DEMAND FOR INSURANCE BY ELDERLY PERSONS - PRIVATE PURCHASES AND EMPLOYER PROVISION

Studies of the demand for health insurance by elderly persons often in adequately address the distinctions between those who receive insuranc e through a former employer and those who purchase insurance on their own. The failure to distinguish these two modes of supplementing Medic are can lead to an inability to identify the effects of important inde pendent variables. Using data from the Survey of Income and Program Pa rticipation this paper examines the demand for employer provided healt h insurance among retired pensioners using a bivariate probit model wi th partial observability and compares these results to other models of insurance demand among elderly persons. The results indicate that uno bserved factors reducing the probability of being offered employer pro vided insurance are associated with increased acceptance. A comparison of the employer provided results with results from other models of th e demand for privately purchased insurance indicates that different in dependent variables may determine the probability of having these type s of insurance. Previous studies of insurance that have not distinguis hed between these two types of insurance may not provide reliable esti mates of the relationship between independent variables and the probab ility of insurance coverage.