Health status and the cost of expanding insurance coverage

This paper uses data on health spending and health status from the Medical Expenditure Panel Survey (MEPS) to estimate the differences in health spending across different types of insurance and across incomes that are attributable solely to health status differences. The results show that the uninsured are less costly than those on Medicaid, based on health status alone, but are more costly than those with employer-sponsored insurance. Adults and children with private nongroup coverage are also less expensive than average, because of better-than-average health. Finally, the data show that expenditures fall (health status improves) with income, regardless of type of coverage.