WI23-06: Does Health Insurance Reduce Consumption Risk?

Many SSA beneficiaries are low income with little savings, generating vulnerability to shocks such as uninsured health needs. We find that health insurance expansion does not exert a protective consumption effect for individuals even at the left tail of the consumption distribution. Our estimate of the risk premium implies a low consumption insurance value to Medicaid, though certainly the program offers large insurance benefits on health, financial shocks, and other dimensions of wellness