Does Health Insurance Encourage Obesity? A Moral Hazard Study

Elizabeth Robison Botkins

No 206228, 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California from Agricultural and Applied Economics Association

Abstract: Obesity and the negative health conditions related to it have been a growing public health concern over the last few decades. While there are many factors contributing to the rise of obesity, one that is often overlooked is the ex-ante moral hazard effect of health insurance. Ex-ante moral hazard occurs when an individual takes on more risk knowing they will not bear the full cost of the consequences. Simply having health insurance allows an individual to bear a smaller portion of the costs of obesity as an insurance company now bears a portion of the costs. While other studies have estimated the moral hazard impact of health insurance on obesity and other life-style related illnesses, this is the first paper to look at the impact of public verses private insurance. I use cross sectional data from the National Longitudinal Youth Survey 1997 from 2011 and employ an instrumental variable technique to address the endogeneity between insurance coverage and body mass index (BMI). The results show that private insurance is predicted to increase BMI by 3.5 kg/m2, while public insurance is predicted to increase BMI by 8 kg/m2. This result demonstrates that, not only is there a significant moral hazard problem, but it is also highly sensitive insurance type. This study can be used to help inform insurance policy design to minimize inefficiencies associated with moral hazard.

Keywords: Health Economics and Policy; Institutional and Behavioral Economics; Labor and Human Capital (search for similar items in EconPapers)
Pages: 27
Date: 2015
New Economics Papers: this item is included in nep-ias
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea15:206228

DOI: 10.22004/ag.econ.206228

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