The Fungible Value of Government and Employer Provided In-Kind Health Benefits 1

Abstract

In this paper we discuss the issue of whether and how to value government and employer provided in-kind medical benefits in determining who is poor. Consideration of this issue leads to the suggestion that the fungible portion of medical care transfers should be included in the income of the poor as they constitute a significant percentage of their resources available for the purchase of goods and services. Fungible medical care transfers are defined as third party payments for medical benefits except those for hospital and nursing home care, on the premise that the latter are for nonroutine medical services that do not increase an individual's well-being. Estimates of the fungible portion of government and private in-kind medical benefits are developed from Health Care Financing Administration data that indicate that of the two, the former is less fungible.