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Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model for outpatient and inpatient episodes

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  • Ángel López-Nicolás
  • Marcos Vera-Hernández

Abstract

This paper analyses whether or not tax subsidies to private medical insurance are self-financing by means of a structural approach. We construct a simulation routine based on a microeconometric discrete choice model that allows us to evaluate the impact of premium changes on the utilisation of outpatient and inpatient health care services. We simulate the 1999 Spanish tax reform that abolished the tax deduction for expenditures on private health insurance using a representative sample of the Catalan population. Prior to this reform, foregone tax revenue arising from deductions after the purchase of private insurance amounted to €69.2 M. per year. In contrast, the elimination of the subsidies to private policies is estimated to generate an extra cost for the public sector of about €8.9 M. per year.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Working Papers, Research Center on Health and Economics with number 632.

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Date of creation: Jul 2002
Date of revision: Oct 2004
Handle: RePEc:upf:upfses:632

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Web page: http://www.econ.upf.edu/

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Keywords: Health care utilisation; structural modelling; tax reform evaluation;

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  17. Propper, Carol & Rees, Hedley & Green, Katherine, 2001. "The Demand for Private Medical Insurance in the UK: A Cohort Analysis," Economic Journal, Royal Economic Society, vol. 111(471), pages C180-200, May.
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Cited by:
  1. Pilar García Gómez & Ángel López, 2004. "The evolution of inequity in the access to health care in Spain: 1987-2001," Economics Working Papers 756, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2006.

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