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Health insurance and ex ante moral hazard: evidence from Medicare

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  • Dhaval Dave

    ()

  • Robert Kaestner

    ()

Abstract

Basic economic theory suggests that health insurance coverage may cause a reduction in prevention activities, but empirical studies have yet to provide much evidence to support this prediction. However, in other insurance contexts that involve adverse health events, evidence of ex ante moral hazard is more consistent. In this paper, we extend the analysis of the effect of health insurance on health behaviors by allowing for the possibility that health insurance has a direct (ex ante moral hazard) and indirect effect on health behaviors. The indirect effect works through changes in health promotion information and the probability of illness that may be a byproduct of insurance-induced greater contact with medical professionals. We identify these two effects and in doing so identify the pure ex ante moral hazard effect. This study exploits the plausibly exogenous variation in health insurance as a result of obtaining Medicare coverage at age 65. We find evidence that obtaining health insurance reduces prevention and increases unhealthy behaviors among elderly men. We also find evidence that physician counseling is successful in changing health behaviors.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s10754-009-9056-4
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Bibliographic Info

Article provided by Springer in its journal International Journal of Health Care Finance and Economics.

Volume (Year): 9 (2009)
Issue (Month): 4 (December)
Pages: 367-390

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Handle: RePEc:kap:ijhcfe:v:9:y:2009:i:4:p:367-390

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Web page: http://www.springerlink.com/link.asp?id=106603

Related research

Keywords: Insurance; Moral hazard; Health behavior; I12; I18;

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References

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  1. David Card & Carlos Dobkin & Nicole Maestas, 2004. "The Impact of Nearly Universal Insurance Coverage on Health Care Utilization and Health: Evidence from Medicare," Working Papers 197, RAND Corporation Publications Department.
  2. Fortin, B. & Lanoie, P., 1998. "Effects of Workers' Compensation : A Survey," Papers 9816, Laval - Recherche en Politique Economique.
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  4. Kaestner, R. & Joyce, T. & Racine, A., 2001. "Medicaid eligibility and the incidence of ambulatory care sensitive hospitalizations for children," Social Science & Medicine, Elsevier, vol. 52(2), pages 305-313, January.
  5. Alma Cohen & Rajeev Dehejia, 2003. "The Effect of Automobile Insurance and Accident Liability Laws in Traffic Fatalities," NBER Working Papers 9602, National Bureau of Economic Research, Inc.
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  7. Christophe Courbage & Augustin de Coulon, 2004. "Prevention and Private Health Insurance in the U.K," The Geneva Papers on Risk and Insurance, The International Association for the Study of Insurance Economics, vol. 29(4), pages 719-727, October.
  8. Sandra L. Decker, 2005. "Medicare and the Health of Women with Breast Cancer," Journal of Human Resources, University of Wisconsin Press, vol. 40(4), pages 948-968.
  9. Zweifel, Peter & Manning, Willard G., 2000. "Moral hazard and consumer incentives in health care," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 8, pages 409-459 Elsevier.
  10. Jonathan Klick & Thomas Stratmann, 2007. "Diabetes Treatments and Moral Hazard," Journal of Law and Economics, University of Chicago Press, vol. 50, pages 519-538.
  11. Christophe Courbage & Augustin de Coulon, 2004. "Prevention and Private Health Insurance in the U.K," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan, vol. 29(4), pages 719-727, October.
  12. Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-48, July-Aug..
  13. Currie, Janet & Gruber, Jonathan, 1996. "Saving Babies: The Efficacy and Cost of Recent Changes in the Medicaid Eligibility of Pregnant Women," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1263-96, December.
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