The Effects of Health on Wealth: New Study Reveals Individuals Without Health
Insurance at Risk for 'Financial Catastrophe'
Research finds uninsured individuals nearing retirement can lose up to 50
percent of assets
CHICAGO, Oct. 15 /PRNewswire/ -- Americans without health insurance are one
major illness away from financial catastrophe, according to a new study. New
research by the Kellogg School of Management at Northwestern University
suggests that uninsured individuals nearing retirement age who experience a
major health concern, such as heart disease, cancer or a stroke, can lose up
to half of their household assets in order to pay their medical expenses.
The study, titled "Does Major Illness Cause Financial Catastrophe?", will be
published in an upcoming issue of Health Services Research Journal. The
research was conducted by professors David Dranove and Andrew Sfekas at the
Kellogg School of Management at Northwestern University, and Keziah Cook, PhD
candidate in economics at Northwestern University.
Dranove and his co-authors discovered a significant finding among the
uninsured, ages 51 to 64, who experienced a major illness. The assets of
uninsured households declined between 30 and 50 percent--in total, a median
loss of 46 percent. In contrast, when matched with uninsured households with
similar backgrounds, those with private health insurance did not experience a
financial loss.
"Lack of insurance is at the heart of the healthcare debate with 4.2 million
uninsured Americans over 55. Our research provides compelling evidence of the
financial damage for these families," said Dranove, the Walter J. McNerney
Professor of Health Industry Management at the Kellogg School and director of
the Center for Health Industry Market Economics. "Despite a person's income,
the uninsured face the risk of losing their retirement savings."
Prior research has explored the impact of medical bankruptcy on the loss of
household assets, but this new research is the first study to isolate health
insurance and its direct impact on personal finances among individuals. The
researchers focused on households with baseline assets between $1,000 and
$200,000 and who reported one of six major illnesses. The illnesses included
diabetes, cancer, lung disease, heart problems, stroke, and emotional or
psychiatric problems.
According to Dranove, the uninsured, near-elderly age group is particularly at
risk because they have accumulated significant assets intended for retirement
and have fewer opportunities to rebuild if they lose assets due to illness.
"For this age bracket, a drop in assets could result in delayed retirement or
a lower standard of living," he said.
The researchers matched panel data from the most recent wave of results in the
Health and Retirement Study (HRS), a longitudinal survey of near-elderly and
elderly administered every two years since 1992 by the Institute for Social
Research at the University of Michigan. They analyzed health, insurance and
financial data for both insured and uninsured households with at least one
person under 65.
"These findings demonstrate private health insurance does protect people from
financial ruin," Dranove said. "The problem is not solely with our current
system of private health insurance; the problem is ensuring people have access
to insurance coverage."
MORE INFORMATION: To see the full study or to arrange an interview with
Professor David Dranove, contact Aaron Mays or Betsy Berger at the contact
information listed below.
For more information about the Kellogg School of Management at Northwestern
University, visit http://www.kellogg.northwestern.edu.
MEDIA CONTACTS:
Aaron Mays Betsy Berger
Kellogg School of Management MS&L
Office: 847-491-2112 Office: 847-577-6063
Mobile: 773-344-2331 Mobile: 847-308-1762
a-mays@kellogg.northwestern.edu betsy.berger@mslworldwide.com
SOURCE Kellogg School of Management at Northwestern University
Aaron Mays of Kellogg School of Management, Office, +1-847-491-2112, Mobile,
+1-773-344-2331, a-mays@kellogg.northwestern.edu; or Betsy Berger of MS&L,
Office, +1-847-577-6063, Mobile, +1-847-308-1762,
betsy.berger@mslworldwide.com, for Kellogg School of Management
