The in-kind benefits, taxes, and work-related expenses items are needed in conjunction with earned and unearned money income to construct disposable income. We recommend in Chapter 3 that a portion of liquid assets be included in family resources as well.

Finally, both the risk variables and the resources variables must be recorded at the person level, so that the variables in each case can be aggregated to the health insurance unit level (for aspects of modeling risk) and family level (for comparing risk with resources). Sufficient information on family relationships must be included to enable the membership of each health insurance unit and family in a household to be identified.

Data Sources for Development of a Measure

The panel looked closely at three longitudinal surveys: the Medical Expenditure Panel Survey (MEPS) (see http://www.meps.ahrq.gov), the Survey of Income and Program Participation (SIPP) (see http://www.census.gov/ SIPP), and the Health and Retirement Study (HRS) (see http://hrsonline.isr.umich.edu). The HRS has the immediate disadvantage of not covering the entire population; its universe is persons over 50 at its broadest. In addition, the interview frequency for the HRS is every 2 years whereas MEPS and SIPP currently conduct two to three interviews per year. (SIPP is being redesigned to conduct one interview per year.) With MEPS and SIPP, then, one can observe expenditures in the year following the measurement of baseline characteristics. That the HRS collects expenditure data covering the time since the last interview (typically 2 years) could affect their quality, although comparisons suggest that means and distributions of expenditures are generally similar to MEPS outside the upper tail (Hurd and Rohwedder, 2009). The quality of the income and asset information collected in the HRS—especially for retired persons—is a particular strength (on the comparison of Current Population Survey and HRS income data, see Hurd and Rohwedder, 2006).

Table 5-1 summarizes the collection of relevant variables in the three surveys. None of the three surveys collects all the variables that would be required to develop a prospective measure of MCER as described in Chapter 4. Most notably, none of the three surveys collects a description of the services and treatments covered by each person’s health insurance plan, and none of the surveys collects sufficient information with which to assess each sample member’s potential liability for out-of-pocket medical costs, although MEPS and the HRS do collect limited information: participation in health maintenance organizations in MEPS and the HRS and whether coverage for a preexisting condition is limited in the HRS. As noted by Czajka (in Part III of this report), MEPS collected detailed information on the health insurance plans of sample members in 1996 but has not done



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