Moral hazard and selection among the poor: evidence from a randomized experiment

Ex-ante moral hazard and health insurance: Evidence from China's urban residence basic medical insurance scheme

This study examines whether implementing Urban Residents Medical Insurance Scheme decreased an individual's risky lifestyle behavior before illness, termed ex-ante moral hazard. Ex-ante moral hazard is predicted by the classical economic theory suggesting that health insurance coverage reduces an individual's incentive to take preventive efforts to remain healthy. Studies have provided mixed evidence for this prediction. China's 2006 nationwide social experiment of implementing the Urban Residents Basic Medical Insurance Scheme offers an excellent opportunity for examining the effect of the transition from uninsured to insured on an individual's health behaviors. We exploit the longitudinal dimension of a representative survey data for 2007-2010 and employ the instrumental variable technique, thereby addressing the issue of self-selection into voluntary health insurance schemes. The results do not provide evidence for and contrast the prediction of the ex-ante moral hazard. Significant differences exist between insured and uninsured groups with respect to smoking, drinking habits, and being overweight. People with insurance care more about their health than people without insurance do. The main results still hold if we use alternative estimation methods and other robustness tests.

Does Maintained Medical Aid Coverage Affect Healthy Lifestyle Factors, Metabolic Syndrome-Related Health Status, and Individuals' Use of Healthcare Services?

Concerns about the moral hazards and usage of universal health insurance require examination. This study aimed to analyze changes in lifestyle, metabolic syndrome-related health status, and individuals' tendency to use healthcare services according to changes in the eligibility status of medical aid recipients. This paper reports a retrospective cohort study that involved analyzing data from 2366 medical aid recipients aged 40 years or older who underwent national health screenings in 2012 and 2014. Of the recipients, 1606 participants continued to be eligible for medical aid (the "maintained" group) and 760 changed from being medical aid recipients to National Health Insurance (NHI) enrollees (the "changed" group). Compared to the "changed" group, the "maintained" group was less likely to quit smoking, more likely to begin smoking, less likely to reduce binge drinking to moderate drinking, and had a significant increase in blood glucose and waist circumference. Annual total medical expenses also increased significantly in the "maintained" group. Since the mere strengthening of healthcare coverage may lead to moral hazards and the failure to link individuals' tendency to use healthcare services and outcomes, establishing mechanisms is necessary to educate people about the health-related outcomes of maintaining a healthy lifestyle and ensure the appropriate use of healthcare services.

Cost-sharing reduction and health service utilisation, health-related lifestyles, and obesity: evidence from the Australian health concession card policy

BACKGROUND

The Australian Health Concession Card (HCC) policy aims to improve access to affordable health services and medicines by providing reduced patient cost-sharing. This study explored the association between HCC holding and health service utilisation, as well as health-related lifestyles and obesity in Australian adults.

METHODS

The Australian National Health Survey data were used to derive three sets of study outcomes. Multivariable generalised linear regression models were used to estimate the association between concessional status and study outcomes after controlling for socio-demographic factors.

RESULTS

HCC holders, compared to their non-concessional counterparts, had more visits to GPs (1.01, 95% CI: 0.74-1.30), specialists (0.23, 95% CI: 0.02-0.44), outpatient clinics (0.19, 95% CI: 0.06-0.31), and had more hospital admissions (0.04, 95% CI: -0.05-0.91). There was no significant difference in visits to doctors and health professionals about mental health problems among HCC holders and their counterparts. Moreover, less HCC holders consumed alcohol on ≥3days a week (OR: 0.75, 95% CI: 0.59-0.93) and had less of an alcohol risk that exceeded the 2001 alcohol guidelines (0.83, 95% CI: 0.69-0.99).

CONCLUSIONS

This study revealed evidence that reduced patientcost-sharing provided by HCC policy was positively correlated with more health service utilisation after adjusting for socio-demographic characteristics. Strategies to prioritise resources are necessary.

The impact of health insurance on self-protection of Chinese rural residents

Purpose

Health insurance lowers the price of medical services, which reduces the insured's demand for self-protection (such as, live a healthy lifestyle or invest in disease prevention) that could help reduce the probability of getting sick, then ex ante moral hazard happens. The purpose of this study is to examine the impact and its heterogeneity of health insurance on the self-protection of Chinese rural residents.

Method

This study firstly builds a theoretical model of health insurance and self-protection. Then, based on the data from the 2004 to 2015 China Health and Nutrition Survey (CHNS), we adopt ordinary least squares model (OLS), probit model, and instrumental variable (IV) method to empirically investigate the impact of health insurance on Chinese rural residents' self-protection.

Results

After addressing the endogeneity problem, the study finds that participating in health insurance exerts a significant negative impact on the demand for self-protection. Specifically, health insurance participation not only increases residents' tendency toward drinking liquor by 3.4%, and that of having general obesity by 3.7%, but also reduces residents' preventive medical expenditure (PME) by 1.057%, increasing Body Mass Index (BMI) by 0.784 kg/m². Further analysis shows that there is heterogeneity between groups, as health insurance participation reduces PME of people who are female, younger, and high-educated, and increases the tendency toward drinking liquor of people who are younger and low-educated.

Conclusions

To reduce the impact of ex ante moral hazard induced by health insurance, our findings suggest that it is necessary to improve the disease prevention function of health insurance and introduce a risk adjustment mechanism into the premium or co-payment design of health insurance.

Problem drinking as intentional risky behavior: Examining the association between state health insurance coverage and excessive alcohol consumption

The moral hazard theory asserts that having health insurance may increase individual risk-taking behaviors. We examined the association between state health insurance coverage and excessive alcohol use among U.S. adults. We used 2001-2017 Behavioral Risk Factor Surveillance System data to estimate annual binge and heavy drinking rates for each state. In a multivariable regression analysis, we used difference-in-difference (DID) models to assess the association between state-level insurance coverage and binge and heavy drinking. Additionally, we assess the potential asymmetric effect and whether economic recessions (2001, 2008-09) had a moderation effect. In the multivariable DID analysis, aggregate state insurance coverage was not significantly associated with binge drinking rates in baseline analysis with state-fixed effects (Model 1), and in the analysis that extends the baseline model to include state unique time trend (Model 2). A similar result was found for heavy drinking in Model 1. In contrast, the result showed a significant association between health insurance coverage and heavy drinking rates in Model 2. However, we found no significant association for binge and heavy drinking rates in both models in the analyses restricting data to periods before the methodological change in the BRFSS sampling frame. The results did not show asymmetric effects, and the association between health insurance and excessive alcohol use did not differ during economic recessions. These findings largely do not support assertions that health insurance may lead to moral hazards (risk-taking behaviors), especially binge drinking.

Impact of community-based health insurance on utilisation of preventive health services in rural Uganda: a propensity score matching approach

The effect of voluntary health insurance on preventive health has received limited research attention in developing countries, even when they suffer immensely from easily preventable illnesses. This paper surveys households in rural south-western Uganda, which are geographically serviced by a voluntary Community-based health insurance scheme, and applied propensity score matching to assess the effect of enrolment on using mosquito nets and deworming under-five children. We find that enrolment in the scheme increased the probability of using a mosquito net by 26% and deworming by 18%. We postulate that these findings are partly mediated by information diffusion and social networks, financial protection, which gives households the capacity to save and use service more, especially curative services that are delivered alongside preventive services. This paper provides more insight into the broader effects of health insurance in developing countries, beyond financial protection and utilisation of hospital-based services.

Drawbacks and aftermath of the Affordable Care Act: ex-ante moral hazard and inequalities in health care access

Background: Following the introduction of the Affordable Care Act, various studies have tried to identify the effects of the reform, without reaching a clear consensus. The aim of this study was to investigate whether expansion of the Medicaid program has led to less inequality in access to health care and to a higher level of ex-ante moral hazard.

Design and Methods: The analysis was conducted on two-year longitudinal data (2014-2015) regarding a cohort of 15,898 individuals from a Medical Expenditure Panel Survey (MEPS). After a data cleaning procedure, a sample of 9,255 individuals was selected for the inequality part of the study and 2,307 for the exante moral hazard analysis. Propensity score matching with nearest- neighbour and kernel matching algorithms, difference-in-difference models and concentration index, corrected according to Erreygers methodology, were adopted.

Results: The analysis showed that disparities were reduced between social classes although the ex-ante moral hazard is a real problem with the Affordable Care Act since individuals covered by public insurance tended to abuse the public service. Among those who benefited from the Act, a reduction in preventive behaviours was observed: there was an increase in smoking and a decrease in level of physical activity. As far as concerns access to health care, there was a decrease in inequality in emergency visits, inability to get care and getting care when needed among beneficiaries of the reform.

Conclusions: This study demonstrates that the extension of Medicaid has had a dual effect of reducing disparities in access to health care but, at the same time, it seems to have induced people to take less care of themselves.

Does increasing access-to-care delay accessing of care? Evidence from kidney transplantation

Policies increasing healthcare availability might decrease the cost of delaying accessing of care, leading to potential negative consequences if patients delay treatment. We analyze a policy designed to increase access to kidney transplantation through the use of time since dialysis inception to prioritize patients for transplant, which was piloted at 26 of the 271 kidney transplant centers in the United States in 2006 and 2007. We model the patient's optimization problem comparing the benefits and costs of early waitlisting and predict that the policy change will lead to delayed waitlisting. To empirically test this prediction, we use difference-in-differences fixed effects panel regression techniques to analyze data on patients who began dialysis between 1/1/2000 and 12/31/2009. The results support the model's prediction; patients on dialysis who waitlist for kidney transplantation increase pre-waitlist dialysis duration by 11.6 percent or approximately 76 days from a pre-policy mean of 652 days (SD = 654). With regard to waitlist outcomes, the policy is associated with a 4.5 percentage point decrease in the probability of receiving a deceased donor transplant, somewhat offset by a 3.0 percentage point increase in the probability of receiving a live donor transplant. On the extensive margin, patients on dialysis decrease their likelihood of ever waitlisting by 1.5 percentage points. We find an increase in pre-waitlist dialysis time and a decrease in the likelihood of waitlisting at all, especially among populations likely to have experienced increased access to transplantation through the policy change: patients self-identifying as Black or Hispanic rather than Non-Hispanic White, and patients without private insurance. These results suggest that some individuals may not benefit if their access to care increases, if the increase in access sufficiently decreases the penalty of delaying accessing of care.

In-kind incentives and health worker performance: Experimental evidence from El Salvador

We experimentally evaluated the effects of in-kind team incentives on health worker performance in El Salvador, with 38 out of 75 community health teams randomly assigned to performance incentives over a 12-month period. All teams received monitoring, performance feedback and recognition for their achievements allowing us to isolate the effect of the incentive. While both treatment and control groups exhibit improvements in performance measures over time, the in-kind incentives generated significant improvements in community outreach, quality of care, timeliness of care, and utilization of maternal and child health services after 12 months. Gains were largest for teams at the bottom and top of the baseline performance distribution. We find no evidence of results being driven by changes in reporting or by shifting away effort from non-contracted outcomes. These results suggest that in-kind team incentives may be a viable alternative to monetary or individual incentives in certain contexts.

Health Uninsurance in rural America: a partial equilibrium analysis

BACKGROUND

The cost of rural health continues to be high in the United States despite an overall improvement in national health insurance enrolment. Stakeholder's perception of adverse selection remains a paramount culprit in the challenges of rural insurance markets. Risk attitude has been revealed as an alternative for measuring this phenomenon, given the 2014 prohibition law on pre-existing conditions and a subsequent repeal in 2018 accompanied by extensive debate among congress. We examine the existence of adverse selection in rural insurance markets by comparing the effects of pre-existing or chronic health conditions and risk attitudes in a Principal-Agent model.

RESULTS

Using multinomial logit and complementary log-log binomial link models in a Principal-Agent framework, our results indicate that there is adverse selection in rural health insurance markets if pre-existing conditions are considered, but risk attitudes yield contrary effects.

CONCLUSIONS

The major policy implication from this study is that respondents who have pre-existing/chronic conditions tend to patronise health insurance with a higher probability than other counterparts and therefore insurers are likely to incur losses given the law on pre-existing conditions as private information. The 2018 law on the exclusion of individuals with pre-existing conditions may be beneficial to the insurance companies at the expense of the populace. Hence, we suggest that market incentive-based programs should be encouraged to minimize rural health uninsurance.

Effects of China's urban basic health insurance on preventive care service utilization and health behaviors: Evidence from the China Health and Nutrition Survey

Background

Lifestyle choices are important determinants of individual health. Few studies have investigated changes in health behaviors and preventive activities brought about by the 2007 implementation of Urban Resident Basic Health Insurance (URBMI) in China. This study, therefore, aimed to explore whether URBMI has reduced individuals’ incentives to adopt healthy behaviors and utilize preventive care services.

Methods

Data were drawn from two waves of the China Health and Nutrition Survey. Respondents were categorized according to their insurance situation before and after the URBMI reform in 2006 and 2011. Propensity score matching and difference-in-differences methods were used to measure levels of preventive care and behavior changes over time. Estimations were also made based on gender, self-reported health, and income.

Results

We found that URBMI implementation did not change residents’ utilization of preventive care services or their smoking habits, drinking habits, or other risky behaviors overall. However, the likelihood of sedentariness did increase by five percentage points. Females tended to be more sedentary while males were less likely to drink soft drinks. Residents with poor self-reported health exercised less while those who reported good health were more likely to be sedentary. Low- and middle-income residents were likely to be sedentary while middle-income people tended to smoke after becoming insured.

Conclusion

Since URBMI implementation, some unhealthy behaviors like sedentariness have increased among those who were newly insured, and different subgroups have reacted differently. This suggests that the insurance design needs to be optimized and effective measures need to be adopted to help improve people’s lifestyle choices.

Creating a preference for prevention: the role of universal health care in the demand for preventive care among Mexico's vulnerable populations

The introduction of Seguro Popular (SP)- providing health insurance to over 50 million Mexicans since the early 2000s-represents a large shift in health care delivery to the Mexican population. And yet, its impact on Mexico's marginalized communities has been little studied, and its impact on health is unclear. Using a survey of poor urban Mexicans and Mexican Ministry of Health administrative data, this article investigates SP's effect on those at the most risk for health disparities by looking at the impact of the programme on demand for preventive care services, especially among women, children and the indigenous. Three outcomes important to Mexico's burden of disease are explored: general physical exams, diabetes screening, and cervical cancer screening. Ordinary least square regressions show that the introduction of SP is associated with an increase in demand for all three services, but these results are likely biased due to selection into the programme. I then use the staggered geographic roll out of SP between 2004 and 2007 to identify the causal impact of the programme on demand. I use length of exposure to SP as an instrumental variable to predict SP affiliation in 2009. Two stage least squares estimates of the causal impact of SP on demand for preventive care services finds that SP affiliation increases adult demand for physicals, but does not affect demand for diabetes screening. Additionally, I find that female and child SP affiliates are less likely to demand physicals, while affiliates who identify as indigenous are less likely to demand physicals but more likely to demand cervical cancer screenings.

Moral Hazard in Health Insurance: What We Know and How We Know It

We describe research on the impact of health insurance on healthcare spending ("moral hazard"), and use this context to illustrate the value of and important complementarities between different empirical approaches. One common approach is to emphasize a credible research design; we review results from two randomized experiments, as well as some quasi-experimental studies. This work has produced compelling evidence that moral hazard in health insurance exists-that is, individuals, on average, consume less healthcare when they are required to pay more for it out of pocket-as well as qualitative evidence about its nature. These studies alone, however, provide little guidance for forecasting healthcare spending under contracts not directly observed in the data. Therefore, a second and complementary approach is to develop an economic model that can be used out of sample. We note that modeling choices can be consequential: different economic models may fit the reduced form but deliver different counterfactual predictions. An additional role of the more descriptive analyses is therefore to provide guidance regarding model choice.

Economic Context and HIV Vulnerability in Adolescents and Young Adults Living in Urban Slums in Kenya: A Qualitative Analysis Based on Scarcity Theory

Urban slum adolescents and young adults have disproportionately high rates of HIV compared to rural and non-slum urban youth. Yet, few studies have examined youth's perceptions of the economic drivers of HIV. Informed by traditional and behavioral economics, we applied a scarcity theoretical framework to qualitatively examine how poverty influences sexual risk behaviors among adolescents and young adults. Focus group discussions with one hundred twenty youth in Kenyan's urban slums were transcribed, coded, and analyzed using interpretive phenomenology. Results indicated that slum youth made many sexual decisions considered rational from a traditional economics perspective, such as acquiring more sex when resources were available, maximizing wealth through sex, being price-sensitive to costs of condoms or testing services, and taking more risks when protected from adverse sexual consequences. Youth's engagement in sexual risk behaviors was also motivated by scarcity phenomena explained by behavioral economics, such as compensating for sex lost during scarce periods (risk-seeking), valuing economic gains over HIV risks (tunneling, bandwidth tax), and transacting sex as an investment strategy (internal referencing). When scarcity was alleviated, young women additionally described reducing the number of sex partners to account for non-economic preferences (slack). Prevention strategies should address the traditional and behavioral economics of the HIV epidemic.

The Impact of Social Health Insurance on Diabetes and Hypertension Process Indicators among Older Adults in Mexico

OBJECTIVE

To examine the impact of Seguro Popular (Mexican social health insurance for the poor; SP) on diabetes and hypertension care, intermediate process indicators for older adults (>50 years): pharmacological treatment, blood glucose tests, the use of complementary and alternative medicine (CAM), and adherence to their nutrition and exercise program. (CAM was defined as products or practices that were not part of the medical standard of care.)

DATA SOURCES/STUDY SETTING

Repeated cross-sectional surveys from Encuesta Nacional de Salud y Nutrición (Mexican Health and Nutrition Survey, ENSANUT), a nationally representative health and nutrition survey sampling N = 45,294 older adults in 2000, N = 45,241 older adults in 2005-2006, and N = 46,277 older adults in 2011-2012.

STUDY DESIGN

Fixed-effects instrumental variable (FE-IV) repeated cross-sectional at the individual level with municipality fixed-effects estimation was performed.

PRINCIPAL FINDINGS

We found a marginally significant effect of SP on the use of insulin and oral agents (40 percentage points). Contrary to that expected, no other significant differences were found for diabetes or hypertension treatment and care indicators.

CONCLUSIONS

Social health insurance for the poor improved some but not all health care process indicators among diabetic and hypertensive older people in Mexico.

Are the healthy behaviors of US high-deductible health plan enrollees driven by people who chose these plans? Smoking as a case study

PURPOSE

To determine whether negative associations between enrollment in a high-deductible health plan (HDHP) and one exemplar unhealthy behavior--daily smoking--are found only among people who chose these plans.

DESIGN

Cross-sectional analysis of nationally-representative data.

SETTING

United States from 2007 to 2008.

SUBJECTS

6,941 privately insured non-elderly adult participants in the 2007 Health Tracking Household Survey.

MEASURES

Self-reported smoking status.

ANALYSIS

We classified subjects as HDHP or traditional health plan enrollees with employer-sponsored insurance (ESI) and no choice of plans, ESI with a choice of plans, or coverage through the non-group market. We used multivariate logistic regression to measure associations between HDHP enrollment and daily smoking within each of the 3 coverage source groups while controlling for potential confounders.

RESULTS

HDHP enrollment was associated with lower odds of smoking among individuals with ESI and a choice of plans (AOR 0.55, 95% CI 0.33-0.90) and those with non-group coverage (AOR 0.64, 95% CI 0.34-1.22), though the latter association was not statistically significant. HDHP enrollment was not associated with lower odds of smoking among individuals with ESI and no choice of plans (AOR 1.04, 95% CI 0.69-1.56).

CONCLUSIONS

HDHP enrollment is associated with lower odds of smoking only among individuals who chose to enroll in an HDHP. Lower rates of unhealthy behaviors among HDHP enrollees may be a reflection of individuals who choose these plans.