Moral Hazard, Adverse Selection and Health Expenditures: A Semiparametric Analysis / Patrick Bajari, Han Hong, Ahmed Khwaja.

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Bajari, Patrick

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w12445.Publication details: Cambridge, Mass. National Bureau of Economic Research 2006.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: 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.

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Previous	nber w12442 Expectations, Asset Prices, and Monetary Policy: The Role of Learning /	nber w12443 The Welfare Consequences of ATM Surcharges: Evidence from a Structural Entry Model /	nber w12444 Financial Innovation for an Aging World /	nber w12445 Moral Hazard, Adverse Selection and Health Expenditures: A Semiparametric Analysis /	nber w12446 Goals and Plans in Protective Decision Making /	nber w12447 Employer Matching and 401(k) Saving: Evidence from the Health and Retirement Study /	nber w12448 Electoral Uncertainty and the Volatility of International Capital Flows /	Next

August 2006.

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.