Living Happily Ever After? The Effect of Taiwan’s National Health Insurance on the Happiness of the Elderly

Abstract

The implementation of Taiwan’s National Health Insurance (NHI) in 1995 has created a quasi-experiment that permits us to draw causal inference for the effect of the NHI on the happiness and life satisfaction. The NHI is expected to have a positive effect on happiness because it not only improves the health and mitigates the uncertainty in financial losses due to health shocks, but also alleviates health inequality in the population through equal access to care. The results show that the NHI has a significant effect on happiness and life satisfaction. The effect ranges from 3 to 30 % depending on the measures of happiness. Nonetheless, the effect of the NHI in narrowing happiness inequality across socioeconomic status (SES) is significant for health and income groups only while its effect on education- and gender-happiness gradients are insignificant. The increase in the probability of being happy or satisfied with life among the least healthy group is 0.08 % points higher than that of the healthier ones. Earlier studies have shown that the effects of health insurance on health and disparity in health across SES groups are small. In contrast, our findings suggest that the welfare impact of the NHI is quite large.