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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. Ruser, John W, 1991. "Workers' Compensation and Occupational Injuries and Illnesses," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 325-50, October.
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  3. David Card & Carlos Dobkin & Nicole Maestas, 2004. "The Impact of Nearly Universal Insurance Coverage on Health Care Utilization and Health: Evidence from Medicare," NBER Working Papers 10365, National Bureau of Economic Research, Inc.
  4. John W. Ruser, 1985. "Workers' Compensation Insurance, Experience-Rating, and Occupational Injuries," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 487-503, Winter.
  5. Fortin, B. & Lanoie, P., 1998. "Effects of Workers' Compensation : A Survey," Papers 9816, Laval - Recherche en Politique Economique.
  6. 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.
  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. 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.
  9. Jonathan Klick & Thomas Stratmann, 2007. "Diabetes Treatments and Moral Hazard," Journal of Law and Economics, University of Chicago Press, vol. 50, pages 519-538.
  10. 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..
  11. 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.
  12. 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.
  13. 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.
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Citations

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Cited by:
  1. Bardey, David & De Donder, Philippe, 2012. "Genetic testing with primary prevention and moral hazard," IDEI Working Papers 729, Institut d'Économie Industrielle (IDEI), Toulouse.
  2. Jay Bhattacharya & Kate Bundorf & Noemi Pace & Neeraj Sood, 2009. "Does Health Insurance Make You Fat?," NBER Working Papers 15163, National Bureau of Economic Research, Inc.
  3. Gregory J. Colman & Dhaval M. Dave, 2011. "Exercise, Physical Activity, and Exertion over the Business Cycle," NBER Working Papers 17406, National Bureau of Economic Research, Inc.
  4. Orit E. Tykocinski, 2013. "The insurance effect: How the possession of gas masks reduces the likelihood of a missile attack," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 8(2), pages 174-178, March.
  5. Inas Rashad & Sara Markowitz, 2007. "Incentives in Obesity and Health Insurance," NBER Working Papers 13113, National Bureau of Economic Research, Inc.
  6. Aoife Brick & Anne Nolan & Jacqueline O’Reilly & Samantha Smith, 2012. "Conflicting Financial Incentives in the Irish Health-Care System," The Economic and Social Review, Economic and Social Studies, vol. 43(2), pages 273–301.
  7. Guinnane, Timothy & Streb, Jochen, 2009. "Moral Hazard in a Mutual Health-Insurance System: German Knappschaften, 1867-1914," Working Papers 70, Yale University, Department of Economics.
  8. Inas Rashad Kelly & Dhaval M. Dave & Jody L. Sindelar & William T. Gallo, 2011. "The Impact of Early Occupational Choice On Health Behaviors," NBER Working Papers 16803, National Bureau of Economic Research, Inc.
  9. Aida Isabel Tavares & Pedro Pita Barros, 2011. "Ex-ante Moral Hazard and Primary Prevention, evidence from Portugal," Working Papers de Economia (Economics Working Papers) 56, Departamento de Economia, Gestão e Engenharia Industrial, Universidade de Aveiro.
  10. Grant Miller & Diana M. Pinto & Marcos Vera-Hernández, 2009. "Risk Protection, Service Use, and Health Outcomes Under Colombia’s Health Insurance Program for the Poor," NBER Working Papers 15456, National Bureau of Economic Research, Inc.
  11. Philippe P. F. M. van de Calseyde & Gideon Keren & Marcel Zeelenberg, 2013. "The insured victim effect: When and why compensating harm decreases punishment recommendations," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 8(2), pages 161-173, March.
  12. Susanna Kochskämper, 2012. "Reformdebatten in der Krankenversicherung vor dem Hintergrund des europäischen Binnenmarktes," Otto-Wolff-Institut Discussion Paper Series 02/2012, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.
  13. Stanciole, Anderson, 2007. "Health Insurance and Life Style Choices: Identifying the Ex Ante Moral Hazard," IRISS Working Paper Series 2007-10, IRISS at CEPS/INSTEAD.

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