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The Impact of Private Hospital Insurance on the Utilization of Hospital Care In Australia

Damien Eldridge (), Ilke Onur (), Malathi Velamuri and Cagatay Koc ()
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Cagatay Koc: Senior Economist, Cornerstone Research, USA

No 2013.03, Working Papers from School of Economics, La Trobe University

Abstract: We use the 2004-'05 wave of the Australian National Health Survey to estimate the impact of private hospital insurance on the propensity for hospitalization as a private patient. We employ instrumental-variable methods to account for the endogeneity of supplementary private hospital insurance purchases. We calculate moral hazard based on a difference-of-means estimator. We decompose the moral hazard estimate into a diversion component that is due to an insurance-induced substitution away from public patient care towards private patient care, and an expansion component that measures a pure insurance-induced increase in the propensity to seek private patient care. We find some evidence of self-selection into insurance but this finding is not robust to alternative specifications. Our results suggest that on average, private hospital insurance causes a sizable and significant increase in the likelihood of hospital admission as a private patient. However, there is little evidence of moral hazard; the treatment effect of private hospital insurance on private patient care is driven almost entirely by the substitution away from public patient care towards private patient care.

Keywords: Health Insurance; Health Care Consumption; Moral Hazard (search for similar items in EconPapers)
JEL-codes: I11 I18 C35 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2013
New Economics Papers: this item is included in nep-cta, nep-hea and nep-ias
Note: ISSN-1837-2198
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http://www.latrobe.edu.au/__data/assets/pdf_file/0003/269616/2013.03.pdf first version, 2013.02.pdf (application/pdf)
http://www.latrobe.edu.au/__data/assets/pdf_file/0003/269616/2013.03.pdf Revised version, 2013.02.pdf (application/pdf)

Related works:
Journal Article: The impact of private hospital insurance on the utilization of hospital care in Australia (2017) Downloads
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