Estimating the Consumption Smoothing Effect of Health Insurance PDF Download

Author: Hua Chen
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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Book Description
Chronic disease is a kind of health shock that most people cannot avoid, which will increase households' medical expenditure and probably decrease other consumptions. Health insurance is a formal mechanism against health shocks. Theoretically, the integration policy of rural and urban residents medical insurance in China increases coverage level and reimbursement ratio of basic medical insurance, and thus can help smooth consumption better. Our study is aimed to test it empirically. Based on the data of China Household Finance Survey(CHFS) in 2015 and 2017, we use the strategy of difference-in-difference(DID) to investigate whether the fluctuation of household consumption caused by chronic diseases is mitigated by the policy reform. It is found that chronic diseases will cause the dicrease of household food and nonfood consumption and the increase of self-paid medical expenditure. But the integration policy significantly smooths the fluctuation of food consumption and self-paid medical expenditure, and plays no role for nonfood consumption.

Author: Amy Finkelstein
Publisher: Columbia University Press
ISBN: 0231538685
Category : Medical
Languages : en
Pages : 161

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Addressing the challenge of covering heath care expenses—while minimizing economic risks. Moral hazard—the tendency to change behavior when the cost of that behavior will be borne by others—is a particularly tricky question when considering health care. Kenneth J. Arrow’s seminal 1963 paper on this topic (included in this volume) was one of the first to explore the implication of moral hazard for health care, and Amy Finkelstein—recognized as one of the world’s foremost experts on the topic—here examines this issue in the context of contemporary American health care policy. Drawing on research from both the original RAND Health Insurance Experiment and her own research, including a 2008 Health Insurance Experiment in Oregon, Finkelstein presents compelling evidence that health insurance does indeed affect medical spending and encourages policy solutions that acknowledge and account for this. The volume also features commentaries and insights from other renowned economists, including an introduction by Joseph P. Newhouse that provides context for the discussion, a commentary from Jonathan Gruber that considers provider-side moral hazard, and reflections from Joseph E. Stiglitz and Kenneth J. Arrow. “Reads like a fireside chat among a group of distinguished, articulate health economists.” —Choice

Author: Paul Gertler
Publisher:
ISBN:
Category : Consumption (Economics)
Languages : en
Pages : 68

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One of the most sizable and least predictable shocks to economic opportunities in developing countries is major illness, both in terms of medical care expenditures and lost income from reduced labor supply and productivity. As a result, families may not be able to smooth their consumption over periods of illness. In this paper, we investigate the extent to which families are able to insure consumption against major illness using a unique panel data set from Indonesia that combines excellent measures of health status with consumption information. We focus on the effect of large exogenous changes in physical functioning. We find that there are significant economic costs associated with these illnesses, albeit more from income loss than from medical expenditures. We also find a robust and striking rejection of full consumption insurance. Indeed, the deviation from full consumption smoothing is significant, particularly for illnesses that severely limit physical function; families are able to smooth less than 30 percent of the income loss from these illnesses. These estimates suggest large welfare gains from the introduction of formal disability insurance, and that the large public subsidies for medical care typical of most developing countries may improve welfare by providing consumption insurance.

Author: Greg Kaplan
Publisher:
ISBN:
Category : Consumption (Economics)
Languages : en
Pages : 42

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"We assess the degree of consumption smoothing implicit in a calibrated life-cycle version of the standard incomplete-markets model, and we compare it to the empirical estimates of Blundell et al. (2008) (BPP hereafter). We find that households in the model have access to less consumption-smoothing against permanent earnings shocks than what is measured in the data. BPP estimate that 36% of permanent shocks are insurable (i.e., do not translate into consumption growth), whereas the model's counterpart of the BPP estimator varies between 7% and 22%, depending on the tightness of debt limits. In the model, the age profile of the insurance coefficient is sharply increasing, whereas BPP find no clear age slope in their estimate. Allowing for a plausible degree of "advance information" about future earnings does not reconcile the model-data gap. If earnings shocks display mean reversion, even with very high autocorrelation, then the average degree of consumption smoothing in the model agrees with the BPP empirical estimate, but its age profile remains steep. Finally, we show that the BPP estimator of the true insurance coefficient has, in general, a downward bias that grows as borrowing limits become tighter"--National Bureau of Economic Research web site.

Author: Maria-Luisa Escobar
Publisher: Brookings Institution Press
ISBN: 0815705468
Category : Social Science
Languages : en
Pages : 239

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Book Description
Over the past twenty years, many low- and middle-income countries have experimented with health insurance options. While their plans have varied widely in scale and ambition, their goals are the same: to make health services more affordable through the use of public subsidies while also moving care providers partially or fully into competitive markets. Until now, however, we have known little about the actual effects of these dramatic policy changes. Understanding the impact of health insurance-based care is key to the public policy debate of whether to extend insurance to low-income populationsand if so, how to do itor to serve them through other means.

Author: Institute of Medicine
Publisher: National Academies Press
ISBN: 0309083435
Category : Medical
Languages : en
Pages : 213

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Book Description
Many Americans believe that people who lack health insurance somehow get the care they really need. Care Without Coverage examines the real consequences for adults who lack health insurance. The study presents findings in the areas of prevention and screening, cancer, chronic illness, hospital-based care, and general health status. The committee looked at the consequences of being uninsured for people suffering from cancer, diabetes, HIV infection and AIDS, heart and kidney disease, mental illness, traumatic injuries, and heart attacks. It focused on the roughly 30 million-one in seven-working-age Americans without health insurance. This group does not include the population over 65 that is covered by Medicare or the nearly 10 million children who are uninsured in this country. The main findings of the report are that working-age Americans without health insurance are more likely to receive too little medical care and receive it too late; be sicker and die sooner; and receive poorer care when they are in the hospital, even for acute situations like a motor vehicle crash.

Author: Kayleigh Barnes
Publisher:
ISBN:
Category : Health insurance
Languages : en
Pages : 41

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Book Description
Abstract: This paper estimates the impact of social health insurance on financial risk reduction by utilizing data from a natural experiment created by the phased roll out of a social health insurance program for the poor in India. We estimate the impact of insurance on the distribution of out-of-pocket costs, frequency and amount of money borrowed for health reasons, and the likelihood of incurring catastrophic health expenditures. We use a stylized expected utility model to compute the welfare effects associated with changes due to insurance in the distribution of out-of-pocket costs. We adjust the standard model to account for the unique conditions of a developing country by incorporating consumption floors, informal borrowing, and selling of assets. These adjustments allow us to estimate the value of financial risk reduction from both consumption smoothing and asset protection channels. Our results show that social insurance reduces out-of-pocket costs with larger effects in the higher quantiles of the out-of-pocket cost distribution. In addition, we find a reduction in the frequency and amount of money borrowed for health reasons. Finally, we find that the value of financial risk reduction outweighs the total per household cost of the social insurance program by two to five times

Author: Harold Alderman
Publisher: World Bank Publications
ISBN:
Category : Consumo - Paises en desarrollo
Languages : en
Pages : 50

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Book Description
Formal tests of perfect consumption-smoothing do not provide convincing evidence that such patterns are prevalent in village economies. Nevertheless, most individuals appear to have appreciable ability to mitigate income fluctuations.

Author: Adam Wagstaff
Publisher: World Bank Publications
ISBN:
Category : Medical care, Cost of
Languages : en
Pages : 21

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Abstract: "While there is a great deal of anecdotal evidence on the economic effects of adverse health shocks, there is relatively little hard empirical evidence. The author builds on recent empirical work to explore in the context of postreform Vietnam two related issues: (1) how far household income and medical care spending responds to health shocks, and (2) how far household consumption is protected against health shocks. The results suggest that adverse health shocks - captured by negative changes in body mass index (BMI) - are associated with reductions in earned income. This appears to be only partly - if at all - due to a reverse feedback from income changes to BMI changes. By contrast, there is a hint - the relevant coefficient is not significant - that adverse BMI shocks may result in increases in unearned income. This may reflect additional gifts, remittances, and so on, from family and friends following the health shock. Medical spending is found to increase following an adverse health shock, but not among those with health insurance. The impact for the uninsured is large, equal in absolute size to the income loss associated with a BMI shock. The lack of impact for the insured points to complete insurance against the medical care costs associated with health shocks, and is consistent with the very generous coverage of Vietnam's health insurance program in this period. The question arises: have Vietnamese households been able to hold their food and nonfood consumption constant in the face of these income reductions and extra medical care outlays? The results suggest not. For the sample as a whole, both food and nonfood consumption are found to be responsive to health shocks, indicating an inability to smooth nonmedical consumption in the face of health shocks. Further analysis reveals some interesting differences across different groups within the sample. Households with insurance come no closer to smoothing nonmedical consumption than uninsured households. Furthermore, and somewhat counterintuitively, better-off households - including insured households - fare worse than poorer households in smoothing their nonmedical consumption in the face of health shocks, despite the fact that in the case of insured households there are no medical bills associated with an adverse health event. Why the poor rely on dissaving and borrowing to such an extent, and do not apparently reduce their food and nonfood consumption following an adverse health shock while the better-off do, may be because the levels of food and nonfood consumption of the poor are simply too low relative to basic needs to enable them to cut back in the face of an adverse BMI shock."--World Bank web site.

Author: Cynthia Georgia Kinnan
Publisher:
ISBN:
Category :
Languages : en
Pages : 163

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This thesis studies two strategies that households may use to keep their consumption smooth in the face of fluctuations in income and expenses: credit (borrowing and savings) and insurance (state contingent transfers between households). The first chapter asks why insurance among households in rural Thai villages is incomplete. The second chapter analyzes the impacts of micro-credit. The third chapter examines the interaction between interpersonal insurance and access to savings. The first chapter is motivated by the observation that interpersonal insurance within villages is an important source of insurance, yet consumption, while much smoother than income, is not completely smooth. That is, insurance is incomplete. This chapter attempts to identify the cause of this incompleteness. Existing research has suggested three possibilities: limited commitment-the inability of households to commit to remain within an insurance agreement; moral hazard-the need to give households incentives to work hard; and hidden income-the inability of households to verify one another's incomes. I show that the way in which "history" matters can be used to distinguish insurance constrained by hidden income from insurance constrained by limited commitment or moral hazard. This history dependence can be tested with a simple empirical procedure: predicting current marginal utility of consumption with the first lag of marginal utility and the first lag of income, and testing the significance of the lagged income term. This test is implemented using panel data from households in rural Thailand. The results are consistent with insurance constrained by hidden income, rather than limited commitment or moral hazard. I test the robustness of this result to measurement error using instrumental variables and by testing over-identifying restrictions on the reduced form equation for consumption. I test robustness to the specification of the utility function by nonparametric ally estimating marginal utility. The results suggest that constraints arising from private information about household income should be taken into account when designing safety net and other policies. My second chapter (co-authored with Abhijit Banerjee, Esther Duflo and Rachel Glennerster) uses a randomized trial to analyze the impacts of micro credit in urban South India. We find that more new businesses are created in areas where a micro credit branch opens. Existing business owners increase their spending on durable goods but not non-durable consumption. Among households that did not have a business before the program began, those with high estimated propensity to start a business reduce non-durable consumption and increase spending on durables in treated areas. Those with low estimated propensity to start a business increase non-durable consumption and spend no more on durables. This suggests that some households use micro credit to pay part of the fixed cost of starting a business, some expand an existing business, and others pay off more expensive debt or borrow against future income. We find no effects on health, education, or women's empowerment. My third dissertation chapter (co-authored with Arun Chandrasekhar and Horacio Larreguy) is motivated by the observation that the ability of community members to insure one another may be significantly reduced when community members also have the ability to privately save some of their income. We conducted a laboratory experiment in rural South India to examine the impact of savings access on informal insurance. We find that transfers between players are reduced when savings is available, but that, on average, players smooth their consumption more with savings than without. We use social network data to compute social distance between pairs, and show that limited commitment constraints significantly limit insurance when risk-sharing partners are socially distant, but not when pairs are closely connected. For distant pairs, access to savings helps to smooth income risk that is not insured interpersonally.