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Dynamic inefficiencies in an employment-based health insurance system: theory and evidence

Fang, Hanming and Gavazza, Alessandro (2011) Dynamic inefficiencies in an employment-based health insurance system: theory and evidence. American Economic Review, 101 (7). pp. 3047-3077. ISSN 0002-8282

Full text not available from this repository.
Identification Number: 10.1257/aer.101.7.3047

Abstract

We investigate the effects of the institutional settings of the US health care system on individuals' life-cycle medical expenditures. Health is a form of general human capital; labor turnover and labor-market frictions prevent an employer-employee pair from capturing the entire surplus from investment in an employee's health. Thus, the pair underinvests in health during working years, thereby increasing medical expenditures during retirement. We provide empirical evidence consistent with the comparative statics predictions of our model using the Medical Expenditure Panel Survey (MEPS) and the Health and Retirement Study (HRS). Our estimates suggest significant inefficiencies in health investment in the United States.

Item Type: Article
Official URL: https://www.aeaweb.org/aer/index.php
Additional Information: © 2011 American Economic Association
Divisions: Economics
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HJ Public Finance
H Social Sciences > HV Social pathology. Social and public welfare. Criminology
R Medicine > RA Public aspects of medicine
JEL classification: D - Microeconomics > D1 - Household Behavior and Family Economics > D14 - Personal Finance
D - Microeconomics > D9 - Intertemporal Choice and Growth > D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving
G - Financial Economics > G2 - Financial Institutions and Services > G22 - Insurance; Insurance Companies
J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J32 - Nonwage Labor Costs and Benefits; Private Pensions
Sets: Departments > Economics
Collections > United States Collection
Date Deposited: 18 Feb 2014 15:50
Last Modified: 08 Oct 2019 11:15
URI: http://eprints.lse.ac.uk/id/eprint/55721

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