title: Life cycle responses to health insurance status.
abstract: 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.
authors.affiliation: EDHEC Business School, Paris, France; CIRANO, Montréal, Canada.
authors.forename: Florian
authors.initials: F
authors.lastname: Pelgrin
authors.affiliation: CIRANO, Montréal, Canada; Faculty of Business and Economics (HEC), University of Lausanne, Lausanne, Switzerland; Swiss Finance Institute, Geneva, Switzerland. Electronic address: Pascal.St-Amour@unil.ch.
authors.forename: Pascal
authors.initials: P
authors.lastname: St-Amour
mesh_terms: D000328:Adult; D000368:Aged; D006264:Health Benefit Plans, Employee; D005102:Health Expenditures; D006801:Humans; D019458:Insurance Coverage; D007348:Insurance, Health; D006278:Medicare; D008875:Middle Aged; D012306:Risk; D014481:United States
keywords: Asset accumulation; Demand for health; Endogenous morbidity and mortality risks; Medicare; Simulated moments estimation