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De-mystifying the Inconvenient Truth : Does Ex Post Moral Hazard Indeed Exist in Korean Private Health Insurance Market?

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  • Lim, Jae-Young

Abstract

There have been heated debates on whether private health insurance creates moral hazard effects. Despite its importance, however, the moral hazard problem of private health insurance is still controversial and understudied. To empirically examine whether or not moral hazard exists in the Korean private health insurance market, we employed two-stage regression for endogeneity control and the Heckman two-step procedure for sample selection bias control, which are expected to produce consistent estimates. All estimation results do not allow us to detect the presence of the moral hazard effects and imply that people hold private health insurance simply as “safety net”.

Suggested Citation

  • Lim, Jae-Young, 2010. "De-mystifying the Inconvenient Truth : Does Ex Post Moral Hazard Indeed Exist in Korean Private Health Insurance Market?," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 51(2), pages 74-92, December.
    • Handle: RePEc:hit:hitjec:v:51:y:2010:i:2:p:74-92
    DOI: 10.15057/18775
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    More about this item

    Keywords

    Private Health Insurance; Moral Hazard; Endogeneity; Sample Selection Bias;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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