Analysis of Risk Protection from Health Insurance Using PSID Data from the United States, 1999–2019

This paper investigates the risk protection from health insurance, accounting for the interaction between health care cost risk and other risks such as income risk. Using panel data on household-level consumption, income, and out-of-pocket health spending, the study found that standard health insurance contracts amplify other risks, while alternative contracts that limit out-of-pocket spending relative to income can provide better risk protection. The analysis uses household-level data from the Panel Study of Income Dynamics (PSID), waves 1999–2019. The PSID data were used to measure consumption, income, out-of-pocket health spending, health insurance status, and demographic characteristics over time. The long panel structure enabled analysis of within-household variation across different time horizons. The full replication package, including code and additional data files, is available at the Harvard Dataverse: https://doi.org/10.7910/DVN/GNDABS.