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The provision of public universal health insurance: impacts on private insurance, asset holdings and welfare

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  • Minchung, Hsu
  • Junsang, Lee

Abstract

This paper aims to investigate impacts of public provision of universal health insurance (UHI) in an environment with household heterogeneity and financial market incompleteness. Various UHI polices with both distortionary (payroll-tax) and non-distortionary (lump-sum tax) financing methods are compared to address the trade-off between risk reduction and tax distortion as well as corresponding welfare implications. We undertake a dynamic equilibrium model with endogenous insurance choice and labor supply decisions to perform quantitative analyses. The results suggest that the UHI expenditure coverage rate would be too high in most OECD countries when the distortion effect is considered. We find a clear crowding out effect on asset holdings. Implications for private health insurance (PHI) purchases when UHI is introduced depend on the pricing and the design of coverage. We find the rich are sensitive to the price of PHI, and would prefer a supplemental plan when UHI is introduced.

Suggested Citation

  • Minchung, Hsu & Junsang, Lee, 2011. "The provision of public universal health insurance: impacts on private insurance, asset holdings and welfare," MPRA Paper 32974, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:32974
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    Cited by:

    1. Pashchenko, Svetlana & Porapakkarm, Ponpoje, 2010. "Quantitative Analysis of Health Insurance Reform: Separating Community Rating from Income Redistribution," MPRA Paper 26158, University Library of Munich, Germany.
    2. Lim, Taejun, 2021. "Coverage Expansion of Universal Health Care and its Impacts on Health Insurance Market and Welfare: the Case of South Korea," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 62(2), pages 141-161, December.
    3. Fehr, Hans & Feldman, Maria, 2024. "Financing universal health care: Premiums or payroll taxes?," European Economic Review, Elsevier, vol. 166(C).
    4. Reona Hagiwara, 2022. "Welfare Effects of Health Insurance Reform: The Role of Elastic Medical Demand," IMES Discussion Paper Series 22-E-05, Institute for Monetary and Economic Studies, Bank of Japan.
    5. Shuyun May Li, Solmaz Moslehi, Siew Ling Yew, 2012. "Public-Private Mix of Health Expenditure: A Political Economy Approach and A Quantitative Exercise," Department of Economics - Working Papers Series 1157, The University of Melbourne.
    6. Shuyun May Li & Solmaz Moslehi & Siew Ling Yew, 2016. "Public–private mix of health expenditure: A political economy and quantitative analysis," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(2), pages 834-866, May.
    7. Lim Kyoung Mook, 2016. "Public provision of health insurance and welfare," The B.E. Journal of Macroeconomics, De Gruyter, vol. 16(2), pages 439-483, June.
    8. Ferreira, Pedro Cavalcanti & Gomes, Diego B.P., 2017. "Health care reform or more affordable health care?," Journal of Economic Dynamics and Control, Elsevier, vol. 79(C), pages 126-153.

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    More about this item

    Keywords

    universal health insurance; complementary/supplemental health insurance;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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