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Market Inefficiency, Insurance Mandate and Welfare: U.S. Health Care Reform 2010

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Author Info

  • Juergen Jung

    ()
    (Department of Economics, Towson University)

  • Chung Tran

    ()
    (School of Economics, Australian National University and ARC Centre of Excellence in Population Ageing Research, Australian School of Business, University of New South Wales)

Abstract

In this paper we develop a stochastic dynamic general equilibrium overlapping generations (OLG) model with endogenous health capital to study the macroeconomic effects of the Affordable Care Act of March 2010 also known as the Obama health care reform. We find that the insurance mandate enforced with fines and premium subsidies successfully reduces adverse selection in private health insurance markets and subsequently leads to almost universal coverage of the working age population.

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File URL: http://www.cepar.edu.au/media/48703/Market%20Inefficiency.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales in its series Working Papers with number 201102.

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Length: 48 pages
Date of creation: Feb 2011
Date of revision:
Handle: RePEc:asb:wpaper:201102

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Keywords: Affordable Care Act 2010; endogenous health capital; life-cycle health spending and ?nancing; dynamic stochastic general equilibrium;

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References

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Citations

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Cited by:
  1. Svetlana Pashchenko & Ponpoje Porapakkarm, 2013. "Quantitative Analysis of Health Insurance Reform: Separating Regulation from Redistribution," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(3), pages 383-404, July.
  2. Harold L. Cole & Soojin Kim & Dirk Krueger, 2012. "Analyzing the Effects of Insuring Health Risks: On the Trade-off between Short Run Insurance Benefits vs. Long Run Incentive Costs," NBER Working Papers 18572, National Bureau of Economic Research, Inc.
  3. Ponpoje (Poe) Porapakkarm & Svetlana Pashchenko, 2013. "Cross-subsidization in employer-based health insurance and the effects of tax subsidy reform," 2013 Meeting Papers 1086, Society for Economic Dynamics.
  4. Ponpoje Porapakkarm & Svetlana Pashchenko, 2011. "Quantitative Analysis of Health Insurance Reform: Separating Community Rating from Income Redistribution," 2011 Meeting Papers 1254, Society for Economic Dynamics.
  5. Manan Roy, 2011. "How Well Does the U.S. Government Provide Health Insurance?," Departmental Working Papers 1102, Southern Methodist University, Department of Economics.
  6. Maria Prados, 2012. "A Life Cycle Approach to the Mechanism Connecting Health Inequality and Earnings Inequality," 2012 Meeting Papers 1145, Society for Economic Dynamics.
  7. Elena Capatina, 2012. "Life Cycle Effects of Health Risk," Working Papers 201216, ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales.
  8. Gerhard Glomm & Juergen Jung & Chung Tran, 2012. "Fiscal Austerity Measures: Spending Cuts vs. Tax Increases," ANU Working Papers in Economics and Econometrics 2012-594, Australian National University, College of Business and Economics, School of Economics.
  9. Pedro Gomis Porqueras & Solmaz Moslehi & Richard M. H. Suen, 2013. "Endogenous Health in a Model of Calories, Medical Services and Health Shocks," Economics Series 2013_4, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.

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