MODELING THE CAUSES AND CONSEQUENCES OF LACK OF HEALTH INSURANCE COVERAGE: GAPS IN THE LITERATURE (original) (raw)
Related papers
2011
In this paper we develop a stochastic dynamic general equilibrium overlapping generations (OLG) model with endogenous health capital to study the macroeconomic effects of the Affordable Care Act of March 2010 also known as the Obama health care reform. We find that the insurance mandate enforced with fines and premium subsidies successfully reduces adverse selection in private health insurance markets and subsequently leads to almost universal coverage of the working age population. On other hand, spending on health care services increases by almost 6 percent due to moral hazard of the newly insured. Notably, this increase in health spending is partly financed by the larger pool of insured individuals and by government spending. In order to finance the subsidies the government needs to either introduce a 2.7 percent payroll tax on individuals with incomes over $200, 000, increase the consumption tax rate by about 1.1 percent, or cut government spending about 1 percent of GDP. A stable outcome across all simulated policies is that the reform triggers increases in health capital, decreases in labor supply, and decreases in the capital stock due to crowding out effects and tax distortions. As a consequence steady state output decreases by up to 2 percent. Overall, we find that the reform is socially beneficial as welfare gains are observed for most generations along the transition path to the new long run equilibrium.
The distortionary effect of health insurance on health demand
2007
This paper presents a general framework for modeling the impact of insurance on healthcare demand extending some of the results of the two-risk model of Rothschild and Stiglitz (1976), but including the latter as a special case. Rothschild and Stiglitz's approach assumes equivalence between the price of treatment and the discomfort caused by the disease. Relaxing this assumption turns out to be key in understanding participation in the insurance and healthcare markets. The demands for insurance and healthcare are modeled simultaneously, under symmetric and asymmetric information. Four main results arise from the relaxation of this assumption. First, only the presence of an insurance market can produce healthcare consumption at higher prices than the discomfort. Second, adverse selection may lead healthcare to be sold at a price lower than that under perfect information. Third, the potential non-participation of one type risk arises despite competition, depending on the degree o...
Market Inefficiency, Insurance Mandate and Welfare: US Health Care Reform 2010
Discussion Papers, 2010
In this paper we develop a stochastic dynamic general equilibrium overlapping generations (OLG) model with endogenous health capital to study the macroeconomic effects of the Affordable Care Act of March 2010 also known as the Obama health care reform. We find that the insurance mandate enforced with fines and premium subsidies successfully reduces adverse selection in private health insurance markets and subsequently leads to almost universal coverage of the working age population. On the other hand, spending on health care services increases by almost 6 percent due to moral hazard of the newly insured. This increase in health spending is partly financed by the larger pool of insured individuals and by government spending. In order to finance the subsidies the government needs to either introduce a 2.7 percent payroll tax on individuals with incomes over $200, 000, increase the consumption tax rate by about 1.1 percent, or cut government spending about 1 percent of GDP. A stable outcome across all simulated policies is that the reform triggers increases in health capital, decreases in labor supply, and decreases in the capital stock due to crowding out effects and tax distortions. As a consequence steady state output decreases by up to 2 percent. Overall, we find that the reform is socially beneficial as welfare gains are observed for most generations along the transition path to the new long run equilibrium. Finally, we show that the insurance take-up rate is mainly driven by the tax penalty and that the premium subsidies have only a moderate effect on enforcing the mandate.
Health insurance coverage and the macroeconomy
Journal of Health Economics, 2005
The primary objective of this paper is to improve our understanding of the historic relationship between state and national macroeconomic climate and the health insurance coverage of Americans.
Evaluating the Causal Effect of Insurance Access on Labor Market Outcomes Among Young Adults
2016
One of the first provisions enacted under the Patient Protection and A↵ordable Care Act (PPACA) was was the Young Adult Coverage Expansion, which took e↵ect on September 23, 2010. Under this provision, individuals up to age 26, can remain on their parent’s employer provided health insurance plan. Relatively little is known about the e↵ect of insurance coverage on the labor supply of young adults. In this paper, I exploit the exogenous expansion of health insurance coverage among a segment of young adults as an instrumental variable to control for the endogeneity of health insurance status. This allows me to estimate causal labor market e↵ects of insurance coverage. I leverage a di↵erence-in-di↵erence design in the first stage of a two-stage control function to estimate the e↵ect of the law on the probability of insurance coverage and use the predicted residual from this stage as my instrument in the second stage regression. The main structural equation estimates the causal e↵ect of ...
Social Health Insurance: A Quantitative Exploration
SSRN Electronic Journal, 2016
We quantitatively explore the welfare benets of health insurance over the lifecycle in a dynamic general equilibrium model with health risk and a health care sector. We consider three distinct approaches to designing a health insurance system: (i) a mixed private and public health insurance system similar to the US system, (ii) private health insurance (PHI), and (iii) universal public health insurance (UPHI). Our results indicate that the introduction of the US system into an economy without any health insurance results in large welfare gains, but does not produce the best welfare outcome. The PHI system with some government regulation on premiums is viable and produces welfare gains comparable to the welfare gains generated by the US system. The UPHI system with a high enough coinsurance rate produces better overall welfare outcomes than the other two systems. There exists an optional coinsurance rate that maximizes the welfare benets of the UPHI system. A structural reform that replaces the US system with the UPHI systemi.e., Medicare for allis welfare improving, but would face political headwinds due to opposing welfare eects across income groups.
Quantitative analysis of health insurance reform: separating regulation from redistribution
RePEc: Research Papers in Economics, 2012
Two key components of the upcoming health reform are a reorganization of the individual health insurance market and an increase in income redistribution in the economy. Which component contributes more to the welfare outcome of the reform? We address this question by constructing a general equilibrium life cycle model that incorporates both medical expenses and labor income risks. We replicate the key features of the current health insurance system in the U.S. and calibrate the model using the Medical Expenditures Panel Survey dataset. We find that the reform decreases the number of uninsured by more than four times. It also generates substantial welfare gains, equivalent to almost one percent of the annual consumption. However, these welfare gains mostly come from the redistributive measures embedded in the reform. If the reform only reorganizes the individual market, introduces individual mandates but does not include any income-based transfers, the welfare gains are much smaller. This result is mostly driven by the fact that most uninsured people have low income. High burdens of health insurance premiums for this group are relieved disproportionately more by income-based measures than by the new rules in the individual market.