Health risk, income, and the purchase of private health insurance

"While many believe that an individual's health plays an important role in both their willingness and ability to obtain health insurance, relatively little agreement exists on how and why health status is likely to affect coverage rates, particularly for individuals purchasing coverage in the individual market. In this paper, we examine the relationship between health risk and the purchase of private health insurance and whether that relationship differs between people purchasing coverage in the individual and large group markets and between low and high income individuals. The data source for our analysis is the panel component of the 1996-2002 Medical Expenditure Panel Survey (MEPS). We find that health risk is positively associated with obtaining private health insurance coverage. The positive relationship between health risk and coverage is stronger for individuals obtaining coverage in the large group market than for individuals obtaining coverage in the individual market. In the large group market, rates of coverage increase more quickly with health risk for low than high income individuals. We conclude that high premiums for high risks are not a significant contributor to the large uninsured population in the U.S. Among low income individuals, high premiums may represent a barrier to low risks in the large group market"--National Bureau of Economic Research web site.