Health Expenditures and Precautionary Savings
AbstractThe precautionary motive for saving is an important issue that is receiving increasing attention. Part of the motivation for this interest stems from the post war coincidence of two trends, one a decline in the U.S. rate of saving and the other an increase in insurance of various types, including unemployment insurance, annuity insurance, disability insurance, and health insurance. This paper examines precautionary saving for uncertain health care payments using a simple two period and illustrates this model's theoretical insights through simulations of a 55 period life cycle model. While derived from a highly stylized model, the simulations give the impression that precautionary saving for uncertain health expenditures could explain a large amount of aggregate savings. Adding uncertain health expenditures to the model's economy raises long run savings by almost one third, assuming individuals self insure. Arrangements for insuring uncertain health expenditures also have potentially quite sizable effects on savings. Introducing actuarially fair insurance to the economy with uncertain health expenditures reduces the steady state level of wealth of that economy by 12 percent. Switching from the fair insurance arrangement to a Medicaid-type program with an asset test further reduces steady state wealth by 75 percent.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2008.
Date of creation: Aug 1986
Date of revision:
Note: PE AG
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Levin, Laurence, 1995. "Demand for health insurance and precautionary motives for savings among the elderly," Journal of Public Economics, Elsevier, vol. 57(3), pages 337-367, July.
- Jonathan Gruber & Aaron Yelowitz, 1999.
"Public Health Insurance and Private Savings,"
Journal of Political Economy,
University of Chicago Press, vol. 107(6), pages 1249-1274, December.
- Jonathan Gruber & Aaron S. Yelowitz, 1998. "Public Health Insurance and Private Savings," JCPR Working Papers 42, Northwestern University/University of Chicago Joint Center for Poverty Research.
- Jonathan Gruber & Aaron Yelowitz, 1997. "Public Health Insurance and Private Savings," NBER Working Papers 6041, National Bureau of Economic Research, Inc.
- Jonathan Gruber & Aaron Yelowitz, 1997. "Public Health Insurance and Private Savings," UCLA Economics Working Papers 772, UCLA Department of Economics.
- J. Gruber & A. Yelowitz, . "Public Health Insurance and Private Savings," Institute for Research on Poverty Discussion Papers 1135-97, University of Wisconsin Institute for Research on Poverty.
- Tullio Jappelli & Luigi Pistaferri & Guglielmo Weber, 2007.
"Health care quality, economic inequality, and precautionary saving,"
John Wiley & Sons, Ltd., vol. 16(4), pages 327-346.
- Tullio Jappelli & Luigi Pistaferri & Guglielmo Weber, 2006. "Health Care Quality, Economic Inequality, and Precautionary Saving," "Marco Fanno" Working Papers 0020, Dipartimento di Scienze Economiche "Marco Fanno".
- O'Donnell, Owen, 1995. "Labour supply and saving decisions with uncertainty over sickness," Journal of Health Economics, Elsevier, vol. 14(4), pages 491-504, October.
- Jonathan Gruber, 2000.
NBER Working Papers
7829, National Bureau of Economic Research, Inc.
- Jeske, Karsten & Kitao, Sagiri, 2009.
"U.S. tax policy and health insurance demand: Can a regressive policy improve welfare?,"
Journal of Monetary Economics,
Elsevier, vol. 56(2), pages 210-221, March.
- Karsten Jeske & Sagiri Kitao, 2007. "U.S. tax policy and health insurance demand: can a regressive policy improve welfare?," Working Paper 2007-13, Federal Reserve Bank of Atlanta.
- Alessandra Guariglia & Mariacristina Rossi, 2003.
"Private Medical Insurance and Saving: Evidence from the British Household Panel Survey,"
CEIS Research Paper
39, Tor Vergata University, CEIS.
- Guariglia, Alessandra & Rossi, Mariacristina, 2004. "Private medical insurance and saving: evidence from the British Household Panel Survey," Journal of Health Economics, Elsevier, vol. 23(4), pages 761-783, July.
- Tullio Jappelli & Luigi Pistaferri & Guglielmo Weber, 2004.
"Health Care Quality and Economic Inequality,"
CSEF Working Papers
120, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Shin-Yi Chou & Jin-Tan Liu & James K. Hammitt, 2002. "Health Insurance and Households' Precautionary Behaviors - An Unusual Natural Experiment," NBER Working Papers 9394, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.