Healthcare in Life Cycle Economy:  Theoretical Model and Simulation

Phaisan Pattanakooha; Arayah  Preechametta

Authors

Phaisan Pattanakooha Faculty of Economics, Thammasat University, Thailand
Arayah Preechametta Faculty of Economics, Thammasat University, Thailand

Keywords:

Theoretical overlapping generation model, healthcare assets, growth rate of population, taxes and subsidies

Abstract

This article aims to develop the theoretical overlapping generation models with the unstable healthcare system due to the problem of missing trading markets between young and old generations. The main healthcare system in Thailand is Universal Coverage (UC) which covers around 48 million Thai people. The costs of the healthcare system in Thailand are rising every year, while Thailand has been in an aging society too early.

The theoretically developed models in this article show the main results that first, the different generations (the young and old households) could not exchange their healthcare assets. Then, the government needs to run a balanced budget to collect lump sum taxes from the current young households and transfer those taxes as healthcare subsidies to the current old households; this system is PAYG (Pay-As-You-Go). The PAYG could be sustainable if the growth rate of the population is greater than or equal to the households’ discount rate. However, under the aging society in Thailand, the average growth rate of the population in the last decade has been negative. Therefore, this system is unlikely sustainable in the long run.

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