IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Demand for Hospital Care and Private Health Insurance in a Mixed Public–Private System: Empirical Evidence Using a Simultaneous Equation Modeling Approach

Author Info

Listed author(s):
  • Terence Chai Cheng

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Farshid Vahid

    (Department of Econometrics and Business Statistics, Monash University)

Abstract

This paper examines the determinants of hospital stay intensity, the decision to seek hospital care as a public or private patient and the decision to purchase private hospital insurance. We describe a theoretical model to motivate the simultaneous nature of these decisions. For the empirical analysis, we develop a simultaneous equation econometric model that accommodates the count data nature of length of stay and the binary nature of the patient type and insurance decisions. The model also accounts for the endogeneity of the patient type and insurance binary variables. The results indicate that there is no evidence of endogeneity between the decision to purchase insurance on the type and intensity of hospital care use. We find some evidence of moral hazard effects of private hospital insurance on the intensity of private hospital care. The results also indicate that the length of hospital stay for private patients is shorter than for public patients.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2011n22.pdf
Download Restriction: no

Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2011n22.

as
in new window

Length: 37 pages
Date of creation: Sep 2011
Handle: RePEc:iae:iaewps:wp2011n22
Contact details of provider: Postal:
Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia

Phone: +61 3 8344 2100
Fax: +61 3 8344 2111
Web page: http://melbourneinstitute.unimelb.edu.au/
Email:


More information through EDIRC

Keywords: Simultaneous equation models; count data; demand for hospital care; moral hazard; public–private mix;

Other versions of this item:

Find related papers by JEL classification:
  • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
  • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
  • 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
  • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window


  1. Keane, Michael P., 2010. "Structural vs. atheoretic approaches to econometrics," Journal of Econometrics, Elsevier, vol. 156(1), pages 3-20, May.
  2. Fabbri, Daniele & Monfardini, Chiara, 2009. "Rationing the public provision of healthcare in the presence of private supplements: Evidence from the Italian NHS," Journal of Health Economics, Elsevier, vol. 28(2), pages 290-304, March.
  3. Blundell, Richard, 2010. "Comments on: Michael P. Keane 'Structural vs. atheoretic approaches to econometrics'," Journal of Econometrics, Elsevier, vol. 156(1), pages 25-26, May.
  4. Carol Propper, 1995. "The Disutility of Time Spent on the United Kingdom's National Health Service Waiting Lists," Journal of Human Resources, University of Wisconsin Press, vol. 30(4), pages 677-700.
  5. Cullis, John G & Jones, Philip R, 1986. "Rationing by Waiting Lists: An Implication," American Economic Review, American Economic Association, vol. 76(1), pages 250-256, March.
  6. Murat K. Munkin & Pravin K. Trivedi, 1999. "Simulated maximum likelihood estimation of multivariate mixed-Poisson regression models, with application," Econometrics Journal, Royal Economic Society, vol. 2(1), pages 29-48.
  7. Savage, Elizabeth & Wright, Donald J., 2003. "Moral hazard and adverse selection in Australian private hospitals: 1989-1990," Journal of Health Economics, Elsevier, vol. 22(3), pages 331-359, May.
  8. Andreas Million & Regina T. Riphahn & Achim Wambach, 2003. "Incentive effects in the demand for health care: a bivariate panel count data estimation," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(4), pages 387-405.
  9. Terza, Joseph V., 1998. "Estimating count data models with endogenous switching: Sample selection and endogenous treatment effects," Journal of Econometrics, Elsevier, vol. 84(1), pages 129-154, May.
  10. Deb, Partha & Trivedi, Pravin K., 2002. "The structure of demand for health care: latent class versus two-part models," Journal of Health Economics, Elsevier, vol. 21(4), pages 601-625, July.
  11. Atella, Vincenzo & Deb, Partha, 2008. "Are primary care physicians, public and private sector specialists substitutes or complements? Evidence from a simultaneous equations model for count data," Journal of Health Economics, Elsevier, vol. 27(3), pages 770-785, May.
  12. Propper, Carol, 1990. "Contingent Valuation of Time Spent on NHS Waiting Lists," Economic Journal, Royal Economic Society, vol. 100(400), pages 193-199, Supplemen.
  13. Cameron, A. Colin & Trivedi, Pravin K., 1991. "The role of income and health risk in the choice of health insurance : Evidence from Australia," Journal of Public Economics, Elsevier, vol. 45(1), pages 1-28, June.
  14. Bhat, Chandra R., 2001. "Quasi-random maximum simulated likelihood estimation of the mixed multinomial logit model," Transportation Research Part B: Methodological, Elsevier, vol. 35(7), pages 677-693, August.
  15. Gertler, Paul & Sturm, Roland, 1997. "Private health insurance and public expenditures in Jamaica," Journal of Econometrics, Elsevier, vol. 77(1), pages 237-257, March.
  16. van Ophem, Hans, 2000. "Modeling Selectivity in Count-Data Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 18(4), pages 503-511, October.
  17. Propper, Carol, 2000. "The demand for private health care in the UK," Journal of Health Economics, Elsevier, vol. 19(6), pages 855-876, November.
  18. A. C. Cameron & P. K. Trivedi & Frank Milne & J. Piggott, 1988. "A Microeconometric Model of the Demand for Health Care and Health Insurance in Australia," Review of Economic Studies, Oxford University Press, vol. 55(1), pages 85-106.
  19. Martin, Stephen & Smith, Peter C., 1999. "Rationing by waiting lists: an empirical investigation," Journal of Public Economics, Elsevier, vol. 71(1), pages 141-164, January.
  20. Srivastava, P & Zhao, X, 2008. "Impact of Private Health Insurance on the Choice of Public versus Private Hospital Services," Health, Econometrics and Data Group (HEDG) Working Papers 08/17, HEDG, c/o Department of Economics, University of York.
  21. Jörgen Hellström, 2006. "A bivariate count data model for household tourism demand," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(2), pages 213-226.
  22. Rust, John, 2010. "Comments on: "Structural vs. atheoretic approaches to econometrics" by Michael Keane," Journal of Econometrics, Elsevier, vol. 156(1), pages 21-24, May.
  23. Lindsay, Cotton M & Feigenbaum, Bernard, 1984. "Rationing by Waiting Lists," American Economic Review, American Economic Association, vol. 74(3), pages 404-417, June.
Full references (including those not matched with items on IDEAS)

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

as
in new window


Cited by:

  1. Eldridge, Damien & Koç, Cagatay & Onur, Ilke & Velamuri, Malathi, 2011. "The impact of private hospital insurance on utilization of hospital care in Australia: Evidence from the national health survey," Working Paper Series 1674, Victoria University of Wellington, School of Economics and Finance.
  2. Daniele Fabbri & Chiara Monfardini, 2016. "Opt Out or Top Up? Voluntary Health Care Insurance and the Public vs. Private Substitution," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(1), pages 75-93, 02.
  3. Chai Cheng, T., 2011. "Measuring the effects of removing subsidies for private insurance on public expenditure for health care," Health, Econometrics and Data Group (HEDG) Working Papers 11/32, HEDG, c/o Department of Economics, University of York.
  4. Nathan Kettlewell, 2016. "Utilisation and Selection in an Ancillaries Health Insurance Market," Discussion Papers 2016-17, School of Economics, The University of New South Wales.
  5. Cheng, Terence Chai, 2014. "Measuring the effects of reducing subsidies for private insurance on public expenditure for health care," Journal of Health Economics, Elsevier, vol. 33(C), pages 159-179.
  6. Geraci, A. & Fabbri, D. & Monfardini, C., 2014. "Testing exogeneity of multinomial regressors in count data models: does two stage residual inclusion work?," Health, Econometrics and Data Group (HEDG) Working Papers 14/03, HEDG, c/o Department of Economics, University of York.
  7. Doiron, Denise & Fiebig, Denzil G. & Suziedelyte, Agne, 2014. "Hips and hearts: The variation in incentive effects of insurance across hospital procedures," Journal of Health Economics, Elsevier, vol. 37(C), pages 81-97.
  8. Damien S.Eldridge & Ilke Onur & Malathi Velamuri & Cagatay Koc, 2013. "The Impact of Private Hospital Insurance on the Utilization of Hospital Care In Australia," Working Papers 2013.03, School of Economics, La Trobe University.
  9. Nathan Kettlewell, 2016. "Policy Choice and Product Bundling in a Complicated Health Insurance Market: Do People get it Right?," Discussion Papers 2016-16, School of Economics, The University of New South Wales.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Access and download statistics

When requesting a correction, please mention this item's handle: RePEc:iae:iaewps:wp2011n22. 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: (Abbey Treloar)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.