Working Paper

Health Insurance and Hospital Supply: Evidence from 1950s Coal Country


Abstract: The United States government spends billions on public health insurance and has funded a number of programs to build health care facilities. However, the government runs these two types of programs separately: in different places, at different times, and for different populations. We explore whether access to both health insurance and hospitals can improve health outcomes and access to health care. We analyze a coal mining union health insurance program in 1950s Appalachia with and without a complementary hospital construction program. Our results show that the union insurance alone increased hospital births and reduced infant mortality. Once the union hospitals opened, however, the insurance and the hospitals together substantially increased the net amount of hospital beds and health care employees, with limited crowd-out of existing private hospitals. Our results suggest that hospitals can complement health insurance in underserved areas.

Keywords: Public economics; Health care; Economic history; Urban, Rural, & Regional Economics; Health economics;

JEL Classification: H51; I13; I18; N32; R58;

https://doi.org/10.17016/FEDS.2020.033

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Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: Finance and Economics Discussion Series

Publication Date: 2020-04-17

Number: 2020-033

Pages: 57 p.