[Correction added after online publication October 13, 2009: on page 2, Keziah Cook's e-mail address was incorrectly listed as ‘firstname.lastname@example.org,’ and should have been listed as ‘email@example.com.’] Address correspondence to Keziah Cook, Ph.D. Candidate in Economics (expected in June 2010), Department of Economics, Northwestern University, 302 Andersen Hall, 2001 Sheridan Road, Evanston, IL 60208; e-mail: firstname.lastname@example.org. David Dranove, Ph.D. Economics, Management, Policy and Andrew Sfekas, Ph.D. Economics, are with the Kellogg School of Management, Northwestern University, Evanston, IL.
Does Major Illness Cause Financial Catastrophe?
Version of Record online: 13 OCT 2009
© Health Research and Educational Trust
Health Services Research
Volume 45, Issue 2, pages 418–436, April 2010
How to Cite
Cook, K., Dranove, D. and Sfekas, A. (2010), Does Major Illness Cause Financial Catastrophe?. Health Services Research, 45: 418–436. doi: 10.1111/j.1475-6773.2009.01049.x
- Issue online: 8 MAR 2010
- Version of Record online: 13 OCT 2009
- costs of illness;
- health insurance coverage;
- median regression;
- triple difference;
- medical bankruptcy
Objective. We examine the financial impact of major illnesses on the near-elderly and how this impact is affected by health insurance.
Data Sources. We use RAND Corporation extracts from the Health and Retirement Study from 1992 to 2006.1
Study Design. Our dependent variable is the change in household assets, excluding the value of the primary home. We use triple difference median regressions on a sample of newly ill/uninsured near elderly (under age 65) matched to newly ill/insured near elderly. We also include a matched control group of households whose members are not ill.
Results. Controlling for the effects of insurance status and illness, we find that the median household with a newly ill, uninsured individual suffers a statistically significant decline in household assets of between 30 and 50 percent relative to households with matched insured individuals. Newly ill, insured individuals do not experience a decline in wealth.
Conclusions. Newly ill/uninsured households appear to be one illness away from financial catastrophe. Newly ill insured households who are matched to uninsured households appear to be protected against financial loss, at least in the near term.