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Insuring against Health Shocks: Health Insurance and Household Choices

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  • Liu, Kai

    (University of Cambridge)

Abstract

This paper provides empirical evidence on the role of public health insurance in mitigating adverse outcomes associated with health shocks. Exploiting the rollout of a universal health insurance program in rural China, I find that total household income and consumption are fully insured against health shocks even without access to health insurance. Household labor supply is an important insurance mechanism against health shocks. Access to health insurance helps households to maintain investment in children's human capital during negative health shocks, which suggests that one benefit of health insurance could arise from reducing the use of costly smoothing mechanisms.

Suggested Citation

  • Liu, Kai, 2015. "Insuring against Health Shocks: Health Insurance and Household Choices," IZA Discussion Papers 9094, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9094
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    More about this item

    Keywords

    health shock; health insurance; China;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • I1 - Health, Education, and Welfare - - Health

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