Supplementing Public Insurance Coverage with Private Coverage

David M. Cutler

in Labor Markets and Firm Benefit Policies in Japan and the United States

Published by University of Chicago Press

Published in print October 2003 | ISBN: 9780226620947
Published online February 2013 | e-ISBN: 9780226620954 | DOI:
Supplementing Public Insurance Coverage with Private Coverage

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All developed countries insure a significant part of the population through public insurance. But not all services are covered publicly, or the services covered may not be of the highest quality. Governments thus need to decide whether people are allowed to purchase additional insurance to supplement the basic package and, if so, under what restrictions. Supplemental health insurance may be of three types. The first is for services that are not covered under the public system. The second type of supplemental insurance is for the cost sharing required in public insurance systems. The third type of insurance is for services that are covered under the public plan but for which private provision might be preferred to public provision. This chapter discusses these three types of supplemental insurance and presents empirical evidence on the effects of the first two. The empirical analysis focuses on the Medicare program in the United States, where supplemental insurance is extremely common. It is shown that Medicare spending is increased by about 35 percent for people with supplemental insurance coverage over equivalent people without supplemental coverage. Coverage for uncovered services does not have a direct effect on public spending.

Keywords: supplemental insurance; health insurance; health care costs; Medicare; insurance coverage; public insurance

Chapter.  7837 words.  Illustrated.

Subjects: Business and Management

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