Taxpayer Willingness to Pay for Health Insurance Reform: A Contingent Valuation Analysis

20 Pages Posted: 9 May 2014

See all articles by Kurt Lavetti

Kurt Lavetti

Ohio State University

Kosali Ilayperuma Simon

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA); National Bureau of Economic Research (NBER)

William White

Cornell University

Date Written: July 2014

Abstract

A key criterion for evaluating policies to expand health insurance coverage is weighing the costs of such policies against the willingness of the public to pay for coverage expansions. We use new panel survey data from New York State to estimate residents' willingness to pay (WTP) to expand public insurance coverage. Using a nonparametric double‐bounded contingent valuation (CV) approach, we specifically ask residents about their WTP to reduce the rate of uninsurance in the state. Our results imply an aggregate lower‐bound WTP of over $2,800 per year to cover one person. We also analyze heterogeneity in WTP by sub‐group and changes in individual WTP over time between 2008 and 2010. We find that a large majority of residents are willing to pay additional taxes to reduce the number of uninsured in the state, and that average WTP remained remarkably stable despite the economic downturn and the politically polarized discussions surrounding the Affordable Care Act. Decomposing the changes in individual WTP, we find that economic factors related to the recession, including changes in income and employment status, cannot explain changes in individual WTP, whereas individual changes in political opinions about health insurance reform between 2008 and 2010 are strongly correlated with changes in WTP.

JEL Classification: H20, H42, H51, H75, I13

Suggested Citation

Lavetti, Kurt and Simon, Kosali Ilayperuma and White, William, Taxpayer Willingness to Pay for Health Insurance Reform: A Contingent Valuation Analysis (July 2014). Economic Inquiry, Vol. 52, Issue 3, pp. 994-1013, 2014, Available at SSRN: https://ssrn.com/abstract=2434891 or http://dx.doi.org/10.1111/ecin.12083

Kurt Lavetti (Contact Author)

Ohio State University ( email )

410 Arps Hall
1945 North High Street
Columbus, OH 43210
United States

Kosali Ilayperuma Simon

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

William White

Cornell University ( email )

120 Martha Van Rensselaer Hall
Ithaca, NY 14853
United States

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