Is health insurance good for you?

Kevin Drum follows up on recent debates.  Apart from mortaility, he mentions:

…preventive care, pain reduction, life improvement, employability, stress reduction, medical bankruptcies, etc.

One way of measuring the value of health insurance is by its market price and by that standard many of the current uninsured just don't value health insurance very much.  That's why they don't buy it.  I don't mean to rule out paternalism a priori, but it's odd not to mention the price of insurance as a bound of its value.

There is a more-than-defensible line of argumentation that the value of a poor man's life is not measured by his money.  But again, that has more force for when someone gives him health insurance (Medicaid) than when we make him buy it.  In the latter case we're also taking away something he values and the scope of that value, all things considered, also may well go beyond its monetary measure.

It's also the case that market data can prove misleading.  It could be that government provision can get the poor health insurance more cheaply, without the private sector mark-up.  That possibility militates in favor of a Medicaid expansion but not the mandate.  When it comes to the mandate, policy doesn't avoid the private sector mark-up on the insurance and there's also a loss from the relatively low valuation of the insurance.  Even with the subsidies, a lot of the poor would be worse off having to buy the product.  Those that are better off won't be better off by so much.

It's one thing to count up "lives saved from insurance" but a lot of those lives are, in ex ante terms, actually made worse off from the mandate.  Some recent research indicates that an economic downturn saves the lives of a lot of lower-middle class individuals by limiting their consumption of cigarettes.  Surely the first question is whether the downturn makes those individuals better off — doubtful — and not whether it saves some of their lives.

Another way to value health insurance, especially govrernment-supplied health insurance, is to look at differences across states.  Texas is skimpy with Medicaid benefits but New York is much more generous.  If you're considering moving across state lines, how big a draw is this?  Can any of you refer me to a paper on the implicit hedonic value of Medicaid benefits or other forms of insurance?  I would be interested in understanding this data.

I've read many blog posts on this topic in the last week but they are skimpy on the ordinal approach, which in my view further favors Medicaid expansion over the mandate.


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