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A Dynamic Analysis of the Demand for Health Insurance and Health Care

  • Bolhaar, Jonneke


    (VU University Amsterdam)

  • Lindeboom, Maarten


    (VU University Amsterdam)

  • van der Klaauw, Bas


    (VU University Amsterdam)

We investigate the presence of moral hazard and advantageous or adverse selection in a market for supplementary health insurance. For this we specify and estimate dynamic models for health insurance decisions and health care utilization. Estimates of the health care utilization models indicate that moral hazard is not important. Furthermore, we find strong evidence for advantageous selection, largely driven by heterogeneity in education, income and health preferences. Finally, we show that ignoring dynamics and unobserved fixed effects changes the results dramatically.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3698.

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Length: 53 pages
Date of creation: Sep 2008
Date of revision:
Publication status: published in: European Economic Review, 2012, 56 (4), 669-690
Handle: RePEc:iza:izadps:dp3698
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  20. Thomas G. McGuire & Jacob Glazer, 2000. "Optimal Risk Adjustment in Markets with Adverse Selection: An Application to Managed Care," American Economic Review, American Economic Association, vol. 90(4), pages 1055-1071, September.
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