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Optimal social insurance and health inequality

Volker Grossmann () and Holger Strulik ()

No 464, FSES Working Papers from Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland

Abstract: This paper integrates into public economics a biologically founded, stochastic process of individual ageing. The novel approach enables us to investigate the interaction between health and retirement policy in order to quantitatively characterize the optimal joint design of the social insurance system today and in response to future medical progress, and its implications for health inequality. Calibrating our model to Germany, we find that currently the public health and pension system is approximately optimal. Future progress in medical technology calls for a potentially drastic increase in health spending that typically shall be accompanied with a lower pension savings rate and a higher retirement age. Medical progress and higher health spending is predicted to lead to more health inequality.

Keywords: Ageing; Health Expenditure; Health Inequality; Social Security System; Retirement Age (search for similar items in EconPapers)
JEL-codes: H50 I10 C60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age and nep-pbe
Date: 2015-11-23
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Related works:
Working Paper: Optimal social insurance and health inequality (2017) Downloads
Working Paper: Optimal Social Insurance and Health Inequality (2015) Downloads
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