Health Expenditures Risk, Purchase of Private Health Insurance, and Precautionary Saving in Turkey

The precautionary saving hypothesis proposes that purchase of private health insurance diminishes household saving, since health insurance coverage decreases the possibility of unexpected out-of-pocket health expenditures. The empirical analysis is realised using the TURKSTAT Household Budget Surveys between 2003 and 2010 for the Turkish economy for this purpose. The econometric results from the Two-Stage Probit Least Squares (2SPLS) regressions indicate that there is a negative and statistically significant relationship between household saving and voluntary health insurance, which includes purchases of private health insurance. Moreover, the relationship between household saving and green-card ownership, which is distributed to the poorest individuals without social security coverage, is negative and statistically significant. As a result, the empirical analysis provides evidence in favour of the precautionary saving hypothesis.