Coecient 0 measures the direct eect of a health shock in the absence of health insurance.10
1 identies the eect of health insurance coverage in mitigating the adverse outcomes associated
with health shocks. In the context of consumption insurance, it is the eect of health insurance
on consumption smoothing against health shocks. The predicted eect of a health shock after the
health insurance reform is given by the sum of 0 and 1.