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Public health insurance and household portfolio Choices: Unravelling financial “Side Effects” of Medicare

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  • Angrisani, Marco
  • Atella, Vincenzo
  • Brunetti, Marianna
Abstract
Large, unpredictable and not fully insurable health-care costs represent a source of background risk that might deter households’ financial risk taking. Using panel data from the Health and Retirement Study, we test whether universal health insurance, like Medicare for over-65 Americans, shields against this risk promoting stockholding. We adopt a fixed-effects estimation strategy, thereby taking into account household-level heterogeneity in health status and private insurance coverage. We find that, before Medicare eligibility, households in poor health, who face a higher risk of medical expenses, are less likely to hold stocks than their healthier counterparts. Yet, this gap is mostly eliminated by Medicare. Notably, the offsetting is primarily experienced by households in poor health and without private health insurance over the observation period.

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  • Angrisani, Marco & Atella, Vincenzo & Brunetti, Marianna, 2018. "Public health insurance and household portfolio Choices: Unravelling financial “Side Effects” of Medicare," Journal of Banking & Finance, Elsevier, vol. 93(C), pages 198-212.
    • Handle: RePEc:eee:jbfina:v:93:y:2018:i:c:p:198-212
    DOI: 10.1016/j.jbankfin.2018.05.001
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    Cited by:

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    3. Xinxin Ma, 2022. "Social Insurances and Risky Financial Market Participation: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(10), pages 2957-2975, August.
    4. Xinxin Ma, 2022. "Medical Insurances and Financial Portfolio Choice," Springer Books, in: Public Medical Insurance Reforms in China, chapter 0, pages 193-215, Springer.
    5. Panchalingam, Thadchaigeni, 2020. "Effects of Public Health Insurance Expansions on Consumption Expenditures of Targeted Households," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304513, Agricultural and Applied Economics Association.
    6. Si Shi & Yawen Jiang, 2022. "Does supplemental private health insurance incentivize household risky financial asset investment? Evidence from the China Household Financial Survey," International Journal of Health Economics and Management, Springer, vol. 22(4), pages 369-421, December.
    7. Vega, Alejandro & Velli, Evangelia, 2020. "Health and the share of wealth held in risky assets," Umeå Economic Studies 972, Umeå University, Department of Economics.

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    More about this item

    Keywords

    Household portfolios; Health status; Medicare; Health insurance;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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