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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Mendola, Mariapia / Requate, Till / Zulehner, Christine / Schirle, Tammy

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The Effect of the Consolidated Omnibus Reconciliation Act of 1985 on Health Care Utilization of Employment Separators

David M. Zimmer1

1Western Kentucky University,

Citation Information: The B.E. Journal of Economic Analysis & Policy. Volume 8, Issue 2, ISSN (Online) 1935-1682, DOI: 10.2202/1935-1682.1840, January 2008

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This article offers supplementary material which is provided at the end of the article.


This paper uses data from the Medical Expenditure Panel Survey to estimate the effect of COBRA on health care utilization among a sample of individuals who experience employment separation. The empirical specification employs a structural simultaneous equations model of insurance choice and utilization that is estimated by Maximum Simulated Likelihood. Results indicate that employment separators who elect COBRA appear to consume more health care compared to individuals who become temporarily uninsured. In addition, results do not indicate adverse selection into COBRA. Although COBRA enrollees consume more health care than temporary insurance losers, election appears to exhibit favorable selection with respect to physician utilization.

Keywords: Medical Expenditure Panel Survey; maximum simulated likelihood

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