Plan alters the incentive calculus of potential recruits—causes a huge decline

Richard J. Cebula Department of Economics Armstrong Atlantic State University Usha Nair-Reichert Department of Economics Georgia Institute of Technology, Kyle Taylor Department of Economics Armstrong Atlantic State University , Does a Lack of Health Insurance Elicit an Increase in the Rate of Voluntary Military Enlistment in the U.S.? The ”Military Health Care Magnet Hypothesis,” 1974-2007 In International Business Research http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.669.7114&rep=rep1&type=pdf

This study addresses the following question: “Does the unavailability of health insurance act as a incentive for persons to enlist in the military?” Within a cost-benefit framework, the present study endeavors to provide insight into this issue, referred to here as the “Military Health Care Magnet Hypothesis”. The OLS and 2SLS results provide substantial evidence that the greater the percentage of the civilian population without health insurance, the greater the rate of enlistment in the U.S. Army. Voluntary enlistment in the U.S. Army also is positively impacted by a greater presence of military veterans (which “promotes” enlistment). Furthermore, it is negatively impacted by a more rapidly growing economy (a proxy for higher opportunity costs) and military conflicts/wars (risk-averse behavior with military conflict being a risk factor that elevates the expected probability of being wounded or killed). Thus, the AVMF (all-voluntary military force) market appears to function as the free enterprise system would expect. Finally, it may be worthy of note that if the “Military Health Care Magnet Hypothesis” is valid, then it logically follows that if a system of de facto universal health care is in fact instituted in the U.S., there may be unforeseen externalities from a military recruitment perspective. In particular, implementation of universal health care would naturally result in a decline in the expected gross benefits of enlistment. This is because would-be enlistees will factor the same into their cost-benefit analysis of whether to enlist. Clearly, as the AVMF market factors the availability of universal health care outside the confines of the military into its marginal enlistment decision calculus, for many the expected net benefits (of enlisting) will decline sufficiently as to create a no-enlist decision. In turn, it follows that some form of additional incentives will be needed in order to induce sufficient recruitment/enlistment. We contribute to the debate on universal health care coverage by pointing out the possibility for an unintended consequence, namely a decline in military enlistment. Thus if universal health care is instituted, it could increase the cost of military recruitment in the future.