Topic 3 Paper: (Doiron, Jones & Savage 2008)

Question 1

What did previous empirical studies reveal about the relationship between self assessed health status (SAHS) and insurance coverage? Is this surprising?

Answer 1

Previous studies had shown a positive correlation between SAHS and insurance coverage.

This is surprising, as adverse selection suggests that those with poorer health should seek more insurance coverage

Question 2

What about this paper made more in depth analysis possible?

Answer 2

The peculiarities of the australian health system, where there is:

1. Universal coverage, but a high private insurance rate (40%)
2. Laws stop insurers from combating adverse selection, and can only change premiums based on age. As a result, we can see consumer preferences, not the result of insurance tactics.
3. Health insurance not related to employer
4. The ABS national health survey is thorough and awesome

Question 3

Is the empirical result from the literature reproduced?

Answer 3

Yes, SAHS & Insurance Coverage is positively related

Question 4

What are some other affects on insurance coverage

Answer 4

Education - positive
Risk Behaviours - negative
Objective Health Conditions - positive
Income - Positive

Question 5

How is the positive relationship between SAHS & insurance coverage explained?

Answer 5

The result reveals that risky behaviours correlate negatively with SAHS - ie, those who are more risky report their health as lower then others. Risky behaviours also correlates negatively with insurance. As a result, while objectively measurable health conditions (smoking, ect) increases health insurance and decreases SAHS, those with risky behaviours overwhelm this trend and SAHS is in the aggregate, positively correlated with insurance coverage.