A new study argues that expanding health insurance coverage can drive medical progress, support wellbeing, and even extend lifespan in the United States.

There is a long-standing debate on whether rolling out health insurance toward high levels of coverage is desirable. For countries with non-existent or only patchy coverage, expanding health insurance would certainly be beneficial. However, in high-income settings where basic coverage is already granted the question remains open.

In a collaborative effort, IIASA Economic Frontiers Program Director, Michael Kuhn, and Ivan Frankovic, now an economist at the Deutsche Bundesbank, analyzed the macroeconomic impact of health insurance expansion in the United States between 1965 and 2005. The study, which has been published in the Journal of Health Economics, used an overlapping generations model of an economy looking at three sectors: final goods production, health care, and medical research and development (R&D).

“This work is the first to tackle the link between health insurance expansion, medical progress, and wellbeing in a coherent and rigorous analytical model for the United States,” says Kuhn. “Our model allows for a thorough integrated assessment of the underlying mechanisms and, as the first of its kind, an assessment of the implications for wellbeing when individuals do not only care about consumption, but also about their health and longevity.”

The authors found that the expansion of health insurance explains about 63% of the increase in health care expenditure and that it was also responsible for a 57% boost to the growth rate of medical patent registrations. Moreover, the expansion of health insurance increased life expectancy by an extra 1.2 years in 2005, mainly due to the stimulation of medical progress.

“The knock-on effects of health insurance on medical progress are relevant both in terms of magnitude and their significant positive impact on wellbeing,” explains Frankovic. “Such effects should be taken into account during policymaking, for example, in the form of an extended cost-benefit analysis.”

A side effect of health insurance expansion is that generous health insurance coverage may stimulate the excessive consumption of health care beyond what is really needed, especially by the elderly generation to the detriment of the younger, working-age generation. However, the researchers found that these losses were compensated by the gains in life expectancy and productivity in the younger generations.

“Our analysis demonstrates the importance of taking a broader wellbeing-oriented and systemic stance when evaluating health care policies,” says Kuhn. “One needs to look beyond what might be short-term losses due to excessive consumption and consider the stimulus a high demand for medical care creates for R&D, resulting in new medical treatments.”


Frankovic, I., & Kuhn, M. (2022). Health insurance, endogenous medical progress, health expenditure growth, and welfare. Journal of Health Economics DOI: 10.1016/j.jhealeco.2022.102717


John Schellnhuber lecture

14 June 2024

IIASA Leadership visits Washington DC

In May, IIASA Director General John Schellnhuber and Head of Communications and External Relations Barbara Kreissler traveled to Washington DC for a series of meetings with members of the US IIASA Committee and other key stakeholders. The trip aimed to strengthen relationships and explore new opportunities for collaboration.
Photo of Professor Karen Lips - IIASA Deputy Director General

13 June 2024

Professor Karen Lips appointed as IIASA Deputy Director General

It is our pleasure to announce the appointment of Professor Karen Lips as the new IIASA Deputy Director General effective from 1 July 2024.
USA flag

23 April 2024

US Permanent Representative to International Organizations in Vienna visits IIASA

H.E. Ambassador Laura Holgate, US Permanent Representative to International Organizations in Vienna, met with IIASA Director General John Schellnhuber to discuss advancing collaboration on leveraging systems analysis for the Sustainable Development Goals (SDGs). The visit strengthened ties between IIASA and the US, emphasizing a commitment to interdisciplinary collaboration and knowledge exchange for informed decision making.