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Private insurance subsidies and public health care markets: evidence from Canada

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  • Mark Stabile

Abstract

In this study I examine the effects of government subsidies to employer-provided health insurance on the decision to purchase insurance, and on utilization of publicly funded health services. Using unique variation in tax subsidies across Canadian provinces as an instrument, I estimate the effects of these subsidies on the demand for supplemental health insurance and their extended effects on the decision to use publicly-funded health services. My results show that government subsidies through tax exemptions have significant effects on the decision to purchase insurance. Furthermore, additional insurance policies lead to moral hazard in the use of publicly funded health services.

Suggested Citation

  • Mark Stabile, 2001. "Private insurance subsidies and public health care markets: evidence from Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 34(4), pages 921-942, November.
    • Handle: RePEc:cje:issued:v:34:y:2001:i:4:p:921-942
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    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H4 - Public Economics - - Publicly Provided Goods
    • I1 - Health, Education, and Welfare - - Health

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