Parents' Responsiveness to Economic Factors in Children's Health Insurance Demand

Presenter: Changwoo Lee, Boston University

Abstract

This study is motivated by a key feature in the choice of children’s health insurance: decisions about children’s health insurance is made by their parents or their family head. In light of this feature, this study explores parent’s behavior as an agency of children in the health insurance decision. In particular, this study examines how the economic factor affects parents’ health insurance decisionss on their own health insurance and on their children’s health insurance differently. The 2002 Medical Expentiture Panel Survey (MEPS) is employed and multinomial methods are applied under the assumption that each parent repeatedly chooses health insurance for him/herself and his/her children. This assumption enables us to use the cross-sectional data used as a panel data. Maximum simulated likelihood estimation is employed to control the unobservable heterogeneity of families. The results show that parents are less responsive to family income when deciding to buy their children’s health insurance than when purchasing their own health insurance. This finding implies that the income subsidy to promote health insurance may not affect all family members equally within the same household.