Life cycle responses to health insurance status

  • Florian Pelgrin Florian Pelgrin
  • Pascal St-Amour Pascal St-Amour

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, wealth and survival rates), and welfare. We solve, structurallyestimate, and simulate a parsimonious life cycle model with endogenous exposition to morbidity and mortality risks to analyze the impact of young (resp. old) insurance status conditional on old (resp. young) coverage. Our results highlight strong substitution across instruments (health expenditures, and leisure) as well as across time (postponing and accelerating expenses, leisure) induced by changes in insurance statuses.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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