Essays on reforming health care and public transfer programs

My dissertation is focused on the effects of re-distributional policies with an emphasis on health care reform. In the first essay I analyze whether a consumer driven health care plan like the newly established Health Savings Accounts (HSAs) can reduce health care expenditures in the United States and increase the fraction of the population with health insurance. My results indicate that HSAs can decrease total health expenditures by up to 3% of GDP but can also increase the number of uninsured individuals by almost 5%. Furthermore, HSAs decrease the aggregate level of health capital and therefore decrease output. In the second essay I construct subjective health expectations curves and empirically evaluate its components using data from the Health and Retirement Study. I find that (i) subjective health expectations do contain additional information that is not incorporated in subjective mortality expectations and (ii) that the rational expectations assumption cannot be rejected for subjective health expectations. In the third essay I investigate whether a redistribution program that targets older individuals can "dominate" a redistribution program that targets younger individuals in terms of output and some measure of welfare. I find that late redistribution can dominate early redistribution in terms of welfare if the program is kept moderate in size by using the possibility of targeting the transfers. Late redistribution does not dominate early redistribution in terms of output. Better targeting of low income households cannot offset savings distortions.