Pelgrin Florian, St-Amour Pascal
EDHEC Business School, Paris, France; CIRANO, Montréal, Canada.
CIRANO, Montréal, Canada; Faculty of Business and Economics (HEC), University of Lausanne, Lausanne, Switzerland; Swiss Finance Institute, Geneva, Switzerland.
J Health Econ. 2016 Sep;49:76-96. doi: 10.1016/j.jhealeco.2016.06.007. Epub 2016 Jun 24.
This paper studies the lifetime effects of exogenous changes in health insurance coverage (e.g. Medicare, PPACA, termination of employer-provided plans) on the dynamic optimal allocation (consumption, leisure, health expenditures), status (health and wealth), and welfare. We solve, simulate, and structurally estimate a parsimonious life cycle model with endogenous exposure to morbidity and mortality risks, and exogenous health insurance. By varying coverage, we identify the marginal effects of insurance when young and/or when old on allocations, statuses, and welfare. Our results highlight positive effects of insurance on health, wealth and welfare, as well as mid-life substitution away from healthy leisure in favor of more health expenses, caused by peaking wages, and accelerating health issues.
