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Health Insurance and Households' Precautionary Behaviors - An Unusual Natural Experiment

  • Shin-Yi Chou
  • Jin-Tan Liu
  • James K. Hammitt

By reducing risk of large out-of-pocket medical expenses, comprehensive social health insurance may reduce households' motivation to engage in precautionary behaviors such as saving, procurement of private insurance, and spousal labor-force participation. We use the natural experiment provided by the 1995 introduction of National Health Insurance in Taiwan to examine these effects, using pre-existing differences in access to health insurance (tied to the household head's and spouse's joint employment status) to identify the effects of increasing insurance coverage. We find that comprehensive health insurance has a statistically significant and large effect on household savings and purchase of private accident insurance, but no significant effect on spousal employment.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9394.

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Date of creation: Dec 2002
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Publication status: published as Chou, Shin-Yi, Jin-Tan Liu and James K. Hammitt. "National Health Insurance And Precautionary Saving: Evidence From Taiwan," Journal of Public Economics, 2003, v87(9-10,Sep), 1873-1894.
Handle: RePEc:nbr:nberwo:9394
Note: HC HE
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