Health Uninsurance in rural America: a partial equilibrium analysis

Area of Science:

• Health Economics
• Insurance Markets
• Rural Health Policy

Background:

• High healthcare costs persist in US rural areas despite increased insurance enrollment.
• Adverse selection, driven by stakeholder perceptions, challenges rural insurance markets.
• Risk attitudes are explored as a measure for adverse selection, influenced by pre-existing condition laws.

Purpose of the Study:

• To examine adverse selection in rural health insurance markets.
• To compare the effects of pre-existing conditions versus risk attitudes on insurance choices.

Main Methods:

• Utilized a Principal-Agent model framework.
• Employed multinomial logit and complementary log-log binomial link models.

Main Results:

• Adverse selection is evident in rural health insurance markets when pre-existing conditions are considered.
• Risk attitudes demonstrated contrary effects, not contributing to adverse selection.

Conclusions:

• Individuals with pre-existing/chronic conditions are more likely to seek health insurance, potentially leading to insurer losses.
• The 2018 law excluding pre-existing conditions may benefit insurers but disadvantage the public.
• Market incentive-based programs are recommended to reduce rural uninsurance.