^*Respectively, Suzanne Downs Palmer Distinguished Research Professor, Department of Economics, University of Memphis, Memphis, TN; and Professor, Department of Economics, Middlebury College, Middlebury, VT. This revised work was earlier presented at the Midwest Economics Association annual conference (Organized Session 49: “Health Insurance, Depression and Elderly Living”), Cleveland, OH, March 30, 2001, and at the Southern Economic Association annual meetings (Session 89G: “Topics in Health Economics, Part I”), Tampa, FL, November 18, 2001. The authors thank participants at both conferences for many useful comments. They also acknowledge the helpful comments of an anonymous referee of this journal, the significant contributions of Bradley Ewing, Jessica Holms, and editorial suggestions of Brenda Ellis on an earlier draft of this paper. Any remaining errors are ours.