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A Dynamic Model of Demand for Private Health Insurance in Ireland

Author

Listed:
  • Finn, Claire

    () (University College Dublin)

  • Harmon, Colm P.

    () (University of Sydney)

Abstract

The Irish health care system offers a tax financed, universal entitlement to public care at a nominal user fee, nonetheless 50% of the Irish population purchase private health insurance. This paper empirically models the propensity to insure as a function of individual and household characteristics using panel data analysis and compares three alternate approaches; a static, chamberlain-mundlak and dynamic specification. Using panel data from 1994 to 2000, we consider whether propensity to insure is in fact a function of heterogeneity or of state dependence. A range of individual and household characteristics is shown to influence propensity to insure. Overall the positive effect of education and income and the negative effect of poor health status remain robust across three specifications. In moving toward a dynamic specification, we show that persistence is a highly significant determinant of demand for private health insurance and also that it reduces the size of the coefficients on the regressors. The latter point highlights that while education, income and, to a lesser extent, health status have very large effects on probability of insuring, these effects are overestimated where no attempt is made to control for unobserved heterogeneity or state dependence.

Suggested Citation

  • Finn, Claire & Harmon, Colm P., 2006. "A Dynamic Model of Demand for Private Health Insurance in Ireland," IZA Discussion Papers 2472, Institute for the Study of Labor (IZA).
    • Handle: RePEc:iza:izadps:dp2472
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    References listed on IDEAS

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    Cited by:

    1. Okore Okorafor, 2012. "National health insurance reform in South Africa," Applied Health Economics and Health Policy, Springer, vol. 10(3), pages 189-200, May.

    More about this item

    Keywords

    health insurance; dynamics; panel; unobserved heterogeneity; state dependence;

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I10 - Health, Education, and Welfare - - Health - - - General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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