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Estimating Adverse Selection And Moral Hazard Effects With Hospital Invoices Data In A Government‐Controlled Healthcare System

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  • Xiangping Liu
  • Danijel Nestic
  • Tomislav Vukina

Abstract

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.

Suggested Citation

  • Xiangping Liu & Danijel Nestic & Tomislav Vukina, 2012. "Estimating Adverse Selection And Moral Hazard Effects With Hospital Invoices Data In A Government‐Controlled Healthcare System," Health Economics, John Wiley & Sons, Ltd., vol. 21(8), pages 883-901, August.
    • Handle: RePEc:wly:hlthec:v:21:y:2012:i:8:p:883-901
    DOI: 10.1002/hec.1756
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    References listed on IDEAS

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    Cited by:

    1. Yan Zheng & Tomislav Vukina & Xiaoyong Zheng, 2021. "Risk aversion, moral hazard, and gender differences in health care utilization," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 46(1), pages 35-60, March.
    2. Zheng, Yan & Vukina, Tomislav & Zheng, Xiaoyong, 2016. "Estimating Asymmetric Information Effects in Health Care Accounting for the Transactions Costs," ARE Working Papers 262941, North Carolina State University, Department of Agricultural and Resource Economics.
    3. Aistov, Andrey V. (Аистов, Андрей) & Aleksandrova, Ekaterina A. (Александрова, Екатерина), 2018. "Ex Post Moral Hazard in Private Health Insurance [Постконтрактный Оппортунизм На Рынке Добровольного Медицинского Страхования]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 3, pages 148-181, June.
    4. Yan Zheng & Tomislav Vukina, 2016. "Using the age-based insurance eligibility criterion to estimate moral hazard in medical care consumption," Financial Theory and Practice, Institute of Public Finance, vol. 40(3), pages 337-356.
    5. Clifford Afoakwah & Joshua Byrnes & Paul Scuffham & Son Nghiem, 2023. "Testing for selection bias and moral hazard in private health insurance: Evidence from a mixed public‐private health system," Health Economics, John Wiley & Sons, Ltd., vol. 32(1), pages 3-24, January.
    6. Yan Zheng & Tomislav Vukina & Xiaoyong Zheng, 2019. "Estimating asymmetric information effects in health care with uninsurable costs," International Journal of Health Economics and Management, Springer, vol. 19(1), pages 79-98, March.

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