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Adverse selection in the U.S. health insurance markets: Evidence from the MEPS

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  • Di Novi, Cinzia

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Abstract

We use the 2003/2004 Medical Expenditure Panel Survey in conjunctions with the 2002 National Health Interview Survey to test for adverse selection in the U.S. private health insurance market. The key idea is to test whether the individuals who are more exposed to health risks also buy insurance contracts with more coverage or higher expected payments. The critical statistical problem is that the extension of insurance is only measured for those who are insured and face positive health care expenditure. So there is a possible sample selection bias effect. The procedure used is based on a method suggested by Wooldridge (1995). The method also accounts for heterogeneity across individuals. The simultaneous account taken of both possible sources of bias is new for this kind of application.

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File URL: http://polis.unipmn.it/pubbl/RePEc/uca/ucapdv/dinovi113.pdf
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Bibliographic Info

Paper provided by Institute of Public Policy and Public Choice - POLIS in its series POLIS Working Papers with number 103.

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Length: 39 pages
Date of creation: Apr 2008
Date of revision:
Handle: RePEc:uca:ucapdv:103

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Web page: http://polis.unipmn.it

Related research

Keywords: adverse selection; health insurance; risk profile;

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  1. Keeler, Emmett B & Newhouse, Joseph P & Phelps, C E, 1977. "Deductibles and the Demand for Medical Care Services: The Theory of a Consumer Facing a Variable Price Schedule under Uncertainty," Econometrica, Econometric Society, vol. 45(3), pages 641-55, April.
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Cited by:
  1. Piero Cavaleri & Michael Keren & Giovanni B. Ramello & Vittorio Valli, 2009. "Publishing an E-Journal on a Shoe String: Is It a Sustainable Project?," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 39(1), pages 89-101, March.
  2. Marchese, Carla, 2008. "The limits to growth then and now," POLIS Working Papers 105, Institute of Public Policy and Public Choice - POLIS.

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