ESTIMATING ADVERSE SELECTION AND MORAL HAZARD EFFECTS WITH HOSPITAL INVOICES DATA IN A GOVERNMENT-CONTROLLED HEALTHCARE SYSTEM
✍ Scribed by Xiangping Liu; Danijel Nestic; Tomislav Vukina
- Publisher
- John Wiley and Sons
- Year
- 2011
- Tongue
- English
- Weight
- 147 KB
- Volume
- 21
- Category
- Article
- ISSN
- 1057-9230
- DOI
- 10.1002/hec.1756
No coin nor oath required. For personal study only.
✦ Synopsis
SUMMARY
We use invoices for hospital services from a regional hospital in Croatia to test for adverse selection and moral hazard. There are three categories of patients: with no supplemental insurance, who bought it, and who are entitled to it for free. Our identification procedure relies on the premise that the difference in the observed medical care consumption between the patients who bought the insurance and those entitled to free insurance is caused by pure selection effect, whereas the difference in healthcare consumption between the group that received the free insurance and the group that has no insurance is due to moral hazard. Results show favorable selection for patients in 20‐ to 30‐year‐old cohort and significant moral hazard for all age cohorts. The selection effect reverses its sign in older cohorts explained by the differences in risk aversion across cohorts caused by the timing of transition from socialism to market economy. Copyright © 2011 John Wiley & Sons, Ltd.