The impact of health insurance on the determinants of medical expenditures in the United States from 1987 to 1996

Health insurance has impacted the quantity and distribution of health care expenditures in the United States. The shift of insurance plans and policies since the 1980s to a managed care focus has complicated the prediction of health care expenditures even further. With medical costs constituting an increasing amount of the GDP of the United States, policies that aim at cutting costs while providing adequate services become more critical, especially with the problem of the number of uninsured individuals in the United States continuing.;The key concern of this paper is to determine the impact that different types of insurance coverage had on the medical expenditures of adults, ages 18 to 64, between 1987 and 1996. Employing consistent methodologies with data from two national surveys, different types of health insurance variables were included within regression models predicting insurance status and medical expenditures. The various specifications of the insurance-related variables, and the choices of expenditure models used in this analysis, provide extensions of other studies.;All types of health insurance coverage increased total expenditures in both time periods, making a case for the presence of moral hazard. However, the magnitude of these increases was not the same for all the types of insurance. As compared to the base group of the uninsured, individuals with public coverage had the highest levels of total expenditures followed by individuals with private/any insurance coverage. Those with managed care coverage had the lowest relative increases in total expenditures. Individuals with managed care coverage also generally had lower personal expenditures than individuals with other types of private or public coverage.;The results in this paper show that the progressive change to managed care types of health insurance between 1987 to 1996 significantly impacted health expenditures, and kept them at lower levels than non-managed care types of insurance. Questions remain, however, as to whether these results were specific to the period of the mid-1990s, and if these policies will continue to be successful in keeping health expenditures increasing at slower rates in the future.