Health care quality, economic inequality, and precautionary saving

Abstract

We argue that health care quality has an important impact on economic inequality and on saving behavior. We exploit district-wide variability in health care quality provided by the Italian universal public health system to identify the effect of quality on income inequality, health inequality and precautionary saving. We find that in lower quality districts there is greater income and health dispersion and higher precautionary saving. The analysis carries important insights for the ongoing debate about the validity of the life-cycle model and interesting policy implications for the design of health care systems.

Priority setting in health care and higher order degree change in risk

“…A meanpreserving spread represents any situation in which two illnesses result in the same expected loss of health but with different levels of severity. As an illustration, Jappelli et al (2007) take as health risk the variance associated with falling into the worst possible state of health. Also Palumbo (1999) measures health risk as the variance of out-of-pocket health expenditure, a second-order phenomenon.…”

Impact of health savings accounts on precautionary savings, demand for health insurance and prevention effort

“…They do not think that HSAs will be an option 3 Other aspects have been discussed as well. For example, Japelli et al (2007) consider quality of care in an empirical study with data from Italy. They find that lower health care quality induces individuals to accumulate higher precautionary savings.…”

VOLUNTARY PRIVATE HEALTH INSURANCE AMONG THE OVER 50s IN EUROPE

“…Health risks are a major determinant of household saving behaviour in old age (Levin, 1995). In fact, part of the explanation of why elderly consumers do not run down their assets after retirement has to do with the revision in conditional probabilities of health-related outlays (Palumbo, 1999;Jappelli et al, 2007;De Nardi et al, 2010). In most European countries, major health shocks are covered by the public health system, but individuals may face expenditures for health care partially covered (co-payments) or not reimbursed by the public scheme: in particular, specialist and diagnostic outpatient services, drugs, dental care, medical appliances, glasses, alternative medicine, and occasionally the choice of better or faster inpatient care for relatively important interventions.…”