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Health, Health Insurance, and Inequality

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  • Chaoran Chen
  • Zhigang Feng
  • Jiaying Gu

Abstract

This paper identifies a "health premium" of insurance coverage that the insured is more likely to stay healthy or recover from unhealthy status. We introduce this feature into the prototypical macro-health model and estimate the baseline economy by matching the observed joint distribution of health insurance purchase, health status and income over the life cycle. Quantitative analysis reveals that an individual’s insurance status has substantial and persistent impact on health, which will be reinforced by and subsequently amplify the feedback effect of health on labor earnings and income inequality. Providing "Universal Health Coverage" would narrow health and life expectancy gaps, with a mixed effect on income distribution in absence of any additional redistribution of income or wealth.

Suggested Citation

  • Chaoran Chen & Zhigang Feng & Jiaying Gu, 2024. "Health, Health Insurance, and Inequality," Working Papers tecipa-767, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-767
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    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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