Social Health Insurance: A Quantitative Exploration

Juergen Jung and Chung Tran

ANU Working Papers in Economics and Econometrics from Australian National University, College of Business and Economics, School of Economics

Abstract: We quantify the welfare implications of three alternative approaches to providing social health insurance: (i) a mix of private and public health insurance (US-style), (ii) compulsory universal public health insurance (UPHI), and (iii) private health insurance for workers combined with government subsidies and price regulation. We use a Bewley-Grossman lifecycle model calibrated to match the lifecycle structure of earnings and health risks in the US. For all three systems we find that welfare gains triggered by a combination of improvements in risk sharing and wealth redistribution dominate welfare losses caused by tax distortions and ex-post moral hazard effects. Overall, the UPHI system outperforms the other two systems in terms of welfare gains if the coinsurance rate is properly designed. A switch from the US system to a well-designed UPHI system results in large welfare gains. However, such a radical reform faces political impediments due to opposing welfare effects across different income groups.

Keywords: Health capital; lifecycle health risk; incomplete insurance markets; social insurance; optimal policy; dynamic general equilibrium with idiosyncratic shocks (search for similar items in EconPapers)
JEL-codes: D52 E62 H31 I13 (search for similar items in EconPapers)
Date: 2015-12
New Economics Papers: this item is included in nep-dge, nep-hea, nep-ias and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Social health insurance: A quantitative exploration (2022)
Working Paper: Social Health Insurance: A Quantitative Exploration (2022)
Working Paper: Social Health Insurance: A Quantitative Exploration (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:acb:cbeeco:2015-629

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