Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model.
This paper develops an empirical strategy to estimate whether subsidies to private medical insurance are self-financing in countries where public and private insurance coexist and the latter covers the same treatments as the former. We construct a simulation routine based on a micro-econometric discrete choice model that allows us to evaluate the impact of premium changes on the utilization of outpatient and inpatient health care services. As an application, we estimate the budgetary effects of scrapping a subsidy from the purchase of individual private policies, using micro-data from Catalonia. Our results suggest that the subsidy is not self-financing. This result is driven by the fact that private medical insurance holders make concurrent use of public and private services, and by the price inelasticity of the demand for private policies.
López Nicolás
Angel
A
Universidad Politécnica de Cartagena, Spain; Centre de Recerca en Economia i Salut, Spain. angel.lopez@upct.es
Vera-Hernández
Marcos
M
D000206:Actuarial Analysis; D000553:Ambulatory Care / Q000706:statistics & numerical data; D003258:Consumer Behavior / Q000191:economics* / Q000706:statistics & numerical data; D004608:Eligibility Determination; D036262:Empirical Research; D005249:Fees and Charges; D005102:Health Expenditures / Q000706:statistics & numerical data; D006761:Hospitals / Q000706:statistics & numerical data; D006801:Humans; D007183:Income Tax; D007348:Insurance, Health / Q000706:statistics & numerical data*; D008511:Medicine / Q000706:statistics & numerical data; D017059:Models, Econometric; D009042:Motivation; D011331:Private Practice; D017149:Private Sector / Q000191:economics* / Q000706:statistics & numerical data*; D011336:Probability; D017150:Public Sector / Q000191:economics* / Q000706:statistics & numerical data*; D013030:Spain; D013038:Specialization