49 | 0 | 2.60 |
50-55 | 0 | 3.00 |
56-59 | 0 | 3.20 |
over 60 | 0 | 3.40 |
Surgical Benefits, Male | ||
Age Category | Estimate of a | Estimate of P |
18-63 | 0 | 0.04 |
over 63 | 0 | 0.07 |
Hospital Benefits, Female | ||
Age Category | Estimate of a | Estimate of P |
18-24 | 0 | 2.20 |
25-29 | 0 | 2.40 |
30-34 | 0 | 2.60 |
35-39 | 0 | 2.80 |
40-44 | 0 | 3.00 |
45-49 | 0 | 3.20 |
50-55 | 0 | 3.40 |
56-59 | 0 | 3.40 |
over 60 | 0 | 3.40 |
Surgical Benefits, Female | ||
Age Category | Estimate of a | Estimate of P |
18-63 | 0 | 0.053 |
over 63 | 0 | 0.067 |
Hospital Benefits, Minors under age 17 | ||
Age | Estimate of a | Estimate of P |
under 17 | 0 | 1.00 |
Surgical Benefits, Minors under age 17 | ||
Age | Estimate of a | Estimate of P |
under 17 | 0 | 0.32 |