Transfer Payment Systems and Financial Distress: Insights from Health Insurance Premium Subsidies

Abstract How should payment systems of means-tested benefits be designed to improve the financial situation needy recipients most effectively? We study this question in context mandatory health insurance Switzerland, where initially receive either a cash transfer or subsidized premiums (a form in-kind transfer). A federal reform 2014 forced cantons (i.e. states) universally switch provision. exploit setting based on difference-in-differences design, analyzing eight years rich individual-level accounting data and applying machine learning approach identify prior reform. find that switching from transfers persistently reduces likelihood late premium payments by about 20% government debt collection for long-term missed approximately 12%. There is no evidence negative spillover effect timely non-subsidized co-pay bills services after regime change.