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Estimating the Value of Public Insurance Using Complementary Private Insurance

Author

Listed:
  • Marika Cabral
  • Mark R. Cullen

Abstract

The welfare associated with public insurance is often difficult to quantify because the demand for coverage is unobserved and thus cannot be used to analyze welfare. However, in many settings, individuals can purchase private insurance to supplement public coverage. This paper outlines an approach to use data and variation from private complementary insurance to quantify welfare associated with counterfactuals related to compulsory public insurance. We then apply this approach using administrative data on disability insurance. Our findings suggests that public disability insurance generates substantial surplus for the sample population, and there may be gains to increasing the generosity of coverage.

Suggested Citation

  • Marika Cabral & Mark R. Cullen, 2016. "Estimating the Value of Public Insurance Using Complementary Private Insurance," NBER Working Papers 22583, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:22583
    Note: AG EH LS PE
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    References listed on IDEAS

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    1. Andreas Ravndal Kostøl & Magne Mogstad, 2015. "Earnings, Disposable Income, and Consumption of Allowed and Rejected Disability Insurance Applicants," American Economic Review, American Economic Association, vol. 105(5), pages 137-141, May.
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    3. Marika Cabral & Neale Mahoney, 2014. "Externalities and Taxation of Supplemental Insurance: A Study of Medicare and Medigap," NBER Working Papers 19787, National Bureau of Economic Research, Inc.
    4. Martin B. Hackmann & Jonathan T. Kolstad & Amanda E. Kowalski, 2015. "Adverse Selection and an Individual Mandate: When Theory Meets Practice," American Economic Review, American Economic Association, vol. 105(3), pages 1030-1066, March.
    5. Raj Chetty, 2008. "Moral Hazard versus Liquidity and Optimal Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 116(2), pages 173-234, April.
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    7. David Autor & Mark Duggan & Jonathan Gruber, 2014. "Moral Hazard and Claims Deterrence in Private Disability Insurance," American Economic Journal: Applied Economics, American Economic Association, vol. 6(4), pages 110-141, October.
    8. Liran Einav & Amy Finkelstein, 2011. "Selection in Insurance Markets: Theory and Empirics in Pictures," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 115-138, Winter.
    9. Raj Chetty & Amy Finkelstein, 2012. "Social Insurance: Connecting Theory to Data," NBER Working Papers 18433, National Bureau of Economic Research, Inc.
    10. David H. Autor & Mark G. Duggan, 2006. "The Growth in the Social Security Disability Rolls: A Fiscal Crisis Unfolding," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 71-96, Summer.
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    12. Raj Chetty & Emmanuel Saez, 2010. "Optimal Taxation and Social Insurance with Endogenous Private Insurance," NBER Chapters, in: Income Taxation, Trans-Atlantic Public Economics Seminar (TAPES), pages 85-114, National Bureau of Economic Research, Inc.
    13. Amy Finkelstein & Nathaniel Hendren & Erzo F. P. Luttmer, 2019. "The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment," Journal of Political Economy, University of Chicago Press, vol. 127(6), pages 2836-2874.
    14. Jeffrey B. Liebman, 2015. "Understanding the Increase in Disability Insurance Benefit Receipt in the United States," Journal of Economic Perspectives, American Economic Association, vol. 29(2), pages 123-150, Spring.
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    Cited by:

    1. Kenneth Brevoort & Daniel Grodzicki & Martin B. Hackmann, 2017. "Medicaid and Financial Health," NBER Working Papers 24002, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • H0 - Public Economics - - General
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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