IDEAS home Printed from https://ideas.repec.org/a/vep/journl/y2011v119i2p167-190.html
   My bibliography  Save this article

Adverse Selection in the Private Health Insurance Markets: a Two-Step Approach

Author

Listed:
  • Cinzia Di Novi

    () (Dipartimento di Politiche Pubbliche e Scelte Collettive, Universita' del Piemonte Orientale - Alessandria, Italy)

Abstract

We use the 2003/2004 Medical Expenditure Panel Survey in conjunction with the 2002 National Health Interview Survey to test for adverse selection in the private U.S. health insurance markets. The key idea is to test whether 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.

Suggested Citation

  • Cinzia Di Novi, 2011. "Adverse Selection in the Private Health Insurance Markets: a Two-Step Approach," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 119(2), pages 167-190.
  • Handle: RePEc:vep:journl:y:2011:v:119:i:2:p:167-190
    as

    Download full text from publisher

    File URL: http://riss.vitaepensiero.it/scheda-articolo_digital/cinzia-di-novi/adverse-selection-in-the-private-health-insurance-markets-a-two-step-approach-000518_2011_0002_0084-150995.html
    Download Restriction: Yes

    More about this item

    Keywords

    adverse selection; health insurance; risk profile; two-step estimation; sample-selection bias;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    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:vep:journl:y:2011:v:119:i:2:p:167-190. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vep - Vita e Pensiero). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.