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Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model

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  • López Nicolás, Ángel
  • Vera-Hernández, Marcos

Abstract

This paper develops an empirical strategy to estimate whether subsidies to private medical insurance are self-financing in countries where public and private insurance coexist and the latter covers the same treatments as the former. We construct a simulation routine based on a micro-econometric discrete choice model that allows us to evaluate the impact of premium changes on the utilization of outpatient and inpatient health care services. As an application, we estimate the budgetary effects of scrapping a subsidy from the purchase of individual private policies, using micro-data from Catalonia. Our results suggest that the subsidy is not self-financing. This result is driven by the fact that private medical insurance holders make concurrent use of public and private services, and by the price inelasticity of the demand for private policies.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 27 (2008)
Issue (Month): 5 (September)
Pages: 1285-1298

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Handle: RePEc:eee:jhecon:v:27:y:2008:i:5:p:1285-1298

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Web page: http://www.elsevier.com/locate/inca/505560

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References

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Cited by:
  1. Chai Cheng, T., 2011. "Measuring the effects of removing subsidies for private insurance on public expenditure for health care," Health, Econometrics and Data Group (HEDG) Working Papers 11/32, HEDG, c/o Department of Economics, University of York.
  2. Michel Grignon & Bidénam Kambia-Chopin, 2009. "Income and the Demand for Complementary Health Insurance in France," Working Papers DT24, IRDES institut for research and information in health economics, revised Apr 2009.
  3. Omar Paccagnella & Vincenzo Rebba & Guglielmo Weber, 2013. "VOLUNTARY PRIVATE HEALTH INSURANCE AMONG THE OVER 50s IN EUROPE," Health Economics, John Wiley & Sons, Ltd., vol. 22(3), pages 289-315, 03.

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