DP12200 Bismarck's Health Insurance and the Mortality Decline

Author(s): Stefan Bauernschuster, Anastasia Driva, Erik Hornung
Publication Date: August 2017
Keyword(s): demographic transition, Health Insurance, Mortality, Prussian Economic History
JEL(s): I13, I18, J11, N33
Programme Areas: Public Economics, Economic History
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12200

We investigate the impact on mortality of the world's first compulsory health insurance, established by Otto von Bismarck, Chancellor of the German Empire, in 1884. Employing a multi-layered empirical setup, we draw on international comparisons and difference-in-differences strategies using Prussian administrative panel data to exploit differences in eligibility for insurance across occupations. All approaches yield a consistent pattern suggesting that Bismarck's Health Insurance generated a significant mortality reduction. The results are largely driven by a decline of deaths from infectious diseases. We present prima facie evidence that diffusion of new hygiene knowledge through physicians was an important channel.