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    Kinda short, but here it is:

    Bankruptcy as Implicit Health Insurance, by Neale Mahoney  (The National Bureau of Economic Research)

    This paper examines the implicit health insurance households receive from the ability to declare bankruptcy. Exploiting cross-state and within-state variation in asset exemption law, I show that uninsured households with greater seizable assets make higher out-of-pocket medical payments, conditional on the amount of care received. In turn, I find that households with greater wealth-at-risk are more likely to hold health insurance. The implicit insurance from bankruptcy distorts the insurance coverage decision. Using a microsimulation model, I calculate that the optimal Pigovian penalties are similar on average to the penalties under the Affordable Care Act (ACA).

    @afrakt

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    • I could not open up the paper and read it, but thank you for raising this issue. I have had it in the back of my mind for years, in the form of the following question:

      Which health care system is better?

      Canadian hospitals send no bills, and so drive no one into bankruptcy.
      (a few Canadians go bankrupt from drug costs, but the data on that is murky.)

      However, Canadian hospitals do fail to provide some heroic care, and even on more standard procedures like bypasses, a shortage of surgeons and hospital staff does lead to delays that harm patients.

      Contrast this to America, where hospitals are free both to over build and to over charge.

      The result is that Americans with poor insurance or no insurance still get expensive procedures with little waiting, and then are later forced tp declare bankruptcy.

      So the question is, which suffering is least tolerable?

      If the Canadian system causes one person in 100 to die, and the American system causes one person in 100 to declare bankruptcy,
      maybe the American system is not so bad.

      I have been on all sides of this. I am working with a friend who had cancer surgery while uninsured and will also declare bankruptcy.
      He prefers bankruptcy!

      I also declared bankruptcy once myself. It was not painful and I have recovered financially.

      Anyways I would enjoy any comments on this. Someone like John Goodman has probably addressed this himself.

      Bob Hertz, The Health Care Crusade