Health Insurance Reform: The Impact of a Medicare Buy-In

Gary Hansen, Minchung Hsu and Junsang Lee

No 18529, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The steady state general equilibrium and welfare consequences of health insurance reform are evaluated in a calibrated life-cycle economy with incomplete markets and endogenous labor supply. Individuals face uncertainty each period about their future health status, medical expenditures, labor productivity, access to employer provided group health insurance, and the length of their life. In this environment, incomplete markets and adverse selection, which restricts the type of insurance contracts available in equilibrium, creates a potential role for health insurance reform. In particular, we consider a policy reform that would allow older workers (aged 55-64) to purchase insurance similar to Medicare coverage. We find that adverse selection eliminates any market for a Medicare buy-in if it is offered as an unsubsidized option to individual private health insurance. Hence, we compare the equilibrium properties of the current insurance system with those that obtain with an optional buy-in subsidized by the government, as well as with several types of health insurance mandates.

JEL-codes: E6 H51 I13 (search for similar items in EconPapers)
Date: 2012-11
New Economics Papers: this item is included in nep-cta, nep-dge, nep-hea, nep-ias and nep-mac
Note: EFG EH PE
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Citations: View citations in EconPapers (15)

Published as Hansen, Gary D. & Hsu, Minchung & Lee, Junsang, 2014. "Health insurance reform: The impact of a Medicare buy-in," Journal of Economic Dynamics and Control, Elsevier, vol. 45(C), pages 315-329.

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Related works:
Journal Article: Health insurance reform: The impact of a Medicare buy-in (2014)
Working Paper: Health Insurance Reform: The impact of a Medicare Buy-In (2011)
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