Age Penalties and Take-up of Private Health Insurance

Nathan Kettlewell and Yuting Zhang
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Yuting Zhang: University of Melbourne

No 14901, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Penalty mandates are used in many countries to encourage people to purchase health insurance. But are they effective? We use a large administrative dataset for a 10% random sample of all Australian tax-filers to study how people respond to a step-wise age-based mandate, and whether this has changed over time. The mandate creates discontinuities in the incentive to insure by age, which we exploit to estimate causal effects. People who do not insure before the penalty dates face higher premiums in the future, which should encourage them to bring forward purchases. We find that people respond as expected to the initial age-penalty, but not to subsequent penalties. The 2% premium loading results in a 1-4% increase in take-up, with effects increasing after an annual government letter campaign that reminds people approaching the penalty deadline about the policy. We discuss the impact of the mandate on the overall efficiency of the market, and implications of potential reforms.

Keywords: regression discontinuity; age-based mandate; health insurance; Australia (search for similar items in EconPapers)
JEL-codes: I12 I13 I18 (search for similar items in EconPapers)
Pages: 71 pages
Date: 2021-11
New Economics Papers: this item is included in nep-hea and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published in: Health Economics, 2024, 33 (4), 636-651

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Related works:
Journal Article: Age penalties and take‐up of private health insurance (2024)
Working Paper: Age penalties and take-up of private health insurance (2021)
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