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|Title:||THE INTERACTION OF INSURANCE AND CONSUMPTION: AN EMPIRICAL STUDY OF THE EFFECT OF HEALTH INSURANCE ON HOUSEHOLD SPENDING|
|Abstract:||The United States devotes a significant portion of its GDP on health care. Even with this high level of spending, more than 15 percent of Americans remain uninsured. While many studies have focused on the relationship between demographic characteristics and insurance, relatively less research has examined insurance in the framework of consumer choice. I employ nationally representative household-level data to analyze the impact of insurance on consumption of non-medical goods and services. Based on OLS regressions, I find that having coverage increases expenditure in various categories of non-medical expenses, and that this effect is greater for luxuries than necessities. Additionally, regressions of relative expenditure show that insurance causes households to spend a smaller portion of their budget on saving and non-medical insurance. The main finding of this paper is that health insurance has a statistically significant effect on various categories of non-medical consumption. Thus, public health policy should consider the effect of coverage not only on utilization of medical care but also on other types of expenditure. As coverage is expanded through the Affordable Care Act, it will become important to study the full impact of the reform by analyzing household behavior in a broader sense.|
|Type of Material:||Princeton University Senior Theses|
|Appears in Collections:||Economics, 1927-2017|
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