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Supplemental Health Insurance and Healthcare Consumption: A Dynamic Approach to Moral Hazard

Author

Listed:
  • Carine Franc

    (CERMES centre de recherche medecine, sciences, sante et societe)

  • Marc Perronnin

    (IRDES Institute for research and information in health economics)

  • Aurelie Pierre

    (IRDES Institute for research and information in health economics)

Abstract

We analyze the existence and persistence of moral hazard over time to test the assumption of pent-up demand. We consider the effects of supplemental health insurance provided by a private insurer when added to compulsory public insurance already supplemented by private insurance. Using panel data from a French mutuelle, we compute error component models with the Chamberlain specification to control for adverse selection. By separating outpatient care consumption into (1) the probability of healthcare use, (2) the number of uses conditional on use and (3) the per-unit cost of care, we provide evidence that supplemental insurance is significantly and positively associated with (1), (2) and (3). However, these effects decrease significantly over time. This pattern supports the existence of pent-up demand, the magnitude of which varies greatly and depends on the dimensions (1), (2) and (3) and the type of care (physician care, prescription drugs, dental care or optical care)..

Suggested Citation

  • Carine Franc & Marc Perronnin & Aurelie Pierre, 2014. "Supplemental Health Insurance and Healthcare Consumption: A Dynamic Approach to Moral Hazard," Working Papers DT58, IRDES institut for research and information in health economics, revised Jan 2014.
  • Handle: RePEc:irh:wpaper:dt58
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    References listed on IDEAS

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    4. de Meza, David, 1983. "Health insurance and the demand for medical care," Journal of Health Economics, Elsevier, vol. 2(1), pages 47-54, March.
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    8. Cutler, David M. & Zeckhauser, Richard J., 2000. "The anatomy of health insurance," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 11, pages 563-643, Elsevier.
    9. Long, Stephen H. & Marquis, M. Susan & Rodgers, Jack, 1998. "Do people shift their use of health services over time to take advantage of insurance?," Journal of Health Economics, Elsevier, vol. 17(1), pages 105-115, January.
    10. Ettner, Susan L., 1997. "Adverse selection and the purchase of Medigap insurance by the elderly," Journal of Health Economics, Elsevier, vol. 16(5), pages 543-562, October.
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    Cited by:

    1. Kevin Devereux & Mona Balesh Abadi & Farah Omran, 2019. "Correcting for Transitory Effects in RCTs: Application to the RAND Health Insurance Experiment," Working Papers 201910, School of Economics, University College Dublin.
    2. Iwona Laskowska, 2015. "Private health insurance and the problem of moral hazard (Prywatne ubezpieczenia zdrowotne a problem pokusy naduzycia)," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 13(53), pages 58-68.
    3. Pierre, Aurélie & Jusot, Florence, 2017. "The likely effects of employer-mandated complementary health insurance on health coverage in France," Health Policy, Elsevier, vol. 121(3), pages 321-328.
    4. Raphaël Cottin, 2018. "Free health care for the poor: a good way to achieve universal health coverage? Evidence from Morocco," Working Papers DT/2018/16, DIAL (Développement, Institutions et Mondialisation).

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    More about this item

    Keywords

    Supplemental health insurance; moral hazard; health care expenditures; longitudinal analysis;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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