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    Market inefficiency, insurance mandate and welfare: U.S. health care reform 2010

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    Market Inefficiency, Insurance Mandate and Welfare U.S. Health Care Reform 2010.pdf (1.677Mb)
    Links to Files
    https://ideas.repec.org/p/tow/wpaper/2014-01.html
    Permanent Link
    http://hdl.handle.net/11603/10752
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    • Towson University Department of Economics Working Paper Series
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    Author/Creator
    Jung, Juergen
    Tran, Chung
    Date
    2014-09
    2016-02-05
    Type of Work
    application/pdf
    52 pages
    Text
    working papers
    Department
    Towson University. Department of Economics
    Citation of Original Publication
    Juergen Jung & Chung Tran, 2014. "Market Inefficiency, Insurance Mandate and Welfare: U.S. Health Care Reform 2010," Working Papers 2014-01, Towson University, Department of Economics, revised Jan 2016.
    Subjects
    United States. Patient Protection and Affordable Care Act
    Insurance mandate
    Medicaid
    Grossman health capital
    Lifecycle health spending and financing
    Dynamic stochastic general equilibrium
    Equilibrium (Economics)
    Abstract
    We quantify the effects of the Affordable Care Act (ACA) using a stochastic general equilibrium overlapping generations model with endogenous health capital accumulation calibrated to match U.S. data on health spending and insurance take-up over the lifecycle. We find that the introduction of an insurance mandate and the expansion of Medicaid which are at the core of the ACA increase the insurance take-up rate of workers to almost universal coverage but decrease capital accumulation, labor supply and aggregate output. Penalties for not having insurance as well as subsidies to assist low income individuals’ purchase of insurance via health insurance market places do reduce the adverse selection problem in private health insurance markets and do counteract the crowding-out effect of the Medicaid expansion. The redistributional measures embedded in the ACA result in welfare gains for low income individuals in poor health and welfare losses for high income individuals in good health. The overall welfare effect depends on the size of the ex-post moral hazard effect, tax distortions and general equilibrium price adjustments.


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    Towson University
    8000 York Road
    Towson, Maryland 21252

    Website:
    www.towson.edu

    Contact Info:
    azukowski@towson.edu
    410-704-5318
    http://libraries.towson.edu/md-soar


    If you wish to submit a copyright complaint or withdrawal request, please email mdsoar-help@umd.edu.