Katsuhiko Nishiyama

Job market paper

Medical Debt, Self-Insurance, and the Value of Health Insurance for the Non-Elderly

In the US, about 60% of non-elderly workers are insured through employer-sponsored health insurance (ESHI). This paper studies how non-elderly workers manage various forms of insurance to cope with medical expenditure shocks and how their coping strategies affect job search decisions. Specifically, I examine the role of self-insurance through saving/borrowing and delaying medical bill payments. To that end, I develop and estimate a job search model in which individuals can insure themselves against medical expenditure shocks in three ways: (1) by enrolling in ESHI, (2) by saving and borrowing, and (3) by accumulating medical debt and repaying them over time. The findings highlight that the valuation of ESHI varies depending on an individual's net liquid assets and medical debt, especially among uninsured workers. Consequently, uninsured workers with a higher valuation of ESHI accept a job providing ESHI at lower wages and transition to a job with ESHI more frequently.