Improving Children's Lives by Rebecca Y. Kim

Author:Rebecca Y. Kim [Kim, Rebecca Y.]
Language: eng
Format: epub
Tags: Nonfiction, Social & Cultural Studies, Social Science, Sociology
ISBN: 9781000526479
Barnesnoble:
Publisher: Taylor & Francis
Published: 2021-12-12T00:00:00+00:00

Table 4-7 also shows the aggregate totals and means of medical coverage values which result from the valuation methods described earlier. Medicaid values based on state mean expenditures per AFDC adult (eligible) and per AFDC child (eligible) results in a total value of $10.7 billion,27 whose mean value is $2,321 per family covered. The use of employer-paid premiums for the value of employer insurance results in $65 billion for the total value and $2500 for the mean value per family covered through employer-based insurance. Also, the valuation of NHI based on current premium costs to purchase private health insurance brings the mean to $2821 per family and the total cost of $104 billion for providing universal coverage. Although Medicare coverage is a very marginal percentage in the sample, its total value amounts to $1.2 billion, with a mean of $2696 per enrollee.

Issue of Recipient Value of Health Care Coverage: Although it has been the most widely used of other alternative methods,28 valuation of health care benefits based on their market costs has some flaws. The market value approach only consider the purchasing power of health benefits in the private market place. Because this method ignores an individual’s own valuation of the worth of services received, the cost of purchasing health care services may not be equal to the recipient value. The recipient value is often measured by the amount of cash which would make the recipient just as well off as the in-kind benefit. In general, it is believed that the market value approach overstates the gain in the recipient’s economic well-being (Wolfe and Moffitt, 1991). Some researchers have empirically shown that most in-kind benefits, especially medical transfers, are worth less to recipients than an equal dollar amount of cash transfer (Smeeding, 1975). If so, the market value of health care transfer should be discounted to reflect the recipient’s own true value. However, existing research evidence shows a broad range of estimates for the recipient’s cash-equivalent value. The estimated cash-equivalent values of medical benefits vary by type of program, income and other characteristics of the recipient, and the valuation approach. For instance, Smeeding (1975) estimated that, based on a normal expenditure approach, recipient values of cash equivalence (in 1972) were 63% for Medicaid, 93% for Medicare, and 78% for both programs. Altogether, including other estimates, Smeeding (1982) concluded that the recipient’s relative values were between 58% and 74% of market value in terms of cash equivalence.

Since values of medical care coverage are treated as income sources in simulation, the results can be altered depending on how coverage value is determined. To test this sensitivity, I will discount health care values which are obtained in terms of market costs as described before. The rate of discount will be set at 0.58, which represents the lowest existing estimate for a cash equivalent value to the recipient. The choice of this low rate is to test the simulation results with the most conservative point of view.29

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