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Health and the Cost of Nongroup Insurance
This analysis estimates a selection-adjusted model of the premium for nongroup
insurance to measure the effect of health status on the cost of nongroup insurance.
Using data from two recent national surveys, the probability of buying nongroup
insurance is about 50% lower for people in fair or poor health compared to similar
people in excellent health. Correcting for selection, premiums are about 15%
higher for people with modest health problems, and 43% to 50% higher for people
with major health problems compared to those in excellent health. We use the
selection-corrected premiums to simulate the effects on the price and affordability
of nongroup insurance for the uninsured under two recent tax credit proposals.