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A dynamic model of demand for private health insurance in Ireland by and

Author

Listed:
  • Claire Finn

    (School of Economics & Geary Institute, University College Dublin)

  • Colm Harmon

    (School of Economics, Geary Institute & IZA Bonn, University College Dublin)

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 heath 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

  • Claire Finn & Colm Harmon, 2006. "A dynamic model of demand for private health insurance in Ireland by and," Working Papers 200612, Geary Institute, University College Dublin.
  • Handle: RePEc:ucd:wpaper:200612
    as

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    File URL: http://www.ucd.ie/geary/static/publications/workingpapers/gearywp200612.pdf
    File Function: First version, 2006
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    References listed on IDEAS

    as
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    3. Besley, Timothy & Hall, John & Preston, Ian, 1999. "The demand for private health insurance: do waiting lists matter?," Journal of Public Economics, Elsevier, pages 155-181.
    4. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics,in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
    5. Besley, Timothy & Hall, John & Preston, Ian, 1998. "Private and public health insurance in the UK," European Economic Review, Elsevier, vol. 42(3-5), pages 491-497, May.
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    12. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
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    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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