IDEAS home Printed from https://ideas.repec.org/a/bla/jrinsu/v77y2010i1p211-229.html
   My bibliography  Save this article

Medical Insurance Coverage and Health Production Efficiency

Author

Listed:
  • Laurie J. Bates
  • Kankana Mukherjee
  • Rexford E. Santerre

Abstract

Conventional economic theory predicts that medical insurance coverage causes an inefficient production of health because of ex ante and ex post moral hazard effects. However, no research has empirically examined the magnitude of the inefficiency. This study empirically examines the impact of medical insurance on the technical efficiency of health production at the metropolitan level. The underlying health production function allows for preventive care, curative care, and behavioral factors. Data envelopment analysis determines relative technical efficiency. The multiple regression results indicate that insurance coverage generates inefficiency but the efficiency loss appears to be relatively small on the extensive margin.

Suggested Citation

  • Laurie J. Bates & Kankana Mukherjee & Rexford E. Santerre, 2010. "Medical Insurance Coverage and Health Production Efficiency," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 77(1), pages 211-229, March.
    • Handle: RePEc:bla:jrinsu:v:77:y:2010:i:1:p:211-229
    DOI: 10.1111/j.1539-6975.2009.01336.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1539-6975.2009.01336.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1539-6975.2009.01336.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Dranove, David & J. Simon, Carol & White, William D., 1998. "Determinants of managed care penetration," Journal of Health Economics, Elsevier, vol. 17(6), pages 729-745, December.
    2. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    3. Pauly, Mark V. & Held, Philip J, 1990. "Benign moral hazard and the cost-effectiveness analysis of insurance coverage," Journal of Health Economics, Elsevier, vol. 9(4), pages 447-461, December.
    4. Bruce Hollingsworth & P.J. Dawson & N. Maniadakis, 1999. "Efficiency measurement of health care: a review of non‐parametric methods and applications," Health Care Management Science, Springer, vol. 2(3), pages 161-172, July.
    5. Ray,Subhash C., 2012. "Data Envelopment Analysis," Cambridge Books, Cambridge University Press, number 9781107405264, October.
    6. Richard Auster & Irving Leveson & Deborah Sarachek, 1969. "The Production of Health, an Exploratory Study," Journal of Human Resources, University of Wisconsin Press, vol. 4(4), pages 411-436.
    7. Henry Tulkens & Philippe Eeckaut, 2006. "Nonparametric Efficiency, Progress and Regress Measures For Panel Data: Methodological Aspects," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 395-429, Springer.
    8. Rosen, H.S.Harvey S. & Wu, Stephen, 2004. "Portfolio choice and health status," Journal of Financial Economics, Elsevier, vol. 72(3), pages 457-484, June.
    9. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    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 623-648, July-Aug..
    11. Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January.
    12. David Hemenway, 1990. "Propitious Selection," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(4), pages 1063-1069.
    13. Harris Schlesinger & Emilio Venezian, 1986. "Insurance Markets with Loss-Prevention Activity: Profits, Market Structure, and Consumer Welfare," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 227-238, Summer.
    14. Michael Grossman, 1972. "The Demand for Health: A Theoretical and Empirical Investigation," NBER Books, National Bureau of Economic Research, Inc, number gros72-1.
    15. Amy Finkelstein & Robin McKnight, 2005. "What Did Medicare Do (And Was It Worth It)?," NBER Working Papers 11609, National Bureau of Economic Research, Inc.
    16. Laurie Bates & Rexford Santerre, 2008. "Do health insurers possess monopsony power in the hospital services industry?," International Journal of Health Economics and Management, Springer, vol. 8(1), pages 1-11, March.
    17. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    18. Laurence C. Baker & Martin L. Brown, 1999. "Managed Care, Consolidation Among Health Care Providers, and Health Care: Evidence from Mammography," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 351-374, Summer.
    19. Patrick L. Brockett & Ray E. Chang & John J. Rousseau & John H. Semple & Chuanhou Yang, 2004. "A Comparison of HMO Efficiencies as a Function of Provider Autonomy," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 71(1), pages 1-19, March.
    20. Crew, Michael A, 1969. "Coinsurance and the Welfare Economics of Medical Care," American Economic Review, American Economic Association, vol. 59(5), pages 906-908, December.
    21. Hoff, Ayoe, 2007. "Second stage DEA: Comparison of approaches for modelling the DEA score," European Journal of Operational Research, Elsevier, vol. 181(1), pages 425-435, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kankana Mukherjee & Rexford Santerre & Ning Jackie Zhang, 2010. "Explaining the efficiency of local health departments in the U.S.: an exploratory analysis," Health Care Management Science, Springer, vol. 13(4), pages 378-387, December.
    2. Georges Dionne & Kili C. Wang, 2011. "Does Opportunistic Fraud in Automobile theft Insurance Fluctuate with the Business Cycle ?," Cahiers de recherche 1121, CIRPEE.
    3. Ligia Alba Melo-Becerra & Diego Vásquez-Escobar & María Isabel Alarcón-Obando & Giselle Tatiana Silva-Samudio, 2024. "Empresas Promotoras de Salud en Colombia: Gestión del riesgo en salud, eficiencia técnica y solidez financiera," Borradores de Economia 1272, Banco de la Republica de Colombia.
    4. Yi-Chung Hsu, 2014. "Efficiency in government health spending: a super slacks-based model," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(1), pages 111-126, January.
    5. Georges Dionne & Kili Wang, 2013. "Does insurance fraud in automobile theft insurance fluctuate with the business cycle?," Journal of Risk and Uncertainty, Springer, vol. 47(1), pages 67-92, August.
    6. Nyman, John A. & Koc, Cagatay & Dowd, Bryan E. & McCreedy, Ellen & Trenz, Helen Markelova, 2018. "Decomposition of moral hazard," Journal of Health Economics, Elsevier, vol. 57(C), pages 168-178.
    7. McBain, Florence, 2014. "Health insurance and health environment: India’s subsidized health insurance in a context of limited water and sanitation services," Working Papers 179200, University of Bonn, Center for Development Research (ZEF).
    8. Yuda, Michio, 2016. "Inefficiencies in the Japanese National Health Insurance system: A stochastic frontier approach," Journal of Asian Economics, Elsevier, vol. 42(C), pages 65-77.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kankana Mukherjee & Rexford Santerre & Ning Jackie Zhang, 2010. "Explaining the efficiency of local health departments in the U.S.: an exploratory analysis," Health Care Management Science, Springer, vol. 13(4), pages 378-387, December.
    2. Paul Marschall & Steffen Flessa, 2011. "Efficiency of primary care in rural Burkina Faso. A two-stage DEA analysis," Health Economics Review, Springer, vol. 1(1), pages 1-15, December.
    3. Ndlovu, Thabang, 2022. "Are South African Medical Schemes Efficient? A Longitudinal Analysis," MPRA Paper 115507, University Library of Munich, Germany.
    4. Mai, Nhat Chi, 2015. "Efficiency of the banking system in Vietnam under financial liberalization," OSF Preprints qsf6d, Center for Open Science.
    5. Nazmi Sari, 2002. "Do competition and managed care improve quality?," Health Economics, John Wiley & Sons, Ltd., vol. 11(7), pages 571-584, October.
    6. Li, Hai-ling & Zhu, Xue-hong & Chen, Jin-yu & Jiang, Fei-tao, 2019. "Environmental regulations, environmental governance efficiency and the green transformation of China's iron and steel enterprises," Ecological Economics, Elsevier, vol. 165(C), pages 1-1.
    7. Mohammad Shahid Zaman & Anup Kumar Bhandari, 2020. "Financial deregulation, competition and cost efficiency of Indian commercial banks: is there any convergence?," Indian Economic Review, Springer, vol. 55(2), pages 283-312, December.
    8. Augustyniak, Wojciech & López-Torres, Laura & Kalinowski, Sławomir, 2015. "Performance of Polish regional airports after accessing the European Union: Does liberalisation impact on airports' efficiency?," Journal of Air Transport Management, Elsevier, vol. 43(C), pages 11-19.
    9. Cawley, John & Markowitz, Sara & Tauras, John, 2004. "Lighting up and slimming down: the effects of body weight and cigarette prices on adolescent smoking initiation," Journal of Health Economics, Elsevier, vol. 23(2), pages 293-311, March.
    10. Alexander Cotte Poveda, 2012. "Estimating Effectiveness of the Control of Violence and Socioeconomic Development in Colombia: An Application of Dynamic Data Envelopment Analysis and Data Panel Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 105(3), pages 343-366, February.
    11. Mario Fortin & André Leclerc, 2011. "L’Efficience Des Cooperatives De Services Financiers: Une Analyse De La Contribution Du Milieu," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 82(1), pages 45-62, March.
    12. Kaffash, Sepideh & Azizi, Roza & Huang, Ying & Zhu, Joe, 2020. "A survey of data envelopment analysis applications in the insurance industry 1993–2018," European Journal of Operational Research, Elsevier, vol. 284(3), pages 801-813.
    13. Murilo Wohlgemuth & Carlos Ernani Fries & Ângelo Márcio Oliveira Sant’Anna & Ricardo Giglio & Diego Castro Fettermann, 2020. "Assessment of the technical efficiency of Brazilian logistic operators using data envelopment analysis and one inflated beta regression," Annals of Operations Research, Springer, vol. 286(1), pages 703-717, March.
    14. Mazumdar, Mainak & Rajeev, Meenakshi & Ray, Subhash C., 2012. "Sources of Heterogeneity in the Efficiency of Indian Pharmaceutical Firms," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 47(2), pages 191-221.
    15. Veronese da Silva, Aline & Costa, Marcelo Azevedo & Lopes-Ahn, Ana Lúcia, 2022. "Accounting multiple environmental variables in DEA energy transmission benchmarking modelling: The 2019 Brazilian case," Socio-Economic Planning Sciences, Elsevier, vol. 80(C).
    16. Ricardo F. Díaz & Blanca Sanchez-Robles, 2020. "Non-Parametric Analysis of Efficiency: An Application to the Pharmaceutical Industry," Mathematics, MDPI, vol. 8(9), pages 1-27, September.
    17. Salas-Velasco, Manuel, 2018. "Production efficiency measurement and its determinants across OECD countries: The role of business sophistication and innovation," Economic Analysis and Policy, Elsevier, vol. 57(C), pages 60-73.
    18. Le, Phuong Thanh & Harvie, Charles & Arjomandi, Amir & Borthwick, James, 2019. "Financial liberalisation, bank ownership type and performance in a transition economy: The case of Vietnam," Pacific-Basin Finance Journal, Elsevier, vol. 57(C).
    19. Charles-Henri DiMaria, 2014. "Sustainability matters," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(3), pages 1257-1269, May.
    20. Berger, Michael & Sommersguter-Reichmann, Margit & Czypionka, Thomas, 2020. "Determinants of soft budget constraints: how public debt affects hospital performance in Austria," LSE Research Online Documents on Economics 116865, London School of Economics and Political Science, LSE Library.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jrinsu:v:77:y:2010:i:1:p:211-229. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/ariaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.