Forcing uninsured people to buy health insurance will not necessarily be good for them.
Isaac Ehrlich and Yong Yin, economists at the State University of New York at Buffalo, make that argument in a paper published behind a paywall by the National Bureau of Economic Research.
Ehrlich and Yin say economists who are trying to analyze the effects of Patient Protection and Affordable Care Act (PPACA) insurance provisions should pay more attention to the value of self-insurance and self-protection” (SISP) efforts.
Ignoring SISP effects may make PPACA seem to be better for uninsured people than it really will be, the economists contend.
Ehrlich and Yin define “self-insurance” as being “actions people take to reduce their potential loss from the occurrence of specific hazards.” Those actions could include investing in medical knowledge, monitoring one’s own health, using medical savings accounts, and depending on charities to help provide care for the poor.
In the area of health care, “self-protection” – actions designed to keep losses from occurring in the first place – could include eating well and exercising, the economists say.
The economists note that PPACA includes a new tax on people who fail to have a minimum level of health coverage.
Leaving SISP out of PPACA models may lead forecasters to overstate how likely the tax will be at getting uninsured people to buy health coverage, and leaving SISP out may also exaggerate the value PPACA will provide for the people who are uninsured today, the economists say.
PPACA calls for Medicaid to provide free coverage for people with very low incomes but for other low-income people to pay at least part of the cost of their coverage.
Under PPACA, all uninsured people who either buy coverage or pay the tax will end up with less cash, the economists say.
The formerly uninsured people who buy health insurance will at least get health insurance, and they may get better health care, but they may also spend substantially less on SISP, in part because they have less cash they can use to buy healthy food and spend on opportunities to exercise, the economists say.
For the people who pay the PPACA tax and stay uninsured, the effect of PPACA
“is unambiguously unfavorable,” the economists say.
Those uninsured people will still have to depend on safety net programs, and, because they are paying the PPACA tax, they will have less cash they can use to spend on health care, the economists say.