Does extending health insurance coverage to the uninsured improve population health outcomes?

An ongoing debate exists about whether the US should adopt a universal health insurance programme. Much of the debate has focused on programme implementation and cost, with relatively little attention to benefits for social welfare.

To estimate the effect on US population health outcomes, measured by mortality, of extending private health insurance to the uninsured, and to obtain a rough estimate of the aggregate economic benefits of extending insurance coverage to the uninsured.

We use state-level panel data for all 50 states for the period 1990-2000 to estimate a health insurance augmented, aggregate health production function for the US. An instrumental variables fixed-effects estimator is used to account for confounding variables and reverse causation from health status to insurance coverage. Several observed factors, such as income, education, unemployment, cigarette and alcohol consumption and population demographic characteristics are included to control for potential confounding variables that vary across both states and time.

The results indicate a negative relationship between private insurance and mortality, thus suggesting that extending insurance to the uninsured population would result in an improvement in population health outcomes. The estimate of the marginal effect of insurance coverage indicates that a 10% increase in the population-insured rate of a state reduces mortality by 1.69-1.92%. Using data for the year 2003, we calculate that extending private insurance coverage to the entire uninsured population in the US would save over 75 000 lives annually and may yield annual net benefits to the nation in excess of $US400 billion.

This analysis suggests that extending health insurance coverage through the private market to the 46 million Americans without health insurance may well produce large social economic benefits for the nation as a whole.