How Health Insurance Influences Healthcare Use and Overall Well-Being

Access to health insurance plays a crucial role in shaping how individuals utilize healthcare services and their subsequent health outcomes. While it is well-established that uninsured populations tend to experience poorer health, pinpointing the direct effects of insurance coverage on health remains complex. This is partly because people who are insured and uninsured often differ in behaviors and socioeconomic factors—such as diet, smoking habits, and physical activity—that also influence health. These confounding variables make it challenging to isolate the true impact of insurance alone.

To better understand this relationship, researchers have employed natural experiments, such as examining the sudden increase in insurance coverage that occurs when individuals become eligible for Medicare at age 65. In their study, “The Impact of Nearly Universal Insurance Coverage on Health Care Utilization and Health: Evidence from Medicare” (NBER Working Paper 10365), economists David Card, Carlos Dobkin, and Nicole Maestas analyze how health insurance affects medical care access and health outcomes by leveraging this age-based policy change.

The core assumption of their approach is that, absent the insurance eligibility cutoff, health-related outcomes should progress gradually with age. Therefore, any abrupt changes at age 65 can be attributed to the increased coverage provided by Medicare. The data reveal that insurance coverage among the broader population jumps from about 90% to nearly 98% at this age, with particularly notable improvements among less educated minorities. For example, the coverage disparity between less educated minorities and more educated whites shrinks significantly after age 65, which allows the researchers to investigate whether disparities in healthcare utilization and health status narrow as well.

The team utilizes diverse data sources, including national health surveys, the Behavioral Risk Factor Surveillance System, mortality records, and hospital discharge data from California and Florida. Their analysis first examines whether access to healthcare improves at age 65. As illustrated in their findings, the percentage of individuals reporting delays in medical care due to cost drops sharply at age 65 among less educated minorities, while no comparable change occurs for educated whites. Similarly, the likelihood of having visited a doctor within the past year increases significantly for these minorities at this age, indicating that insurance coverage enhances their ability to access medical services.

Further, the study investigates how Medicare influences hospital admissions. They observe a 5 to 10 percent rise in hospitalizations at age 65, which persists beyond that age, suggesting that increased coverage does not merely postpone necessary care but may lead to more hospital utilization overall. Interestingly, the rise in hospital admissions is more pronounced among white populations and is more evident in elective procedures like joint replacements than emergency admissions. This pattern hints that factors beyond insurance coverage—such as the broader array of procedures covered by Medicare or differences in copayment requirements—may drive these increases. Higher socioeconomic status individuals, who often have secondary insurance or greater financial means, are more likely to take advantage of additional procedures after becoming Medicare-eligible.

The researchers also explore behavioral and health outcome changes around age 65. Surprisingly, they find little evidence that health behaviors such as smoking, exercising, or weight management change immediately following Medicare eligibility. The effects on overall health are mixed; for instance, self-reported health status improves modestly among less educated minorities, reducing their health gap by about 15%, but there is no significant impact on mortality rates right after age 65. These findings suggest that while insurance coverage can improve access and some health indicators, its immediate influence on long-term health outcomes may be limited.

The evidence underscores that health insurance has a measurable, though modest, influence on healthcare utilization and certain health metrics. For a deeper understanding of how health systems leverage technology, explore the role of application programs (APIs) in health, which are increasingly integral to modern healthcare delivery. Additionally, the evolving use of artificial intelligence in the medical field offers promising avenues for improving patient outcomes; see examples of AI applications in healthcare to learn more. Many healthcare providers are now integrating AI tools into their systems, raising questions about its mainstream adoption—find out whether AI is currently being utilized in standard healthcare practices. The advantages of such technological integration include increased efficiency, personalized treatment plans, and streamlined diagnostics, which are outlined in the main benefits of embedding AI into medical systems.

Ultimately, while health insurance undeniably influences healthcare utilization and some health outcomes, its immediate impact on mortality and long-term health remains nuanced. As healthcare systems continue to evolve, understanding these dynamics will be vital for designing policies that maximize health benefits for all populations.

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Note: The research discussed was supported by grants from the National Institute on Aging and the Center for Labor Economics at UC Berkeley, with findings summarized by Courtney Coile. For more insights into health economics and aging, visit official resources like the National Bureau of Economic Research.