Transfer Payment Systems and Financial Distress: Insights from Health Insurance Premium Subsidies

50 Pages Posted: 13 Oct 2020

See all articles by Christian P.R Schmid

Christian P.R Schmid

CSS Institute for Empirical Health Economics

Nicolas Schreiner

University of Basel

Alois Stutzer

University of Basel; IZA Institute of Labor Economics

Abstract

How should payment systems of means-tested benefits be designed to improve the financial situation of needy recipients most effectively? We study this question in the context of mandatory health insurance in Switzerland, where recipients initially received either a cash transfer or subsidized insurance premiums (a form of in-kind transfer). A federal reform in 2014 forced cantons (i.e. states) to universally switch to in-kind provision. We exploit this setting based on a difference-in-differences design, analyzing rich individual-level accounting data and applying a machine learning approach to identify cash recipients prior to the reform.We find that switching from cash to in-kind transfers reduces the likelihood of late premiums payments by about 20% and of government debt collection for long-term missed payments by approximately 16%. There is no evidence for a negative spillover effect on the timely payment of the non-subsidized coinsurance bills for health services after the regime change.

Keywords: health insurance, transfers, cash subsidies, in-kind transfers, financial distress, debt collection

JEL Classification: D14, G52, H24, I13

Suggested Citation

Schmid, Christian P.R and Schreiner, Nicolas and Stutzer, Alois, Transfer Payment Systems and Financial Distress: Insights from Health Insurance Premium Subsidies. Available at SSRN: https://ssrn.com/abstract=3708629 or http://dx.doi.org/10.2139/ssrn.3708629

Christian P.R Schmid

CSS Institute for Empirical Health Economics ( email )

Lucerne
Switzerland

Nicolas Schreiner

University of Basel

Petersplatz 1
Basel, CH-4003
Switzerland

Alois Stutzer (Contact Author)

University of Basel ( email )

Faculty of Business and Economics
Peter Merian-Weg 6
4002 Basel
Switzerland
0041 61 207 3361 (Phone)

HOME PAGE: http://www.wwz.unibas.ch/en/stutzer/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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