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A structural econometric model of family valuation and choice of employer-sponsored health insurance in the United States

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  • David J. Vanness

    (Division of Health Care Policy & Research, Mayo Clinic, Rochester, Minnesota, USA)

Abstract

This paper estimates a fully structural unitary household model of employment and health insurance decisions for dual wage-earner families with children in the United States, using data from the 1987 National Medical Expenditure Survey. Families choose hours of work and the breakdown of compensation between cash wages and health insurance benefits for each wage earner in order to maximize expected utility under uncertain need for medical care. Heterogeneous demand for the employer-sponsored health insurance is thus generated directly from variations in health status and earning potential. The paper concludes by discussing the benefits of using structural models for simulating welfare effects of insurance reform relative to the costly assumptions that must be imposed for identification. Copyright © 2003 John Wiley & Sons, Ltd.

Suggested Citation

  • David J. Vanness, 2003. "A structural econometric model of family valuation and choice of employer-sponsored health insurance in the United States," Health Economics, John Wiley & Sons, Ltd., vol. 12(9), pages 771-790.
  • Handle: RePEc:wly:hlthec:v:12:y:2003:i:9:p:771-790
    DOI: 10.1002/hec.837
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    References listed on IDEAS

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    Cited by:

    1. Wang, H. Holly & Rosenman, Robert, 2007. "Perceived need and actual demand for health insurance among rural Chinese residents," China Economic Review, Elsevier, vol. 18(4), pages 373-388.

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