Intergenerational Redistribution, Health Care, and Politics
AbstractPublicly provided health care implies considerable intergenerational redistribution. The possibility of accumulating a fund or debt will affect the degree of redistribution as well as how efficient the financing of health care is. In a voting model we study how governments inability to make binding long-term policy commitments will affect the accumulation of a fund or debt. Today's government will base its policy decisions on expectations about future governments behavior and simply follow suit, which results in strong political inertia. Either a fund or debt may therefore be upheld in political equilibrium. But no mechanism ensure that it is at its optimal level. If there is fund in steady state, the more political clout the old have the smaller will the fund be, i.e saving decrease. If there is debt, however, a politically stronger old generation may imply a smaller debt, i.e. savings increase.
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Bibliographic InfoPaper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 486.
Length: 15 pages
Date of creation: 07 Jan 2002
Date of revision:
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Voting; health expenditure; intergenerational transfers; dynamic politics;
Find related papers by JEL classification:
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- I10 - Health, Education, and Welfare - - Health - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-01-22 (All new papers)
- NEP-DGE-2002-01-22 (Dynamic General Equilibrium)
- NEP-HEA-2002-01-22 (Health Economics)
- NEP-PBE-2002-01-22 (Public Economics)
- NEP-POL-2002-01-22 (Positive Political Economics)
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