Public insurance programs: The impact of uncompensated care reimbursement funds and Medicaid

Public health insurance programs are frequently proposed or enacted in order to fill gaps in private health insurance coverage. This dissertation addresses two particular forms of public insurance: uncompensated care reimbursement funds, which target health care providers, and Medicaid, which targets health care recipients. One potential drawback to public insurance programs is that they may act as a substitute for the private insurance market but not provide the same access to medical services. This dissertation examines the impact of both programs on the purchase of private insurance and medical care utilization. A behavioral model of the response to uncompensated care reimbursement funds and Medicaid is used to derive hypotheses about their effect on the purchase of private insurance and subsequent medical care utilization. The consumer demand for private health insurance is modeled as demand for an income protection or stop-loss insurance policy. The hypotheses are tested using the 1986 Health Interview Survey. The probability of purchasing private insurance is estimated using a multinomial logit specification with three categories of insurance status: privately insured, publicly insured and no insurance. In order to correct for the endogeneity of insurance purchase, the impact of insurance status on physician and hospital utilization is estimated with a Probit regression using predicted insurance categories from the insurance regression. The empirical results suggest that uncompensated care reimbursement funds decrease the purchase of private health insurance, and are not associated with higher rates of hospitalization or physician visits. Medicaid programs do not substitute for private insurance but are associated with a significantly higher rate of physician visits. To the extent that physician utilization rates are an accurate proxy for access to medical services, this research indicates that uncompensated care reimbursement funds have significant disadvantages relative to Medicaid as a public insurance program for the uninsured