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A structural econometric model of family valuation and choice of employer‐sponsored health insurance in the United States
Author(s) -
J. Vanness David
Publication year - 2003
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/hec.837
Subject(s) - valuation (finance) , medical expenditure panel survey , actuarial science , wage , health insurance , economics , welfare , cash , health care , self insurance , work (physics) , order (exchange) , labour economics , public economics , demographic economics , business , finance , economic growth , mechanical engineering , engineering , market economy
This paper estimates a fully structural unitary household model of employment and health insurance decisions for dual wage‐earner families with children in the United States, using data from the 1987 National Medical Expenditure Survey. Families choose hours of work and the breakdown of compensation between cash wages and health insurance benefits for each wage earner in order to maximize expected utility under uncertain need for medical care. Heterogeneous demand for the employer‐sponsored health insurance is thus generated directly from variations in health status and earning potential. The paper concludes by discussing the benefits of using structural models for simulating welfare effects of insurance reform relative to the costly assumptions that must be imposed for identification. Copyright © 2003 John Wiley & Sons, Ltd.