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Out‐of‐Pocket Health Expenditures : A Suggested Role for Social Security
Author(s) -
Zilcha Itzhak,
Schneier Nancy
Publication year - 2012
Publication title -
risk management and insurance review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.386
H-Index - 16
eISSN - 1540-6296
pISSN - 1098-1616
DOI - 10.1111/j.1540-6296.2012.01215.x
Subject(s) - social security , business , health insurance , ex ante , actuarial science , public economics , economics , health care , economic growth , market economy , macroeconomics
We present economic data to demonstrate that the (random) out‐of‐pocket health‐related expenses of seniors who face medical problems are significant and increasing over time. This remains the case even when we take into account the availability of supplemental health insurance. We propose to apply a modest part of Social Security benefits, without increasing the total expenses of this system, to provide mandatory supplemental health insurance for all recipients. Using a theoretical framework we demonstrate that introducing such additional role for Social Security makes individuals ( ex ante ) better off and hence results in a Pareto dominating new regime for Social Security.