Health uninsurance premium and mortgage interest rates |
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Affiliation: | 1. School of Economics and Management, Southwest Jiaotong University, Chengdu, China;2. Service Science and Innovation Key Laboratory of Sichuan Province, China;3. School of Business, Lebanese American University, Lebanon |
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Abstract: | I show that lenders charge higher interest rates on mortgage-financed houses in areas with a higher rate of health uninsurance to protect themselves against a potential future bankruptcy of the borrower caused by health uninsurance. The health uninsurance premium is higher for applicants who are more likely to file for bankruptcy and for mortgage-financed houses in areas where there are greater benefits to obtaining insurance or where there is a higher percentage of uninsured people who cannot afford insurance. The premium is lower following the implementation of the requirement to have qualifying health insurance coverage under the Affordable Care Act. |
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