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Curing Germany's health care system by mandatory health premia?

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  • Schubert, Stefanie
  • Schnabel, Reinhold

Abstract

A current proposal for reforming the German statutory health insurance suggests replacing earnings-related contributions by per-capita health premia. Combining a computable general equilibrium analysis with abundant empirical data on heterogenous household types, we investigate both the distributional and allocative impact of such a reform proposal. Our results indicate efficiency gains in terms of GDP and employment. This is because employed households of all skill types would increase their labour supply. Yet, while these household types would benefit from introducing health premia, others, such as those including pensioners or unemployed individuals, may suffer in terms of equivalent variations, despite tax-financed compensating transfers to these low-income households. Nonetheless, such transfers are an essential part of the reform proposal in order to mitigate redistributional effects. By comparing two different compensation schemes, we find that higher transfers go along with higher GDP and employment. This result may indicate that more redistribution comes at no efficiency costs.

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  • Schubert, Stefanie & Schnabel, Reinhold, 2009. "Curing Germany's health care system by mandatory health premia?," Journal of Health Economics, Elsevier, vol. 28(5), pages 911-923, September.
    • Handle: RePEc:eee:jhecon:v:28:y:2009:i:5:p:911-923
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    1. Kemnitz Alexander, 2013. "A Simple Model of Health Insurance Competition," German Economic Review, De Gruyter, vol. 14(4), pages 432-448, December.
    2. Christian Bünnings & Harald Tauchmann, 2015. "Who Opts out of the Statutory Health Insurance? A Discrete Time Hazard Model for Germany," Health Economics, John Wiley & Sons, Ltd., vol. 24(10), pages 1331-1347, October.

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