Health insurance reform: The impact of a Medicare buy-in

Gary Hansen, Minchung Hsu and Junsang Lee

Journal of Economic Dynamics and Control, 2014, vol. 45, issue C, 315-329

Abstract: The steady-state general equilibrium and welfare consequences of a Medicare buy-in program, optional for those aged 55–64, is evaluated in a calibrated life-cycle economy with incomplete markets. Incomplete markets and adverse selection create a potential welfare improving role for health insurance reform. 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. The subsidy needed to bring the number of uninsured to less than 5 percent of the target population could be financed by an increase in the labor income tax rate of just 0.03–0.18 percent depending on how the program is implemented.

Keywords: Health insurance; Life cycle model; Incomplete markets (search for similar items in EconPapers)
JEL-codes: E62 I13 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (41)

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Related works:
Working Paper: Health Insurance Reform: The Impact of a Medicare Buy-In (2012)
Working Paper: Health Insurance Reform: The impact of a Medicare Buy-In (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:45:y:2014:i:c:p:315-329

DOI: 10.1016/j.jedc.2014.06.006

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