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Income and the Demand for Complementary Health Insurance in France

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Author Info

  • Michel Grignon

    ()
    (McMaster University, Department of Economics and Department of Health, Aging, and Society, Hamilton, Ontario, Canada)

  • Bidénam Kambia-Chopin

    ()
    (IRDES institut for research and information in health economics)

Abstract

This paper examines the demand for complementary health insurance (CHI) in the non-group market in France and the reasons why the near poor seem price insensitive. First we develop a theoretical model based on a simple tradeoff between two goods: CHI and a composite good reflecting all other consumptions. Then we estimate a model of CHI consumption and empirically test the impact of potential determinants of demand for coverage: risk aversion, asymmetrical information, non-expected utility, the demand for quality and health, and supply-side factors such as price discrimination. We interpret our empirical findings in terms of crossed price and income elasticity of the demand for CHI. Last, we use these estimates of elasticity to simulate the effect of various levels of price subsidies on the demand for CHI among those with incomes around the poverty level in France. We find that the main motivation for purchasing CHI in France is protection against the financial risk associated with co-payments in the public health insurance scheme. We also observe a strong income effect suggesting that affordability might be an important determinant. Our simulations indicate that no policy of price subsidy can significantly increase the take-up of CHI among the near poor; any increase in the level of subsidy generates a windfall benefit for richer households.

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File URL: http://www.irdes.fr/EspaceAnglais/Publications/WorkingPapers/DT24IncomeDemandComplementHealthInsuranceFrance.pdf
File Function: First version, 2009
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Bibliographic Info

Paper provided by IRDES institut for research and information in health economics in its series Working Papers with number DT24.

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Length: 28 pages
Date of creation: Apr 2009
Date of revision: Apr 2009
Handle: RePEc:irh:wpaper:dt24

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Keywords: Demand for health insurance; Uninsured; Premium subsidies;

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References

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  1. Rubin, Paul H & Paul, Chris W, II, 1979. "An Evolutionary Model of Taste for Risk," Economic Inquiry, Western Economic Association International, vol. 17(4), pages 585-96, October.
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  3. Bradley, Ralph, 2008. "Comment--Defining health insurance affordability: Unobserved heterogeneity matters," Journal of Health Economics, Elsevier, vol. 27(4), pages 1129-1140, July.
  4. Michel Grignon & Marc Perronnin & John N. Lavis, 2008. "Does free complementary health insurance help the poor to access health care? Evidence from France," Health Economics, John Wiley & Sons, Ltd., vol. 17(2), pages 203-219.
  5. Joan Costa & Jaume Garcia, 2003. "Demand for private health insurance: how important is the quality gap?," Health Economics, John Wiley & Sons, Ltd., vol. 12(7), pages 587-599.
  6. David M. Cutler & Amy Finkelstein & Kathleen McGarry, 2008. "Preference Heterogeneity and Insurance Markets: Explaining a Puzzle of Insurance," NBER Working Papers 13746, National Bureau of Economic Research, Inc.
  7. Nyman, John A., 1999. "The value of health insurance: the access motive," Journal of Health Economics, Elsevier, vol. 18(2), pages 141-152, April.
  8. Thomas C. Buchmueller & Agnès Couffinhal & Michel Grignon & Marc Perronnin, 2004. "Access to physician services: does supplemental insurance matter? Evidence from France," Health Economics, John Wiley & Sons, Ltd., vol. 13(7), pages 669-687.
  9. Barsky, Robert B, et al, 1997. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Study," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 537-79, May.
  10. Newhouse, Joseph P., 2006. "Reconsidering the moral hazard-risk avoidance tradeoff," Journal of Health Economics, Elsevier, vol. 25(5), pages 1005-1014, September.
  11. Eddy van Doorslaer & Cristina Masseria, 2004. "Income-Related Inequality in the Use of Medical Care in 21 OECD Countries," OECD Health Working Papers 14, OECD Publishing.
  12. Cutler, David & McGarry, Kathleen & Finkelstein, Amy, 2008. "Preference Heterogeneity and Insurance Markets: Explaining a Puzzle of Insurance," Scholarly Articles 2640581, Harvard University Department of Economics.
  13. Jonathan Gruber, 2008. "Covering the Uninsured in the U.S," NBER Working Papers 13758, National Bureau of Economic Research, Inc.
  14. Bundorf, M. Kate & Pauly, Mark V., 2006. "Is health insurance affordable for the uninsured?," Journal of Health Economics, Elsevier, vol. 25(4), pages 650-673, July.
  15. Saliba, Berengere & Ventelou, Bruno, 2007. "Complementary health insurance in France Who pays? Why? Who will suffer from public disengagement?," Health Policy, Elsevier, vol. 81(2-3), pages 166-182, May.
  16. López Nicolás, Ángel & Vera-Hernández, Marcos, 2008. "Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model," Journal of Health Economics, Elsevier, vol. 27(5), pages 1285-1298, September.
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Cited by:
  1. Guthmuller, Sophie & Jusot, Florence & Wittwer, Jérôme & Després, Caroline, 2011. "Le recours à l’Aide complémentaire santé : les enseignements d’une expérimentation sociale à Lille," Economics Papers from University Paris Dauphine 123456789/7022, Paris Dauphine University.
  2. Zeynep Or & Chantal Cases & Melanie Lisac & Karsten Vrangbaek & Ulrika Winblad & Gwyn Bevan, 2009. "Are Health Problems Systemic? Politics of Access and Choice under Beveridge and Bismarck Systems," Working Papers DT27, IRDES institut for research and information in health economics, revised Sep 2009.
  3. Jusot, Florence & Perraudin, Clémence & Wittwer, Jérôme, 2011. "L'accessibilité financière à la complémentaire santé en France : les résultats de l'enquête Budget de Famille 2006," Economics Papers from University Paris Dauphine 123456789/11091, Paris Dauphine University.
  4. Thierry Debrand & Christine Sorasith, 2010. "Bouclier sanitaire : choisir entre égalité et équité ? Une analyse à partir du modèle ARAMMIS," Working Papers DT32, IRDES institut for research and information in health economics, revised Jun 2010.
  5. Jusot, Florence & Legal, Anne & Wittwer, Jérôme, 2008. "La complémentaire santé : un bien normal ?," Economics Papers from University Paris Dauphine 123456789/1926, Paris Dauphine University.
  6. Thierry Debrand & Christine Sorasith, 2010. "Out-of-Pocket Maximum Rules under a Compulsatory Health Care Insurance Scheme: A Choice between Equality and Equity," Working Papers DT34, IRDES institut for research and information in health economics, revised Nov 2010.
  7. repec:hal:journl:halshs-00423931 is not listed on IDEAS
  8. Guthmuller, Sophie & Jusot, Florence & Wittwer, Jérôme, 2014. "Improving take-up of health insurance program: a social experiment in France," Economics Papers from University Paris Dauphine 123456789/9715, Paris Dauphine University.
  9. Thierry Debrand & Nicolas Sirven, 2009. "What are the Motivations of Pathways to Retirement in Europe: Individual, Familial, Professional Situation or Social Protection Systems?," Working Papers DT28, IRDES institut for research and information in health economics, revised Oct 2009.
  10. Jérôme Wittwer & Clémence Perraudin & Florence Jusot, 2011. "L’accessibilité financière à la complémentaire santé en France : les résultats de l’enquête Budget de Famille 2006," Économie et Statistique, Programme National Persée, vol. 450(1), pages 29-46.

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