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Market Inefficiency, Insurance Mandate and Welfare: U.S. Health Care Reform 2010

Colleagues analysing data

Juergen Jung and Chung Tran

In this paper we develop a stochastic dynamic general equilibrium overlapping generations (OLG) model with endogenous health capital to study the macroeconomic effects of the Affordable Care Act of March 2010 also known as the Obama health care reform.

We find that the insurance mandate enforced with fines and premium subsidies successfully reduces adverse selection in private health insurance markets and subsequently leads to almost universal coverage of the working age population.

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