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Separating Selection and Incentive Effects: an Econometric Study of Swiss Health Insurance Claims Data

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  • Lucien Gardiol
  • Pierre-Yves Geoffard
  • Chantal Grandchamp

Abstract

This paper presents an empirical analysis of the link between health insurance coverage and health care expenditures. We use claims data for over 60 000 adult individuals covered by a major Swiss Health Insurance Fund, followed for up to four years. In the Swiss health insurance system, each individual can choose between five plans, corresponding to different levels of annual deductible. The data show a strong positive correlation between coverage and expenditure. We provide a simple method to separate selection effects (due to individual choice of coverage) and incentive effects (" moral hazard "). The method only requires that there exists an observable variable: 1. correlated with the unobservable health status; 2. not affected by incentives. The analysis of mortality rates indicates important selection effects, which is confirmed by the data on inpatient care. However, the positive correlation between coverage and outpatient expenditure is not fully explained by selection effects, and moral hazard effects are of the same order of magnitude.

Suggested Citation

  • Lucien Gardiol & Pierre-Yves Geoffard & Chantal Grandchamp, 2003. "Separating Selection and Incentive Effects: an Econometric Study of Swiss Health Insurance Claims Data," DELTA Working Papers 2003-27, DELTA (Ecole normale supérieure).
  • Handle: RePEc:del:abcdef:2003-27
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    Cited by:

    1. Pau Olivella & Marcos Vera-Hernández, 2006. "Testing for Asymmetric Information in Private Health Insurance," Working Papers 246, Barcelona Graduate School of Economics.
    2. Lucien Gardiol & Pierre-Yves Geoffard & Chantal Grandchamp, 2005. "Separating selection and incentive effects in health insurance," PSE Working Papers halshs-00590713, HAL.
    3. Vincenzo Atella & Alberto Holly & Alessandro Mistretta, 2016. "Disentangling Adverse Selection, Moral Hazard and Supply Induced Demand: An Empirical Analysis of The Demand For Healthcare Services," CEIS Research Paper 389, Tor Vergata University, CEIS, revised 28 Jun 2016.
    4. World Bank, 2009. "Europe and Central Asia - Health insurance and competition," World Bank Other Operational Studies 3064, The World Bank.

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