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

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

Abstract

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.

Suggested Citation

  • Shin-Yi Chou & Jin-Tan Liu & James K. Hammitt, 2002. "Health Insurance and Households' Precautionary Behaviors - An Unusual Natural Experiment," NBER Working Papers 9394, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:9394
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    Cited by:

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    2. Le, Nga T.Q. & Groot, Wim & Tomini, Sonila & Tomini, Florian, 2017. "Effects of health insurance on labour supply: Evidence from the health care fund for the poor in Viet Nam," MERIT Working Papers 2017-050, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • H4 - Public Economics - - Publicly Provided Goods

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