Properties of actuarially-fair and pay-as-you-go health insurance schemes for the elderly. An OLG model approach
AbstractThe aged dependency ratio or ADR is growing at a fast pace in many countries. This fact causes stress to the economy and might create conflicts of interest between young and old. In this paper the properties of different health insurance systems for the elderly are analysed within an overlapping generations (OLG) model. The properties of actuarial health insurance and different variations of pay-as-you-go health insurance are compared. It turns out that the welfare properties of these contracts are heavily dependent on the economy's dynamic properties. Of particular importance is the magnitude of the rate of population growth relative to the interest rate. In addition it is shown that public health insurance is associated with an inherent externality resulting in a second-best solution.
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Bibliographic InfoPaper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 231.
Length: 26 pages
Date of creation: 06 Apr 1998
Date of revision:
Publication status: Published in Journal of Health Economics, 2000, pages 477-498.
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More information through EDIRC
health insurance; optimal insurance; government insurance; PAYG insurance; OLG models;
Find related papers by JEL classification:
- H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
This paper has been announced in the following NEP Reports:
- NEP-HEA-1998-04-21 (Health Economics)
- NEP-PBE-1998-04-21 (Public Economics)
- NEP-PUB-1998-04-21 (Public Finance)
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