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    Health care financing over the life cycle, universal medical vouchers and welfare

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    Health Care Financing over the Life Cycle, Universal Medical Vouchers and Welfare.pdf (1.697Mb)
    Links to Files
    https://ideas.repec.org/p/tow/wpaper/2010-03.html
    Permanent Link
    http://hdl.handle.net/11603/10779
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    • Towson University Department of Economics Working Paper Series
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    Author/Creator
    Jung, Juergen
    Tran, Chung
    Date
    2010-01
    2010-02-01
    Type of Work
    application/pdf
    48 pages
    Text
    working papers
    Department
    Towson University. Department of Economics
    Citation of Original Publication
    Juergen Jung & Chung Tran, 2010. "Health Care Financing over the Life Cycle, Universal Medical Vouchers and Welfare," Working Papers 2010-03, Towson University, Department of Economics, revised Feb 2010.
    Subjects
    Public health insurance
    Private health insurance
    Vouchers
    Subsidies
    Dynamic stochastic general equilibrium model
    Equilibrium (Economics)
    Endogenous health production
    Abstract
    In this paper we develop a general equilibrium overlapping generations (OLG) model with health shocks to analyze the life-cycle pattern of insurance choice and health care spending. We use data from the Medical Expenditure Panel Survey (MEPS) and show that our model is able to match the life-cycle trends of insurance take up ratios and average medical expenditures in the U.S. We then demonstrate how this model can be used to conduct health care policy analysis by evaluating the macroeconomic effects of a counter factual health care reform using a system of universal health insurance vouchers. Our results suggest that health insurance vouchers are able to extend insurance coverage to the entire population but they also increase aggregate spending on health. More importantly, we find that the positive insurance effect (efficient risk pooling) dominates the negative incentive effect (tax distortions and moral hazard) which results in significant welfare gains for all generations when a payroll tax is used to finance the voucher program. In addition, our results suggest that the choice of tax financing instrument and accounting for general equilibrium price adjustments are critical in determining the performance of the voucher program.


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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.