The Impact of an Individual Health Insurance Mandate on Hospital and Preventive Care: Evidence from Massachusetts
Posted: 7 Jul 2011
Date Written: June 2010
In April 2006, the state of Massachusetts passed legislation aimed at achieving near universal health insurance coverage. A key provision of this legislation, and of the national legislation passed in March 2010, is an individual mandate to obtain health insurance. Although previous researchers have studied the impact of expansions in health insurance coverage among the indigent, children, and the elderly, the Massachusetts reform gives us a novel opportunity to examine the impact of expansion to near universal health insurance coverage among the entire state population. In this paper, we are the first to use hospital data to examine the impact of this legislation on insurance coverage, utilization patterns, and patient outcomes in Massachusetts. We use a difference-in-difference strategy that compares outcomes in Massachusetts after the reform to outcomes in Massachusetts before the reform and to outcomes in other states. We embed this strategy in an instrumental variable framework to examine the effect of insurance coverage on utilization patterns. Using the Current Population Survey, we find that the reform increased insurance coverage among the general Massachusetts population. Our main source of data is a nationally-representative sample of approximately 20% of hospitals in the United States. Among the population of hospital discharges in Massachusetts, the reform decreased uninsurance by 28% relative to its initial level. We also find that the reform affected utilization patterns by decreasing length of stay and the number of inpatient admissions originating from the emergency room. Using new measures of preventive care, we find evidence that outpatient care reduced hospitalizations for preventable conditions. The reform affected nearly all age, gender, income, and race categories. We identify some populations for which insurance had the greatest direct impact on outcomes and others for which the impact on outcomes appears to have occurred through spillovers.
Keywords: adverse selection, health insurance, Insurance market regulation
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