Abstract
This paper investigates whether the voluntary deductible in the Dutch health insurance system reduces moral hazard or acts only as a cost reduction tool for low‐risk individuals. We use a sample of 14,089 observations, comprising 2,939 individuals over seven waves from the Longitudinal Internet Studies for the Social sciences panel for the analysis. We employ bivariate models that jointly model the choice of a deductible and health care utilization and supplement the identification with an instrumental variable strategy. The results show that the voluntary deductible reduces moral hazard, especially in the decision to visit a doctor (extensive margin) compared with the number of visits (intensive margin). In addition, a robustness test shows that selection on moral hazard is not present in this context.
Highlights
It is well-known that comprehensive insurance may lead to moral hazard—that is, a change in health behavior in response to lower out-of-pocket health care costs
This paper investigates whether the voluntary deductible in the Dutch health insurance system reduces moral hazard or acts only as a cost reduction tool for low-risk individuals
We investigate the existence of a selection effect by testing whether healthier and less risk-averse people are more likely to opt for a voluntary deductible
Summary
It is well-known that comprehensive (health) insurance may lead to moral hazard—that is, a change in health behavior in response to lower out-of-pocket health care costs. To provide additional background on this debate, we use panel data from the Longitudinal Internet Studies for the Social sciences (LISS) for the years 2009–2016 to investigate whether the voluntary deductible in the Netherlands has served its purpose of reducing moral hazard or has acted only as a cost reduction tool for low-risk individuals. We add to the scarce evidence on the existence of selection on moral hazard While we study these issues in the institutional setting of the Dutch health care system, the results may interest policy makers in other countries that have mandatory private health insurance and voluntary deductibles, such as Switzerland, Germany, and the United States.
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