GRIPS 政策研究センター Policy Research Center


2013/4/1 ~ 2015/3/31

Private Health Insurance over the Life Cycle – Implications for the Health Care System in an Aging Society


This project aims to study Private Health Insurance (PHI) markets in systems with Universal Health Insurance (UHI), focusing on individuals’ demand for PHI over the life-cycle and the welfare implications for government policies. The project includes 3 parts: (1) an empirical study on life-cycle PHI demand in the presence of UHI using household survey data; (2) development of a theoretical model (a dynamic stochastic general equilibrium life-cycle model with heterogeneous agents) to explain the insurance demand over the life-cycle; (3) policy experiments to investigate implications of several government policies and regulations of PHI markets and social insurance, e.g. subsidies for PHI (including employer provided PHI), regulation related to discrimination based on health status and interaction between PHI and UHI. In an aging society (like Japan and European countries), benefits provided by a government sponsored UHI are likely to be reduced over time because of higher demand of medical care and fewer tax payers. Supplemental insurance in private markets will play a more crucial role in insuring residual health risk. In particular, the out-of-pocket medical expenditures still can be a big burden for elderly people even now when the UHI covers 70% of the medical cost because the elderly’s (65+) medical expenditures are 4-6 times higher than the young’s and the top 10% can be higher than 6 million yen in a year. It will be a more serious issue in a more aged society happening soon. Therefore, the development of well-functioning PHI markets is important that may largely help individuals to insure themselves against health risk over the life cycle (and rely less on public assistance, which will be problematic financially). 


This project will help to understand what PHI policy and how it can effectively help to reduce individuals’ medical expenditure risk in an aging society.