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Moral hazard and the demand for health services: a matching estimator approach

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  • Machado, Matilde P.
  • Sanz-de-Galdeano, Anna
  • Pita-Barros, Pedro

Abstract

In this paper we estimate the impact of health insurance coverage beyond National Health Insurance on the demand for several health services. Traditionally, the literature has tried to deal with the endogeneity of the private (extra) insurance decision by finding instrumental variables. It is hard to think, however, of any variable that a priori would be a good instrument and, therefore, we take a different approach. We concentrate on the most common health insurance plan in the Portuguese Health Survey, (ADSE), which is given to all civil servants and their dependants. We argue that this insurance is exogenous for most people i.e. not correlated with their health status. Under this identifying assumption we estimate the impact of having ADSE coverage on three different health services using a matching estimator technique. The measures of demand for health services are number of visits, number of blood and urine tests, and the probability of visiting a dentist. Preliminary results show large effects of ADSE for number of visits and tests among the young (18 to 30 years old) but only for tests are these effects statistically significantly different from zero. The magnitude of the effects represent 21.8 and 30 percent of the average number of visits and tests for the young. On the contrary we find no evidence of moral hazard on the probability of visiting a dentist. Finally, we argue that there is evidence of a positive cumulative effect of ADSE over the years.

Suggested Citation

  • Machado, Matilde P. & Sanz-de-Galdeano, Anna & Pita-Barros, Pedro, 2005. "Moral hazard and the demand for health services: a matching estimator approach," UC3M Working papers. Economics we055928, Universidad Carlos III de Madrid. Departamento de Economía.
  • Handle: RePEc:cte:werepe:we055928
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    References listed on IDEAS

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    Cited by:

    1. Richard Layte & Anne Nolan, 2015. "Eligibility for free GP care and the utilisation of GP services by children in Ireland," International Journal of Health Economics and Management, Springer, vol. 15(1), pages 3-27, March.
    2. Izabela Jelovac, 2015. "Physicians’ balance billing, supplemental insurance and access to health care," International Journal of Health Economics and Management, Springer, vol. 15(2), pages 269-280, June.
    3. Astrid Kiil, 2012. "Does employment-based private health insurance increase the use of covered health care services? A matching estimator approach," International Journal of Health Economics and Management, Springer, vol. 12(1), pages 1-38, March.
    4. Richard Layte & Anne Nolan, 2015. "Income-related inequity in the use of GP services by children: a comparison of Ireland and Scotland," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 16(5), pages 489-506, June.
    5. John E. Murray, 2011. "Asymmetric Information and Countermeasures in Early Twentieth‐Century American Short‐Term Disability Microinsurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 78(1), pages 117-138, March.
    6. Aida Isabel Tavares & Pedro Pita Barros, 2011. "Ex-ante Moral Hazard and Primary Prevention, evidence from Portugal," Working Papers de Economia (Economics Working Papers) 56, Departamento de Economia, Gestão e Engenharia Industrial, Universidade de Aveiro.
    7. Barbara Hofmann, 2014. "Sick of being “Activated?”," Empirical Economics, Springer, vol. 47(3), pages 1103-1127, November.
    8. repec:kap:jeczfn:v:123:y:2018:i:1:d:10.1007_s00712-017-0550-8 is not listed on IDEAS
    9. repec:eee:joecag:v:6:y:2015:i:c:p:24-43 is not listed on IDEAS
    10. Søgaard, Rikke & Pedersen, Morten Saaby & Bech, Mickael, 2013. "To what extent does employer-paid health insurance reduce the use of public hospitals?," Health Policy, Elsevier, vol. 113(1), pages 61-68.
    11. José Murteira & Óscar Lourenço, 2011. "Health care utilization and self-assessed health: specification of bivariate models using copulas," Empirical Economics, Springer, vol. 41(2), pages 447-472, October.
    12. Omar Paccagnella & Vincenzo Rebba & Guglielmo Weber, 2013. "VOLUNTARY PRIVATE HEALTH INSURANCE AMONG THE OVER 50s IN EUROPE," Health Economics, John Wiley & Sons, Ltd., vol. 22(3), pages 289-315, March.
    13. Moreira S & Pita Barros P, 2009. "Double coverage and demand for health care: Evidence from quantile regression," Health, Econometrics and Data Group (HEDG) Working Papers 09/21, HEDG, c/o Department of Economics, University of York.
    14. repec:kap:ijhcfe:v:17:y:2017:i:1:d:10.1007_s10754-016-9195-3 is not listed on IDEAS
    15. Palmer, Michael G., 2014. "Inequalities in Universal Health Coverage: Evidence from Vietnam," World Development, Elsevier, vol. 64(C), pages 384-394.
    16. Pedro Ramos & Álvaro Almeida, 2014. "The Impact of An Increase in User Costs on the Demand For Emergency Services: The Case of Portuguese Hospitals," FEP Working Papers 531, Universidade do Porto, Faculdade de Economia do Porto.
    17. Layte, Richard & Nolan, Anne, 2013. "Income-Related Inequity in the Use of GP Services: A Comparison of Ireland and Scotland," Papers WP454, Economic and Social Research Institute (ESRI).
    18. Galina Besstremyannaya, 2014. "Heterogeneous effect of coinsurance rate on healthcare costs: generalized finite mixtures and matching estimators," Discussion Papers 14-014, Stanford Institute for Economic Policy Research.
    19. Jaume Puig-Junoy & Pilar Garcia-Gomez & David Casado-Marin, 2011. "Free Medicines thanks to Retirement: Moral Hazard and Hospitalization Offsets in an NHS," Tinbergen Institute Discussion Papers 11-108/3, Tinbergen Institute.

    More about this item

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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