Fee-For-Service Health Insurance and Moral Hazard of Hospitals

Jung Chan Wook () and Park Sojung Carol ()
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Jung Chan Wook: DB Insurance company, 432 Teheran-ro, Gangnam-gu, Seoul 06194, South Korea
Park Sojung Carol: Full professor at College of Business Administration, Seoul National University, 1 Gwanak ro, Gwanak gu, Seoul 08826, South Korea

Asia-Pacific Journal of Risk and Insurance, 2021, vol. 15, issue 2, 145-167

Abstract: The supply-side contribution to the surge of medical expense is overlooked in the Korean health insurance market. Commonly, the demand-side is accounted for the excessive increase in medical consumption. Previous studies suggest the moral hazard or adverse selection of Fee-For-Service Health Insurance (FFS) policyholders as the source of the problem. However, this paper focuses on the moral hazard of medical institutions using Korea Health Panel (KHP) Data version 1.5 from year 2008–2016. This study finds the medical usage difference between FFS holders and non-holders were greater for clinics and local hospital visits than the visits to general hospitals or special hospitals. This implies that supply-side contributes to the ex-post moral hazard of health insurance.

Keywords: fee-for-service health insurance; moral hazard; adverse selection (search for similar items in EconPapers)
JEL-codes: G22 I13 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1515/apjri-2021-0002

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