Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model for outpatient and inpatient episodes
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Research GroupGrupo de I+D en Economía, Políticas Públicas y Salud
Knowledge AreaEconomía Aplicada
SponsorsWe 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.
PublisherUniversidad Pompeu Fabra. Departamento de Economía y Empresa
Bibliographic CitationLÓPEZ 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 2004
KeywordsSeguro médico privado
Utilización de asistencia sanitaria
Evaluación de la reforma tributaria
Private medical insurance
Health care utilization
Tax reform evaluation
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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