The Effect of Health Insurance on Self-Rated Health: Evidence from Older Adults with Functional Limitation

Abstract

This study examines the health effect of health insurance, based on the disparity in self-rated health between those with and those without any daily-life limitation. We use the National Health Interview Survey to construct the sample of older adults aged between 60 to 69 years with the period between 2004 and 2013. To address omitted variable bias caused by unobserved characteristics, we use regression discontinuity design to estimate the causal effect of health insurance on self-rated health, which exploits the Medicare eligibility age as an instrumental variable. We find that when older adults with functional limitation reached the age of 65, their self-reported health improved more than those without any functional limitation. Improvements in self-rated health are immediately implemented at the age of 65 for those who have any functional limitation. Moreover, health care or preventive care services cannot be attributed to better health for older adults with functional limitation in the short run. Results imply that being able to use health care or preventive care services increases perception of well-being. Health insurance can play an important role in improving assurance in health-managing ability, which in turn influences self-rated health.