Title: Moral hazard in health insurance: a dynamic model of within-year medical care consumption
Abstract: Asymmetric information in health insurance markets may lead individuals to overconsume medical care. Many studies explore this \moral using models that aggregate medical care decisions up to the annual level. Using employer-employee matched data from the Medical Expenditure Panel Survey (MEPS), I estimate moral hazard using a dynamic model of within-year medical care consumption that allows for endogenous health transitions, variation in medical care prices, and consumer uncertainty within a health insurance year. I use the model and estimated structural parameters to recalculate moral hazard under an alternative set of conditions that are consistent with the assumptions of most annual expenditure models. The within-year decision-making model generates a moral hazard estimate that is larger than the alternative model. I highlight the importance of correctly estimating moral hazard using a counterfactual policy experiment that implements the individual mandate provision of the 2010 Patient Protection and Aordable Care Act (ACA).
Publication Year: 2013
Publication Date: 2013-01-01
Language: en
Type: article
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Cited By Count: 1
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