The effects of unemployment rate fluctuations on private health insurance coverage in New Zealand

Abstract

In this paper, we estimate the effect of changes in the unemployment rate on private health insurance coverage of New Zealanders using quarterly national data from 1999 to 2009. A 1 percentage point increase in the unemployment rate is associated with a decrease of 9843 lives covered by private health insurance or a 0.32 percentage point decrease in the coverage rate of the total New Zealand population – representing a change of 0.7%–1.0% from the baseline. We also find some evidence of a stronger effect on men and the elderly and of an asymmetric effect on new insurance contracts vs. terminations.

Keywords:

• private health insurance
• unemployment rate
• New Zealand

• JEL Classification: I13

Acknowledgements

We would like to thank the Health Funds Association of New Zealand for providing the data and members of the Economics and Finance Department at the University of Canterbury for helpful feedback. We are also grateful for comments provided by two anonymous referees. The usual disclaimer applies.