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Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model for outpatient and inpatient episodes

Author

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  • Ángel López-Nicolás
  • Marcos Vera-Hernández

Abstract

This paper analyses whether or not tax subsidies to private medical insurance are self-financing by means of a structural approach. We construct a simulation routine based on a microeconometric discrete choice model that allows us to evaluate the impact of premium changes on the utilisation of outpatient and inpatient health care services. We simulate the 1999 Spanish tax reform that abolished the tax deduction for expenditures on private health insurance using a representative sample of the Catalan population. Prior to this reform, foregone tax revenue arising from deductions after the purchase of private insurance amounted to €69.2 M. per year. In contrast, the elimination of the subsidies to private policies is estimated to generate an extra cost for the public sector of about €8.9 M. per year.

Suggested Citation

  • Ángel López-Nicolás & Marcos Vera-Hernández, 2002. "Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model for outpatient and inpatient episodes," Economics Working Papers 632, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2004.
  • Handle: RePEc:upf:upfgen:632
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    References listed on IDEAS

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    Cited by:

    1. Pilar García Gómez & Ángel López, 2004. "The evolution of inequity in the access to health care in Spain: 1987-2001," Working Papers, Research Center on Health and Economics 756, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2006.

    More about this item

    Keywords

    Health care utilisation; structural modelling; tax reform evaluation;

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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