A Discussion about the Healthcare Costs and Insurance Purchase

Xinhe He


The U.S. Healthcare system is one of the most expensive healthcare system in the world , and the government has been continously making efforts to make insurance more affordable. In 2009, pre-ObamaCare was launched and its main action was to have everybody insured. However, it is an understudied area about how this will reduce healthcare costs. This research examines insurance consumer market and focuses on insurance demand fluctuation.  insurance demand fluctuation. Linear regression test, T-test and sensitivity analysis are used to analyze the pre-ObamaCare insurance market in 1999-2009. This study was able to statistically confirm the positive consumer reaction to increasing costs. As counter-intuitive as it seems, this irrationality in consumer behavior is understandable due to perceived future health costs. Insurance are not substitutable in covering consumers’ healthcare costs. The study shows that when healthcare costs increaseand lay more financial burden on the public, healthcare consumers would react nervously and start buying insurance even at a higher premium price.


healthcare, insurance coverage, healthcare costs, state variation, year variation, consumer psychology, public health

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