Macroeconomic Analysis of Social Health Insurance Implementation in Kazakhstan

Over the past three decades, Kazakhstan put a lot of efforts and resources into implementation of the Social Health Insurance. Debates on health policy often focuses on contribution rates in SHI that should limit the growth of out-of-pocket spending. We investigate a central issue to the debates: are the contribution rates stipulated by the law sufficient to minimize the out-of-pocket health payments? We develop a simple dynamic stochastic general equilibrium (DSGE) model based on over-lapping generations macroeconomic model (OLG) to describe the process of healthcare reforms in Kazakhstan. The numeric results argue that current contribution rates will not be enough to reduce the share of ou-of-pocket health payments in the economy. On contrary, optimal inter-temporary consumption-saving decision of households may bring us to the optimal composition of total spending that shifts toward health, and the out-of-pocket health expenditures can easily exceed current level of 40 percent.