Importance of Health Insurance – Evidence from Yale
March 24th, 2025
Health, of course, is of paramount importance. But in today’s economic context health insurance seems nearly as important. Can the importance of health insurance be statistically demonstrated? We’ll present three examples from Yale researchers that do exactly that.
Example 1 – Can Health Insurance Improve Financial Health?
The simple answer is yes, at least in the case of Medicare (which is available for Americans aged 65+). Researchers used credit bureau data (from Equifax along with location and health data (from the Census Bureau’s American Community Survey to come to this broad conclusion.
More specifically, the researchers were able to show that when people turned 65 and enrolled in Medicare there was a significant decrease (of 30%) in their collections debt (i.e., money owed to collection agencies). Interestingly, there were significant geographic variations with the most gains in the south, which has the highest proportion of uninsured near-elderly (55-64) – effectively evening out national disparities. The gains in financial health were also higher in areas with higher proportions of black residents, those with disabilities, and for-profit hospitals.
To read the full academic article click here. To read a shorter version click here.
This research was conducted by:
- Paul Goldsmith-Pinkham from the Yale School of Management
- Maxim Pinkovskiy from the Federal Reserve Bank of New York
- Jacob Wallace from the Yale School of Public Health
Example 2 – How Does Mental Health Access Impact Career Earnings?
Focusing on depression, schizophrenia and bipolar disorder, the researchers showed that lack of access to treatment can have a significant impact on lifetime income. To demonstrate this, data from a unique natural experiment was needed. When Denmark’s equivalent of the FDA authorized (in 1976) the usage of the mood stabilizer lithium as a maintenance drug for bipolar disorder the experiment was created, as some people used the treatment and others did not.
Lack of access to mental health treatment can have severe impact on lifetime income ranging from about 34% for depression and bipolar disorder to 74% for schizophrenia. This research shows that access to treatment eliminates about one-third of the earnings penalty, greatly reduces the risk of low or no earnings, and shows a major reduction in the risk of disability.
To read the full academic article click here. To read a shorter version click here.
This research was conducted by:
- Barbara Biasi from the Yale School of Management
- Michael Dahl from Aalborg University
- Petra Moser from New York University
Example 3 – Can Choosing the Wrong Health Insurance Kill you?
Medicare Advantage plans are an option for people looking to get more coverage beyond original Medicare. But there are many options with cost/benefit variations, and it is not easy choosing between them. Why not choose the plans that are demonstrably better (i.e.) those that are shown to most extend life? That’s not a straightforward prospect even for researchers.
For example, plans with lower mortality rates could be enrolling healthier members. So, researchers need to look for a natural experiment (with random allocation) and adjust for a variety of factors to properly understand mortality rates. One way to do that is to look at the mortality rates of people who had to inadvertently switch when their plans were terminated. When Jason Abaluck and colleagues did that, they found some significant differences, such as plans where four times as many people die as in other plans.
Mortality rate would seem like an important consideration in plan choice but it is not easily accessible to consumers. But what about the star ratings that CMS mandates, and that are based on factors such as customer satisfaction? It turns out that they are uncorrelated with mortality rates. So, there appears to be no clear answer for customers looking specifically for plans that ensure the longest life (except perhaps price as more expensive plans do seem to have better outcomes).
To read the full academic article click here. To read a shorter version click here.
This research was conducted by:
- Jason Abaluck from the Yale School of Management
- Mauricio Caceres Bravo from Brown University
- Peter Hull from Brown University
- Amanda Starc from Northwestern University
Those of us with health insurance understand its importance for our daily lives. But it is not easy to see the population-level impact without appropriate studies. This stream of research from Yale University demonstrates the beneficial importance of health insurance coverage, and the negative impact of lack of coverage and access.
