Medical expenditures over the life-cycle: persistent risks and insurance

Taiyo Fukai (), Hidehiko Ichimura (), Sagiri Kitao () and Minamo Mikoshiba ()
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Taiyo Fukai: Gakushuin University
Hidehiko Ichimura: University of Arizona
Sagiri Kitao: National Graduate Institute for Policy Studies (GRIPS)
Minamo Mikoshiba: Nagoya University

The Japanese Economic Review, 2025, vol. 76, issue 2, No 3, 285-336

Abstract: Abstract This paper builds a life-cycle model of single and married households and evaluates the roles of the national health insurance system. We use the administrative data on nationwide health insurance claims in Japan to analyze medical expenditure risks and calibrate the model with the stochastic process that varies by age and gender. Economic and welfare effects of health insurance reform depend on household income levels and generosity of the welfare program. Without health insurance, high-income households turn to self-insurance, significantly increasing aggregate savings. Low-income households, especially low-skilled single men and women, reduce savings and many of them become welfare recipients. Raising copayment rates for the elderly increases household savings, but depletes wealth of low-income households and leads to a rise in the number of welfare recipients.

Keywords: Medical expenditures; Health risks; Health insurance; Life-cycle model; Fiscal sustainability; Japan; D15; E21; I10; I13 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s42973-025-00190-z

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