Public health insurance and household portfolio Choices: Unravelling financial “Side Effects” of Medicare

Marco Angrisani, Vincenzo Atella and Marianna Brunetti

Journal of Banking & Finance, 2018, vol. 93, issue C, 198-212

Abstract: Large, unpredictable and not fully insurable health-care costs represent a source of background risk that might deter households’ financial risk taking. Using panel data from the Health and Retirement Study, we test whether universal health insurance, like Medicare for over-65 Americans, shields against this risk promoting stockholding. We adopt a fixed-effects estimation strategy, thereby taking into account household-level heterogeneity in health status and private insurance coverage. We find that, before Medicare eligibility, households in poor health, who face a higher risk of medical expenses, are less likely to hold stocks than their healthier counterparts. Yet, this gap is mostly eliminated by Medicare. Notably, the offsetting is primarily experienced by households in poor health and without private health insurance over the observation period.

Keywords: Household portfolios; Health status; Medicare; Health insurance (search for similar items in EconPapers)
JEL-codes: D14 G11 I13 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Public Health Insurance and Household Portfolio Choices: Unraveling Financial “Side Effects” of Medicare (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:93:y:2018:i:c:p:198-212

DOI: 10.1016/j.jbankfin.2018.05.001

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