Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model for outpatient and inpatient episodes
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URI: http://hdl.handle.net/10317/1185Share
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Grupo de I+D en Economía, Políticas Públicas y SaludKnowledge Area
Economía AplicadaSponsors
We are grateful to Andrew Jones and the YSHE group for useful comments and support. All remaining errors are the only responsibility of the authors. López-Nicolás thanks the Spanish DGES (project PB98- 1058-C03-01) and the Fundación BBVA for financial aid under the project “La dinámica del estado de salud y los factores socieconómicos a lo largo del ciclo vital. Implicaciones para las políticas públicas”. Vera- Hernández gratefully acknowledges financial support from a Marie Curie Fellowship of the European Community program Improving Human Research Potential and the Socioeconomic Knowledge Base under contract HPMF-CT-2001-01206.Publication date
2004-10Publisher
Universidad Pompeu Fabra. Departamento de Economía y EmpresaBibliographic Citation
LÓPEZ NICOLÁS, Ángel, VERA HERNÁNDEZ, Marcos. Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model for outpatient and inpatient episodes. Working Papers, 632: 32, Octubre 2004Keywords
Seguro médico privadoUtilización de asistencia sanitaria
Modelado estructural
Evaluación de la reforma tributaria
Private medical insurance
Health care utilization
Structural modeling
Tax reform evaluation
Abstract
This paper develops an empirical strategy to estimate whether subsidies to private
medical insurance are self-financing in countries where public and private health
insurance coexist. 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
utilisation of outpatient and inpatient health care services. As an application, we
simulate the main feature of the 1999 Spanish income tax reform that abolished the
individual tax deduction for expenditures on private health insurance. We find evidence
suggesting that the fiscal subsidy is far from self-financing. This result is driven by the
fact that private medical insurance holders make concurrent use of public services and
by the low price elasticity of the demand for policies.
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