Health Insurance Reform: The Impact of a Medicare Buy-In

Gary D. Hansen, Minchung Hsu, Junsang Lee

NBER Working Paper No. 18529
Issued in November 2012
NBER Program(s):   EFG   HE   PE

The steady state general equilibrium and welfare consequences of health insurance reform are evaluated in a calibrated life-cycle economy with incomplete markets and endogenous labor supply. Individuals face uncertainty each period about their future health status, medical expenditures, labor productivity, access to employer provided group health insurance, and the length of their life. In this environment, incomplete markets and adverse selection, which restricts the type of insurance contracts available in equilibrium, creates a potential role for health insurance reform. In particular, we consider a policy reform that would allow older workers (aged 55-64) to purchase insurance similar to Medicare coverage. We find that adverse selection eliminates any market for a Medicare buy-in if it is offered as an unsubsidized option to individual private health insurance. Hence, we compare the equilibrium properties of the current insurance system with those that obtain with an optional buy-in subsidized by the government, as well as with several types of health insurance mandates.

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w18529

Published: Hansen, Gary D. & Hsu, Minchung & Lee, Junsang, 2014. "Health insurance reform: The impact of a Medicare buy-in," Journal of Economic Dynamics and Control, Elsevier, vol. 45(C), pages 315-329. citation courtesy of

Users who downloaded this paper also downloaded these: