Humboldt-Universität zu Berlin - High Dimensional Nonstationary Time Series

IRTG1792DP2019 012

Voting for Health Insurance Policy: the U.S. versus Europe

Xinwen Ni

In this paper, we build an overlapping generation model to examine the reason
why developed countries with similar background have implemented different
social health insurance systems. We propose two hypotheses to explain this
phenomenon: (i) the different participation rates of the poor in the voting;
(ii) the distinct attitudes towards the size of the government and the existence
of a compulsory social health insurance system. Agents need to vote for one of
two policies: Policy I without Social Health Insurance (SHI) but with the
subsidy for the poor, and Policy II with fully covered SHI. By comparing either
their current utility or the expected life time utility, households will choose
one policy. We find that under Policy I, the derivative of the changes of
expected utility with respect to income is not monotonic. This means that both
the poorest and the richest dislike the social health insurance system. With the
calibrated parameters, we solve the benchmark and find that the public’s
attitude towards the size of the government and the lower representation of the
poor affect the election result. The changes in the minimum consumption level
under Policy I affect the voting results most, followed by the attitude. Voting
Participant rate plays the most insignificant role in the voting outcome. The
sensitivity analysis shows that our main findings are robust to the input

Social Health Insurance, Voting

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