What Does (Formal) Health Insurance Do, and for Whom?

Amy Finkelstein, Neale Mahoney, Matthew J. Notowidigdo

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


Health insurance confers benefits to the previously uninsured, including improvements in health, reductions in out-of-pocket spending, and reduced medical debt. However, because the nominally uninsured pay only a small share of their medical expenses, health insurance also provides substantial transfers to nonrecipient parties who would otherwise bear the costs of providing uncompensated care to the uninsured. The prevalence of uncompensated care helps explain the limited take-up of heavily subsidized public health insurance and the evidence that many recipients value formal health insurance at substantially less than the cost to insurers of providing that coverage. The distributional implications of public subsidies for health insurance depend critically on the ultimate economic incidence of the transfers that they deliver to providers of uncompensated care.

Original languageEnglish (US)
Pages (from-to)261-286
Number of pages26
JournalAnnual Review of Economics
StatePublished - Aug 2 2018


  • health insurance
  • public subsidies
  • uncompensated care

ASJC Scopus subject areas

  • Economics and Econometrics


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