Private Medical Insurance and Saving: Evidence from the British Household Panel Survey
36 Pages Posted: 20 Nov 2002
Date Written: October 2003
This paper uses the British Household Panel Survey for the years 1996 to 2000 to investigate whether individuals in the UK save for precautionary motives against uncertain medical costs. In particular, we test the hypothesis that those individuals who are not covered by private medical insurance, and who are therefore more exposed to facing unexpected health care expenditures or loss of income while waiting for treatment, tend to save more than those who are covered. According to our findings, which are based on a wide range of econometric specifications, there is a positive association between insurance coverage and saving, suggesting that private medical insurance does not crowd out private saving. This relationship is however weaker in areas where people feel the quality of medical facilities to be poor and in rural areas.
Keywords: precautionary saving, private medical insurance
JEL Classification: D12, D91, E21, H51
Suggested Citation: Suggested Citation