Health Insurance Reform: The impact of a Medicare Buy-In

Minchung Hsu, Junsang Lee and Gary Hansen

No 699, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: Current U.S. policy extends medical insurance in the form of Medicare to individuals aged 65 and over. Younger individuals may have group health insurance through their employer, purchase individual health insurance, or go without. The fact that many individuals have no insurance, or have relatively expensive individual insurance, is a motivation for health insurance reform. This paper evaluates the general equilibrium and welfare consequences of health insurance reform in a calibrated life-cycle economy with incomplete markets, uncertain lifespans, and endogenous labor supply. In particular, we consider a policy reform that would allow younger workers (aged 55-64) to purchase Medicare coverage. In our model, working age individuals face idiosyncratic productivity shocks, choose whether or not to work (labor is indivisible), accumulate claims to capital, and can purchase private health insurance if they do not receive group health insurance through their employer. Retired individuals receive social security and Medicare which, along with accumulated savings, is used to finance consumption and medical expenditures. Preliminary results indicate that adverse selection renders a Medicare buy-in program infeasible unless at least 40 percent of the costs of the program are financed through government subsidy.

Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2011/paper_699.pdf (application/pdf)

Related works:
Journal Article: Health insurance reform: The impact of a Medicare buy-in (2014)
Working Paper: Health Insurance Reform: The Impact of a Medicare Buy-In (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:sed011:699

Access Statistics for this paper

More papers in 2011 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().