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Market Inefficiency, Insurance Mandate and Welfare: U.S. Health Care Reform 2010

  • Juergen Jung

    ()

    (Department of Economics, Towson University)

  • Chung Tran

    ()

    (School of Economics, Australian National University and ARC Centre of Excellence in Population Ageing Research, Australian School of Business, University of New South Wales)

In this paper we develop a stochastic dynamic general equilibrium overlapping generations (OLG) model with endogenous health capital to study the macroeconomic effects of the Affordable Care Act of March 2010 also known as the Obama health care reform. We find that the insurance mandate enforced with fines and premium subsidies successfully reduces adverse selection in private health insurance markets and subsequently leads to almost universal coverage of the working age population.

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File URL: http://www.cepar.edu.au/media/48703/Market%20Inefficiency.pdf
File Function: First version, 2011
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Paper provided by ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales in its series Working Papers with number 201102.

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Length: 48 pages
Date of creation: Feb 2011
Date of revision:
Handle: RePEc:asb:wpaper:201102
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