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Demand for hospital care and private health insurance in a mixed publicprivate system: empirical evidence using a simultaneous equation modeling approach

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  • Chai Cheng, T;
  • Vahid, F;

Abstract

This paper examines the determinants of hospital stay intensity, the decision to seek hospital care as a public or private patient and the decision to purchase private hospital insurance. We describe a theoretical model to motivate the simultaneous nature of these decisions. For the empirical analysis, we develop a simultaneous equation econometric model that accommodates the count data nature of length of stay and the binary nature of the patient type and insurance decisions. The model also accounts for the endogeneity of the patient type and insurance binary variables. The results suggest that there is some weak evidence of endogeneity between the decision to purchase insurance and the intensity of hospital use. We do not ¯nd signi¯cant moral hazard effects of private hospital insurance on the intensity of private hospital care. The results also indicate that the length of hospital stay for private patients is shorter than for public patients.

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Bibliographic Info

Paper provided by HEDG, c/o Department of Economics, University of York in its series Health, Econometrics and Data Group (HEDG) Working Papers with number 10/25.

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Date of creation: Oct 2010
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Handle: RePEc:yor:hectdg:10/25

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Web page: http://www.york.ac.uk/res/herc/research/hedg/
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Keywords: Demand for Hospital Care; Private Hospital Insurance; Public Private Mix; Moral Hazard;

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  18. Jörgen Hellström, 2006. "A bivariate count data model for household tourism demand," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(2), pages 213-226.
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Cited by:
  1. Damien Eldridge & Catagay Koc & Ilke Onur & Malathi Velamuri, 2011. "The Impact of Private Hospital Insurance on Utilization of Hospital Care in Australia: Evidence from the National Health Survey," Working Papers 2011.01, School of Economics, La Trobe University, revised Jan 2011.
  2. Fabbri, Daniele & Monfardini, Chiara, 2011. "Opt Out or Top Up? Voluntary Healthcare Insurance and the Public vs. Private Substitution," IZA Discussion Papers 5952, Institute for the Study of Labor (IZA).
  3. Terence Chai Cheng, 2011. "Measuring the Effects of Removing Subsidies for Private Insurance on Public Expenditure for Health Care," Melbourne Institute Working Paper Series wp2011n26, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  4. Chai Cheng, T., 2011. "Measuring the effects of removing subsidies for private insurance on public expenditure for health care," Health, Econometrics and Data Group (HEDG) Working Papers 11/32, HEDG, c/o Department of Economics, University of York.

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