Essays on health and social insurance

Abstract

This thesis consists of three chapters on the economics of health and social insurance. In the first chapter, I examine the distribution of income risk that adults face from severe illness and the social insurance provided by taxes and transfers using an event study research design with linked Canadian hospital and tax records. I find that adults with lower incomes face larger pre-tax earnings risk from hospitalization events, primarily due to extensive margin exits from employment. Canada's tax and transfer system insures 44% of post-hospitalization income losses in the bottom income quintile and 12% of losses in the top income quintile. But less than two thirds of this insurance comes from replacing lost earnings with increased transfers. In the bottom income quintile, 30% of insurance is due to a stable stream of transfers; in the top income quintile, 30% of insurance is due to progressive taxation.

Using a calibrated model, I find that the marginal value of additional insurance against hospitalization risk is approximately flat across the income distribution. In the second chapter, I show that employer-provided short-term disability insurance (STDI) increases long-term disability insurance (LTDI) take-up and imposes a negative fiscal externality on the government budget. Using variation in private STDI coverage caused by Canadian firms ending their plans, I find that private STDI raises two-year flows onto LTDI by 0.07 percentage points (33%). Extrapolating to Canada's entire population, private STDI generated 18,300 LTDI recipients and CA$230 million dollars (5%) of public LTDI spending in 2015. In the third chapter, Raj Chetty, Sarah Abraham, Shelby Lin, Benjamin Scuderi, Nicholas Turner, Augustin Begeron, David Cutler and I examine the relationship between income and life expectancy in the United States from 2001 to 2014.

Using 1.4 billion linked earnings and mortality records, we document the levels of life expectancy and changes in life expectancy over time by income group, at a national level and within local areas. We also examine the factors correlated with differences in life expectancy across local areas. JEL Classification: I38, H53, I14