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Effects of National Health Insurance on precautionary saving: new evidence from Taiwan

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  • Chung-Ming Kuan

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  • Chien-Liang Chen

Abstract

In this article, we evaluate the crowd-out effects of the National Health Insurance (NHI) on household precautionary saving in Taiwan. Our analysis differs from existing studies in two respects. First, we do not exclude the households with negative saving that are about 18.9% of the entire sample. Second, we conduct a more complete treatment effect analysis. We estimate both average treatment effect (ATE) and quantile treatment effect (QTE) using the difference-in-differences method. We also partition some covariates (household income and the age of household head) into different groups and estimate the group-wise ATEs and QTEs. While supporting the existing finding that the NHI has negative impact on households saving, our empirical result shows that the QTEs are heterogeneous across saving quantiles, such that higher savers tend to have greater reduction in saving after the NHI is enforced. It is also found that the NHI has greater impact on the households with higher income and those with retiring heads, especially on high savers in these groups. Copyright Springer-Verlag 2013

Suggested Citation

  • Chung-Ming Kuan & Chien-Liang Chen, 2013. "Effects of National Health Insurance on precautionary saving: new evidence from Taiwan," Empirical Economics, Springer, vol. 44(2), pages 921-943, April.
  • Handle: RePEc:spr:empeco:v:44:y:2013:i:2:p:921-943
    DOI: 10.1007/s00181-011-0533-5
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    References listed on IDEAS

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    1. Mark Kazarosian, 1997. "Precautionary Savings-A Panel Study," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 241-247, May.
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    6. Chou, Shin-Yi & Liu, Jin-Tan & Hammitt, James K., 2003. "National Health Insurance and precautionary saving: evidence from Taiwan," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 1873-1894, September.
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    8. 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.
    9. Finkelstein, Amy, 2002. "The effect of tax subsidies to employer-provided supplementary health insurance: evidence from Canada," Journal of Public Economics, Elsevier, vol. 84(3), pages 305-339, June.
    10. Michael G. Palumbo, 1999. "Uncertain Medical Expenses and Precautionary Saving Near the End of the Life Cycle," Review of Economic Studies, Oxford University Press, vol. 66(2), pages 395-421.
    11. Alex Maynard & Jiaping Qiu, 2009. "Public insurance and private savings: who is affected and by how much?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(2), pages 282-308, March.
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    13. Shin-Yi Chou & Jin-Tan Liu & Cliff J. Huang, 2004. "Health insurance and savings over the life cycle-a semiparametric smooth coefficient estimation," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(3), pages 295-322.
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    Cited by:

    1. Sheu, Ji-Tian & Lu, Jui-fen Rachel, 2014. "The spillover effect of National Health Insurance on household consumption patterns: Evidence from a natural experiment in Taiwan," Social Science & Medicine, Elsevier, vol. 111(C), pages 41-49.
    2. Juan Rodriguez-Poo & Alexandra SoberĂ³n, 2015. "Differencing techniques in semi-parametric panel data varying coefficient models with fixed effects: a Monte Carlo study," Computational Statistics, Springer, vol. 30(3), pages 885-906, September.
    3. Lee, Daeyong, 2016. "Effects of dependent coverage mandate on household precautionary savings: Evidence from the 2010 Affordable Care Act," Economics Letters, Elsevier, vol. 147(C), pages 32-37.
    4. Lugilde, Alba & Bande, Roberto & Riveiro, Dolores, 2017. "Precautionary Saving: a review of the theory and the evidence," MPRA Paper 77511, University Library of Munich, Germany.

    More about this item

    Keywords

    Average treatment effect; Difference-in-differences; National Health Insurance; Precautionary saving; Quantile treatment effect; D12; I18; I38;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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