Topics: Education, Economic Sufficiency Awareness, Health Awareness

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Description : In this paper, Zhigang Feng and others studied the interaction between health disparity and income inequality. They extend the prototypical macro health model in several directions. Their model considers the impact of health on labor earning and medical spending. Moreover, they identify a "health premium" of insurance coverage that the insured is more likely to stay healthy or recover from unhealthy status. They hence modeled the effects of income on health and mortality risk through endogenous health insurance choice. All these extensions are essential to simulate the observed joint distribution of income and health status, household's health insurance choice, and medical spending by income level and over their life cycle. Quantitative analysis reveals a significant impact of individual's income in early life on their health at adulthood, which will be reinforced by and subsequently amplify the negative effect of bad health on labor earning and income inequality. They conducted comparative analysis of health policies intended to alleviate health disparity and income inequality. Providing universal insurance coverage will narrow the health and life expectancy gap. Such policy benefits lower skilled the most, which adds additional weight to the poor in the aggregate income distribution and counteracts the positive effect of improved health on income inequality. While the implementation of universal basic income reduces income inequality and mean-tested public insurance will attenuate its effect on health disparity.