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Does Major Illness Cause Financial Catastrophe?, Health Services Research


Objective: We examine the financial impact of major illnesses on the near-elderly and how this impact is affected by health insurance. Data Sources : We use RAND Corporation extracts from the Health and Retirement Survey from 1992-2006. Study Design : Our dependent variable is the change in household assets, excluding the value of the primary home. We use triple difference median regressions on a sample of newly ill uninsured near elderly (under age 65) matched to newly ill insured near elderly. We also include a control group of individuals who are not ill. Results : Controlling for the effects of insurance status and illness, we find that the median household with a newly ill uninsured individual suffers a statistically significant decline in household assets of approximately 30 percent relative to households with matched insured individuals. Newly ill insured individuals do not experience a decline in wealth. Conclusions : While insured newly ill individuals are protected against financial loss, the uninsured appear to be one illness away from financial catastrophe.




Keziah Cook, David Dranove, Andrew Sfekas

Date Published



Cook, Keziah, David Dranove, and Andrew Sfekas. 2010. Does Major Illness Cause Financial Catastrophe?. Health Services Research.(2)


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