Moral hazard, adverse selection, and health expenditures: A semiparametric analysis

Bajari, Patrick; Dalton, Christina Marsh; Hong, Han; Khwaja, Ahmed

doi:10.1111/1756-2171.12069

Cited by 52 publications

(12 citation statements)

References 27 publications

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“…These three variables representing the respondent’s risk tolerance did not play a role in the choice of any of the health insurance options. Similar results were obtained by Landsberger and Meilijson [17], Cardon and Handel [7] and Bajari et al [2].…”

Section: Multinomial Logit Resultssupporting

confidence: 90%

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Health Uninsurance in rural America: a partial equilibrium analysis

Nganje

Addey

2019

Health Econ Rev

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BackgroundThe cost of rural health continues to be high in the United States despite an overall improvement in national health insurance enrolment. Stakeholder’s perception of adverse selection remains a paramount culprit in the challenges of rural insurance markets. Risk attitude has been revealed as an alternative for measuring this phenomenon, given the 2014 prohibition law on pre-existing conditions and a subsequent repeal in 2018 accompanied by extensive debate among congress. We examine the existence of adverse selection in rural insurance markets by comparing the effects of pre-existing or chronic health conditions and risk attitudes in a Principal-Agent model.ResultsUsing multinomial logit and complementary log-log binomial link models in a Principal-Agent framework, our results indicate that there is adverse selection in rural health insurance markets if pre-existing conditions are considered, but risk attitudes yield contrary effects.ConclusionsThe major policy implication from this study is that respondents who have pre-existing/chronic conditions tend to patronise health insurance with a higher probability than other counterparts and therefore insurers are likely to incur losses given the law on pre-existing conditions as private information. The 2018 law on the exclusion of individuals with pre-existing conditions may be beneficial to the insurance companies at the expense of the populace. Hence, we suggest that market incentive-based programs should be encouraged to minimize rural health uninsurance.

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Section: Multinomial Logit Resultssupporting

confidence: 90%

“…Diverse groups of variables have been used to explain asymmetry of information in these markets. Among the two categories that have dominated adverse selection studies, the existence of chronic or pre-existing conditions has been conspicuous [2, 7]. .…”

Section: Literature Reviewmentioning

confidence: 99%

Health Uninsurance in rural America: a partial equilibrium analysis

Nganje

Addey

2019

Health Econ Rev

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“…[ 9 ] Inefficiencies in health-care provision incentivize the provision of unnecessary services that waste resources and impose additional costs on patients. [ 10 ]…”

Section: Introductionmentioning

confidence: 99%

The main factors of supplier-induced demand in health care

Seyedin

Afshari

Isfahani

et al. 2021

Journal of Education and Health Promotion

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BACKGROUND: Induced demand is a major challenge for financing health promotion, whereby providers exploit patients' information gap to manipulate their demand for health care. The purpose of this study was to identify the factors associated with induced demand for health-care services in hospitals affiliated with Iran University of Medical Sciences (IUMS) in 2018. MATERIALS AND METHODS: In this qualitative study, semi-structured interviews were conducted with 20 participants from IUMS hospitals, including faculty members, physicians, public hospital managers, patients, and researchers with academic and practical experience. Inductive content analysis was used to analyze the data. RESULTS: Overall, 24 subthemes or factors were identified and classified into the health system, the insurer, health-care provider, and health-care recipient themes. Poor monitoring and control, the fee-for-service payment system, limited role of insurance companies, insufficient monitoring of insurance companies, the educational nature of our health centers, health-care providers' interests, and patients' information gap were some important factors in induced demand for health-care services. CONCLUSION: Our results showed that there are many factors that contribute to induced demand for health care. Given the four levels of factors identified in this study, health policymakers and managers must develop strategies at each level to reduce induced demand for health care.

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“…In the broadest sense, the article relates to the large literature on the design of private health insurance markets, Fang and Gavazza, Bajari et al, ; Starc, ; Handel, Hendel, and Whinston, 2015; Hackmann, Kolstad, and Kowalski, ; Einav,Finkelstein, and Schrimpf, 2016) and markets with lock‐in effects and one‐sided commitments, Cardon and Hendel, Crocker and Moran, ; Herring and Pauly, ; Viard, ; Bouckaert, Degryse, and Provoost, ; Crocker and Snow, ; Biglaiser, Crémer, and Dobos, 2013). Because the German private health insurance market is comparable to life insurance markets in other countries—well‐known examples of front‐loaded contracts—the article contributes to a better understanding of the functioning of front‐loaded insurance markets and the issue of portability, Hendel and Lizzeri, ; Gründl, Post, and Schulze, ; Farrell and Klemperer, ; Fang and Kung, ; McShane, Cox, and Butler, ; Fang and ; Schmeiser, Holzmüller, and Gatzert, ; Eling and Kiesenbauer, 2014; Schmeiser, Gatzert, and Huber, )…”

Section: Introductionmentioning

confidence: 99%

Exit, Voice, or Loyalty? An Investigation Into Mandated Portability of Front‐Loaded Private Health Plans

Atal¹,

Fang²,

Karlsson³

et al. 2017

J of Risk & Insurance

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. We study theoretically and empirically how consumers in an individual private longterm health insurance market with front-loaded contracts respond to newly mandated portability requirements of their old-age provisions. To foster competition, effective 2009, the German legislature made the portability of standardized old-age provisions mandatory. Our theoretical model predicts that the portability reform will increase internal plan switching. However, under plausible assumptions, it will not increase external insurer switching. Moreover, the portability reform will enable unhealthier enrollees to reoptimize their plans. We find confirmatory evidence for the theoretical predictions using claims panel data from a big private insurer. Terms of use: Documents in JEL Classification:G22, I11, I18

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Moral hazard, adverse selection, and health expenditures: A semiparametric analysis

Cited by 52 publications

References 27 publications

Health Uninsurance in rural America: a partial equilibrium analysis

Health Uninsurance in rural America: a partial equilibrium analysis

The main factors of supplier-induced demand in health care

Exit, Voice, or Loyalty? An Investigation Into Mandated Portability of Front‐Loaded Private Health Plans

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