Health insurance and savings over the life cycle-a semiparametric smooth coefficient estimation

Individuals save for future uncertain health care expenses. This is less efficient than pooling health risk through insurance. The provision of comprehensive health insurance may raise welfare by providing the missing market to smooth out consumption through the life cycle. We employ a semiparametri...

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Bibliographic Details
Published in:Journal of applied econometrics (Chichester, England) England), 2004-05, Vol.19 (3), p.295-322
Main Authors: Chou, Shin-Yi, Liu, Jin-Tan, Huang, Cliff J.
Format: Article
Language:English
Subjects:
Age
Consumer economics
Consumption
Durable goods
Employer provided health insurance
Expenditures
Families & family life
Family income
Government employees
Health care
Health expenditures
Health insurance
Household consumption
Households
Insurance coverage
Insurance policies
National health insurance
Precautionary savings
Social insurance
Studies
Utility functions
Welfare
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Summary:Individuals save for future uncertain health care expenses. This is less efficient than pooling health risk through insurance. The provision of comprehensive health insurance may raise welfare by providing the missing market to smooth out consumption through the life cycle. We employ a semiparametric smooth coefficient model to examine the effects of the introduction of the National Health Insurance in Taiwan in 1995 on savings and consumption over the life cycle. The idea is to estimate the coefficients of health insurance which vary with age. Our results suggest that younger households are more sensitive to the risk reductions, and that they demonstrate a greater response in the reduction of their precautionary saving.
ISSN:0883-7252
1099-1255
DOI:10.1002/jae.735