Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/250562 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14901
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Penalty mandates are used in many countries to encourage people to purchase health insurance. But are they effective? We use a large administrative dataset for a 10% random sample of all Australian tax-filers to study how people respond to a step-wise age-based mandate, and whether this has changed over time. The mandate creates discontinuities in the incentive to insure by age, which we exploit to estimate causal effects. People who do not insure before the penalty dates face higher premiums in the future, which should encourage them to bring forward purchases. We find that people respond as expected to the initial age-penalty, but not to subsequent penalties. The 2% premium loading results in a 1-4% increase in take-up, with effects increasing after an annual government letter campaign that reminds people approaching the penalty deadline about the policy. We discuss the impact of the mandate on the overall efficiency of the market, and implications of potential reforms.
Subjects: 
health insurance
age-based mandate
regression discontinuity
Australia
JEL: 
I13
I18
I12
Document Type: 
Working Paper

Files in This Item:
File
Size
3.48 MB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.