A Dynamic Model of Demand for Private Health Insurance in Ireland

Claire Finn () and Colm Harmon
Additional contact information
Claire Finn: University College Dublin

No 2472, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The Irish health care system offers a tax financed, universal entitlement to public care at a nominal user fee, nonetheless 50% of the Irish population purchase private health insurance. This paper empirically models the propensity to insure as a function of individual and household characteristics using panel data analysis and compares three alternate approaches; a static, chamberlain-mundlak and dynamic specification. Using panel data from 1994 to 2000, we consider whether propensity to insure is in fact a function of heterogeneity or of state dependence. A range of individual and household characteristics is shown to influence propensity to insure. Overall the positive effect of education and income and the negative effect of poor health status remain robust across three specifications. In moving toward a dynamic specification, we show that persistence is a highly significant determinant of demand for private health insurance and also that it reduces the size of the coefficients on the regressors. The latter point highlights that while education, income and, to a lesser extent, health status have very large effects on probability of insuring, these effects are overestimated where no attempt is made to control for unobserved heterogeneity or state dependence.

Keywords: health insurance; dynamics; panel; unobserved heterogeneity; state dependence (search for similar items in EconPapers)
JEL-codes: D01 G22 I10 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2006-11
New Economics Papers: this item is included in nep-hea and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Working Paper: A dynamic model of demand for private health insurance in Ireland (2006)
Working Paper: A dynamic model of demand for private health insurance in Ireland (2006)
Working Paper: A dynamic model of demand for private health insurance in Ireland (2006)
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