Poverty: Insurance Theory and the Medically Uninsured

The federal/state Medicaid program is designed to provide health insurance for the nation's poorest, yet between 15 and 20 percent of the population continue to have no health insurance. Classic utility-based insurance theory is examined to see if it well explains why some do and some do not purchase health insurance at the state level or if a host of other non-economic factors are needed. This pooled, cross-sectional time-series analysis shows that the state characteristics most strongly associated with the prevalence of a lack of health insurance is the percent of persons whose income falls below the poverty line, the percent of the state's population that is female and the percent of the population with only a high school education. This analysis suggests that the starting point for policies aimed at limiting the number of insured should be limiting poverty and perhaps recognizing the gender/education influence in designing state eligibility requirements.