Insuring against Health Shocks: Health Insurance and Household Choices

40 Pages Posted: 7 Nov 2013 Last revised: 8 Jun 2015

See all articles by Kai Liu

Kai Liu

Norwegian School of Economics (NHH)

Multiple version iconThere are 2 versions of this paper

Date Written: May 2015

Abstract

This paper provides empirical evidence on the role of public health insurance in mitigating adverse outcomes associated with health shocks. Exploiting the rollout of a universal health insurance program in rural China, I find that total household income and consumption are fully insured against health shocks even without access to health insurance. Household labor supply is an important insurance mechanism against health shocks. Access to health insurance helps households to maintain investment in children's human capital during negative health shocks, which suggests that one benefit of health insurance could arise from reducing the use of costly smoothing mechanisms.

JEL Classification: D1, O1, I1

Suggested Citation

Liu, Kai, Insuring against Health Shocks: Health Insurance and Household Choices (May 2015). NHH Dept. of Economics Discussion Paper No. 16/2013. Available at SSRN: https://ssrn.com/abstract=2350710 or http://dx.doi.org/10.2139/ssrn.2350710

Kai Liu (Contact Author)

Norwegian School of Economics (NHH) ( email )

Helleveien 30
Bergen
Norway

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