Health Uninsurance in rural America: a partial equilibrium analysis
Abstract Background The cost of rural health continues to be high in the United States despite an overall improvement in national health insurance enrolment. Stakeholder’s perception of adverse selection remains a paramount culprit in the challenges of rural insurance markets. Risk attitude has been...
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| Format: | Article |
| Language: | English |
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BMC
2019-06-01
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| Series: | Health Economics Review |
| Subjects: | |
| Online Access: | http://link.springer.com/article/10.1186/s13561-019-0234-x |
| _version_ | 1818544001369767936 |
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| author | William Nganje Kwame Asiam Addey |
| author_facet | William Nganje Kwame Asiam Addey |
| author_sort | William Nganje |
| collection | DOAJ |
| description | Abstract Background The cost of rural health continues to be high in the United States despite an overall improvement in national health insurance enrolment. Stakeholder’s perception of adverse selection remains a paramount culprit in the challenges of rural insurance markets. Risk attitude has been revealed as an alternative for measuring this phenomenon, given the 2014 prohibition law on pre-existing conditions and a subsequent repeal in 2018 accompanied by extensive debate among congress. We examine the existence of adverse selection in rural insurance markets by comparing the effects of pre-existing or chronic health conditions and risk attitudes in a Principal-Agent model. Results Using multinomial logit and complementary log-log binomial link models in a Principal-Agent framework, our results indicate that there is adverse selection in rural health insurance markets if pre-existing conditions are considered, but risk attitudes yield contrary effects. Conclusions The major policy implication from this study is that respondents who have pre-existing/chronic conditions tend to patronise health insurance with a higher probability than other counterparts and therefore insurers are likely to incur losses given the law on pre-existing conditions as private information. The 2018 law on the exclusion of individuals with pre-existing conditions may be beneficial to the insurance companies at the expense of the populace. Hence, we suggest that market incentive-based programs should be encouraged to minimize rural health uninsurance. |
| first_indexed | 2024-12-11T22:42:47Z |
| format | Article |
| id | doaj.art-1dba6e118a2147a6b5c3efab7c363333 |
| institution | Directory Open Access Journal |
| issn | 2191-1991 |
| language | English |
| last_indexed | 2024-12-11T22:42:47Z |
| publishDate | 2019-06-01 |
| publisher | BMC |
| record_format | Article |
| series | Health Economics Review |
| spelling | doaj.art-1dba6e118a2147a6b5c3efab7c3633332022-12-22T00:47:44ZengBMCHealth Economics Review2191-19912019-06-019111510.1186/s13561-019-0234-xHealth Uninsurance in rural America: a partial equilibrium analysisWilliam Nganje0Kwame Asiam Addey1Department of Agribusiness and Applied Economics, North Dakota State UniversityCenter for Agricultural Policy and Trade Studies, North Dakota State UniversityAbstract Background The cost of rural health continues to be high in the United States despite an overall improvement in national health insurance enrolment. Stakeholder’s perception of adverse selection remains a paramount culprit in the challenges of rural insurance markets. Risk attitude has been revealed as an alternative for measuring this phenomenon, given the 2014 prohibition law on pre-existing conditions and a subsequent repeal in 2018 accompanied by extensive debate among congress. We examine the existence of adverse selection in rural insurance markets by comparing the effects of pre-existing or chronic health conditions and risk attitudes in a Principal-Agent model. Results Using multinomial logit and complementary log-log binomial link models in a Principal-Agent framework, our results indicate that there is adverse selection in rural health insurance markets if pre-existing conditions are considered, but risk attitudes yield contrary effects. Conclusions The major policy implication from this study is that respondents who have pre-existing/chronic conditions tend to patronise health insurance with a higher probability than other counterparts and therefore insurers are likely to incur losses given the law on pre-existing conditions as private information. The 2018 law on the exclusion of individuals with pre-existing conditions may be beneficial to the insurance companies at the expense of the populace. Hence, we suggest that market incentive-based programs should be encouraged to minimize rural health uninsurance.http://link.springer.com/article/10.1186/s13561-019-0234-xPre-existing conditionsPrincipal-agent modelRural health uninsuranceComplementary log-log binomialSpence-Mirrlees condition |
| spellingShingle | William Nganje Kwame Asiam Addey Health Uninsurance in rural America: a partial equilibrium analysis Health Economics Review Pre-existing conditions Principal-agent model Rural health uninsurance Complementary log-log binomial Spence-Mirrlees condition |
| title | Health Uninsurance in rural America: a partial equilibrium analysis |
| title_full | Health Uninsurance in rural America: a partial equilibrium analysis |
| title_fullStr | Health Uninsurance in rural America: a partial equilibrium analysis |
| title_full_unstemmed | Health Uninsurance in rural America: a partial equilibrium analysis |
| title_short | Health Uninsurance in rural America: a partial equilibrium analysis |
| title_sort | health uninsurance in rural america a partial equilibrium analysis |
| topic | Pre-existing conditions Principal-agent model Rural health uninsurance Complementary log-log binomial Spence-Mirrlees condition |
| url | http://link.springer.com/article/10.1186/s13561-019-0234-x |
| work_keys_str_mv | AT williamnganje healthuninsuranceinruralamericaapartialequilibriumanalysis AT kwameasiamaddey healthuninsuranceinruralamericaapartialequilibriumanalysis |