A dynamic model of demand for private health insurance in Ireland

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Title: A dynamic model of demand for private health insurance in Ireland
Authors: Finn, Claire
Harmon, Colm
Permanent link: http://hdl.handle.net/10197/1109
Date: 23-Nov-2006
Abstract: The Irish health care system offers a tax financed, universal entitlement to public care at a nominal user fee, nonetheless 50% of the Irish population purchase private health insurance. This paper empirically models the propensity to insure as a function of individual and household characteristics using panel data analysis and compares three alternate approaches; a static, chamberlain-mundlak and dynamic specification. Using panel data from 1994 to 2000, we consider whether propensity to insure is in fact a function of heterogeneity or of state dependence. A range of individual and household characteristics is shown to influence propensity to insure. Overall the positive effect of education and income and the negative effect of poor heath status remain robust across three specifications. In moving toward a dynamic specification, we show that persistence is a highly significant determinant of demand for private health insurance and also that it reduces the size of the coefficients on the regressors. The latter point highlights that while education, income and, to a lesser extent, health status have very large effects on probability of insuring, these effects are overestimated where no attempt is made to control for unobserved heterogeneity or state dependence.
Funding Details: Irish Research Council for the Humanities and Social Sciences; Endeavour Awards Australia Postgraduate and Post-doctoral Research Fellowship Programme; Higher Education Authority Programme for Research in Third-Level Institutions
Type of material: Working Paper
Publisher: University College Dublin. Geary Institute
Copyright (published version): 2006 Geary Institute
Keywords: Health insuranceDynamicsPanelUnobserved heterogeneityState dependence
Subject LCSH: Health insurance--Ireland
Medical care--Ireland
Consumer behavior
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Geary Institute Working Papers
Economics Research Collection

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