Macroeconomic analysis of Korean and Japanese private and social insurance via insurance-adjusted OLG: health insurance

Despite of the importance of the insurance market in the economy, there has been a lack of research on macroeconomic model which captures influence of risk and risk protection via insurance products. Korea and Japan have a similar health care system, yet, the level of coverage benefits by the national health care in Korea is much lower and out-of-pocket payment in Korea is significantly higher. We use Overlapping generation model(OLG) of Lee et al. (2022) to compare Korean and Japanese economies when influence of both private and public insurance exists. We examine to derive the optimal economic situations for Korea and Japan through a model that accounts for the impact of insurance. The analysis is conducted using data from the OECD, IMF and other sources. Finding an optimal solution of the OLG model by Lee et al. (2022) with the carefully estimated parameter values lead to realistic outcome where proportion of private health insurance for Korean workers and retirees is higher than the Japanese.