| Policymakers have been very concerned about achieving universal coverage and ensuring access to health care. Although 15% of the nation's population was chronically uninsured in 1995 (March 1995 Current Population Survey, Bureau of Labor Statistics), Minnesota's rate of 4.1% (Call et al., 1995) ranks among the lowest in the country. The success of market reform efforts hinges on consumer incentives to enroll in health insurance plans. This research examines the uninsured's incentives to purchase private individual health insurance policies in light of their aversion to the financial risks imposed by suffering adverse health conditions.; Data are from the 1995 Minnesota Health Care Insurance and Access Survey. Information on current health insurance status and coverage, out of pocket medical expenditures, and premiums are collected. The survey includes a set of questions on a hypothetical choice of health insurance plans. Willingness to pay for each of these plans, and expected out of pocket medical expenditures are obtained. Three approaches to analyzing the degree of risk aversion are then addressed. The first method addresses the expected financial loss due to health expenditures ex ante, i.e. prior to making the decision to purchase health insurance. The second method compares willingness to pay to actuarially fair premiums. The last method analyzes the financial loss endured ex post, i.e. after making the decision to insure. Those individually insured and chronically uninsured over the year prior to the study are included in the study population.; All three approaches to measure risk aversion did not characterize the sample population as risk averse. The chronically uninsured are generally willing to pay less than the actuarially fair premiums for individual health insurance policies and their choice of the two hypothetical insurance policies indicates that they are risk seeking. This research suggests that programs offering subsidized premiums to a generally risk seeking audience are accomplishing their goal of enticing consumers to enroll. |
