Demand for Hospital Care and Private Health Insurance in a Mixed Public–Private System: Empirical Evidence Using a Simultaneous Equation Modeling Approach

Terence Cheng () and Farshid Vahid

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: This paper examines the determinants of hospital stay intensity, the decision to seek hospital care as a public or private patient and the decision to purchase private hospital insurance. We describe a theoretical model to motivate the simultaneous nature of these decisions. For the empirical analysis, we develop a simultaneous equation econometric model that accommodates the count data nature of length of stay and the binary nature of the patient type and insurance decisions. The model also accounts for the endogeneity of the patient type and insurance binary variables. The results indicate that there is no evidence of endogeneity between the decision to purchase insurance on the type and intensity of hospital care use. We find some evidence of moral hazard effects of private hospital insurance on the intensity of private hospital care. The results also indicate that the length of hospital stay for private patients is shorter than for public patients.

Keywords: Simultaneous equation models; count data; demand for hospital care; moral hazard; public–private mix (search for similar items in EconPapers)
JEL-codes: C15 C31 H42 I11 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2011-09
New Economics Papers: this item is included in nep-hea and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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http://melbourneinstitute.unimelb.edu.au/downloads ... series/wp2011n22.pdf (application/pdf)

Related works:
Working Paper: Demand for hospital care and private health insurance in a mixed publicprivate system: empirical evidence using a simultaneous equation modeling approach (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:iae:iaewps:wp2011n22

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