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Life cycle responses to health insurance status

Listed author(s):
  • Pelgrin, Florian
  • St-Amour, Pascal

This paper studies the lifetime effects of exogenous changes in health insurance coverage (e.g. Medicare, PPACA, termination of employer-provided plans) on the dynamic optimal allocation (consumption, leisure, health expenditures), status (health and wealth), and welfare. We solve, simulate, and structurally estimate a parsimonious life cycle model with endogenous exposure to morbidity and mortality risks, and exogenous health insurance. By varying coverage, we identify the marginal effects of insurance when young and/or when old on allocations, statuses, and welfare. Our results highlight positive effects of insurance on health, wealth and welfare, as well as mid-life substitution away from healthy leisure in favor of more health expenses, caused by peaking wages, and accelerating health issues.

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File URL: http://www.sciencedirect.com/science/article/pii/S0167629616300467
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Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 49 (2016)
Issue (Month): C ()
Pages: 76-96

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Handle: RePEc:eee:jhecon:v:49:y:2016:i:c:p:76-96
DOI: 10.1016/j.jhealeco.2016.06.007
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505560

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