Asymmetric Information in Iranian’s Health Insurance Market: Testing of Adverse Selection and Moral Hazard (original) (raw)
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Management Science and Engineering, 2009
Due to special properties of moral hazard and adverse selection in health insurance contract, governments' effort to efficiently provide health care services to their citizens tends to encounter many problems, especially in low income countries. The National Health Insurance of Ghana has not been immune to this problem. This paper, explores empirical research to test for the asymmetric information problem of moral hazard and adverse selection in health insurance contracts. It uses both quantitative and qualitative to analyze data gathered through a meaningfully administered questionnaire in the Sekyere West District of Ghana to make its conclusion on the subject matter.
Adverse Selection in Health Insurance in Nigeria
African Journal of Health Economics
Theoretical literature predicts that asymmetric information in insurance markets generate inefficient outcomes and literature have mostly focus on adverse selection and moral hazard caused by information advantage in insurance market. Adverse selection is the likelihood of those who anticipate more need of health care due to enhanced health risk to purchase health insurance. Therefore, this study investigates adverse selection in health insurance in Nigeria. Contract theory provided the framework for the study. The insurance-demand equation was derived from the solution to the optimality condition of insurance decision equation which gives the Marshallian insurance-demand equation. The model to measure the determinants of the demand for health insurance was a linear probability demand model. Health insurance model captured adverse selection and was estimated with probit and instrumental variable probit regressions. A positive coefficient for health status and health insurance status indicate the presence of adverse selection. Adverse selection was evident in health insurance, social and private health insurance with coefficients of 0.44, 0.25 and 0.24 respectively. Insurance income elasticity was also positive in health insurance, social health insurance and private health insurance with coefficients of 0.15, 0.23 and 0.05. There is a need for mechanisms of optimal mix of people with poor and good health status that may require working out different premium for different set of people based on the type and nature of their work and regulating the behaviour of the insured, HMO's and health provider as health insurance market grows in Nigeria.
Adverse selection and moral hazard in health insurance
In this paper, we want to characterize the optimal health insurance contract with adverse selection and moral hazard. We assume that policyholders di¤er by the permanent health status loss and choose an unobservable preventive e¤ort in order to reduce the probability of illness which is ex-ante identical. The di¤erence in illness'after-e¤ect modi…es policyholders' preventive actions. By the way, they di¤er in probabilities of illness leading to a situation close to Rothschild and Stiglitz 'model. In this case, we show that the optimal contract exhibits a deductible for the high health risk type since a higher after e¤ect implies a higher preventive e¤ort and then a lower probability of illness rather than for the low health risk type.
Selection on Moral Hazard in Health Insurance
2011
numerous seminar participants for helpful comments and suggestions. The data were provided as part of an ongoing service and research agreement between Alcoa, Inc. and Stanford, under which Stanford faculty, in collaboration with faculty and staff at Yale University, perform jointly agreed-upon ongoing and ad hoc research projects on workers' health, injury, disability, and health care, and Mark Cullen serves as Senior Medical Advisor for Alcoa, Inc.
Moral Hazard, Adverse Selection and Health Expenditures: A Semiparametric Analysis
Theoretical models predict asymmetric information in health insurance markets may generate inefficient outcomes due to adverse selection and moral hazard. However, previous empirical research has found it difficult to disentangle adverse selection from moral hazard in health care. We empirically study this question by using data from the Health and Retirement Study to estimate a structural model of the demand for health insurance and medical care. Using a two-step semi-parametric estimation strategy we find significant evidence of moral hazard, but not of adverse selection.
World Development, 2019
The Indian healthcare sector is growing at a rapid pace; nevertheless, inequality in healthcare consumption and catastrophic healthcare expenditure is also increasing at an alarming rate. In addition to socioeconomic differences, poor healthcare infrastructure, and inadequate risk-pooling mechanisms; asymmetric information in the healthcare market is also a potential contributor to this inequity and increasing costs. The consequences of information asymmetry are adverse selection (AS) and moral hazard (MH). AS occurs if people with health risks (high-risk individuals) are more prone to buying health insurance as compared to low-risk individuals. MH occurs when insured individuals are more likely to use healthcare than the uninsured individuals, inflating insurance premiums and medical care costs. Empirically, AS and MH lead to endogeneity due to unobserved heterogeneity. In practice, endogeneity is often addressed by using the instrumental variable estimation technique; however, this approach suffers from identification problems. Therefore, in this paper, we use an instrument-free semi-parametric copula regression technique to examine how health insurance status affects hospitalization using a sample of individuals from a large nationally representative survey for India. Our results suggest the presence of AS and potential MH in the Indian healthcare market. We observe that chronically ill individuals are probable sources of AS, which leads to possible MH. A spline regression analysis suggests nonlinearity in health insurance choice and healthcare utilization across age, education, family size, and household consumption expenditure. We find chronically ill women in India exhibit less insurance coverage and lower hospital care usage. We also identify the vulnerable groups, such as older adults and rural residents, who have low insurance participation and high healthcare consumption. Our results indicate toward the need for evidence-based health care policy to manage the healthcare system and support the disadvantaged population of India.
The Geneva Papers on Risk and Insurance - Issues and Practice
Health risk can be defined as the likelihood of a negative health consequence occurring due to a specific event, disease or condition. Its consequences can be strongly detrimental to individuals and society and managing health risks is a central concern for individuals and governments. This special issue of The Geneva Papers on Risk and Insurance on health aims at better understanding the role of insurance mechanisms in financing and managing health risks. It concentrates on four topics: the structure and performance of health insurance markets, the drivers of long-term care (LTC) insurance purchase, the phenomena of moral hazard in health insurance, and the effect of health insurance on the health of individuals. It offers nine contributions from various perspectives to better understand these issues and, in particular, the function and development of health insurance markets. These contributions tackle practical aspects and policy implications and are illustrated in the light of various health systems with application to countries such as Australia, Chile, China, South Korea, Switzerland and the U.S. Health insurance markets are organised in various ways and insurance carriers can take different forms, principally as stock insurers, mutual insurers or health maintenance organisations (HMOs). Health insurers also deal with various types of populations as they can specialise in serving individuals, groups, low-income people, older people, civil servants, etc. Naturally, the structure of their organisation and the type of population they serve strongly influence the governance and activities of health insurers. The first two papers address supply-side issues of health insurance markets by investigating the behaviour and performance of health insurers, either in relation to HMOs or in serving poor individuals.
Who Took out Additional Supplementary Health Insurance? A dynamic Analysis of Adverse-Selection
I n s t i t u t e f o r R e s e a r c h a n d I n f o r m a t i o n i n H e a l t h E c o n o m i c s no 150-January 2010 According to economic theory, individuals choose their insurance cover levels in virtue of anticipated health expenditures. Thus, they partially reveal their health risks. Yet, on the French health insurance market this hypothesis, known as 'adverse-selection', has only been tested on the supplementary health insurance purchase decision. However, the supplementary health insurance market is extremely heterogeneous, at least in the same way as beneficiaries' health risk levels. Between July 1st 2003 and December 31st 2006, a mutual insurance fund for state employees (Mutuelle générale de l'équipement et des territoires) offered existing holders of its supplementary cover ('MGET basic') an additional health coverage ('MGET+'). This particular context, where individuals covered from the same supplementary health insurance decide to pu...
2011
2006, this article examines health insurance choice and its dynamics. The article takes advantage of the panel data to examine the dynamics and determinants of insurance change. Evidence indicates that private insurance is losing customers to the public sector. Two analyses are undertaken in the article using logistic regressions. For each of the three years studied, the paper looks at insurance choice and its determinants. Income seems to be highly important in determining the choice, as well as age, education, gender, geographical location and health shocks. Evidence of moral hazard and adverse selection was found in the longitudinal and cross sectional analysis. The results of this research are aligned with most of the previous investigations done on Chile's health insurance system and advance previous knowledge on the topic by including the dynamism that panel data permits.