Abstract
This paper contributes to the discussion around ex-post (increased utilisation of health care) and ex-ante (changes in health behaviours) moral hazard in supplemental private health insurance. Applying a range of methodologies to data from the Russian Longitudinal Monitoring Survey—Higher School of Economics we exploit a selection mechanism in the data to compare the impact of workplace provided and individually purchased supplemental health insurance on the utilisation of health care, on a range of health behaviours and on self-assessed health. We find compelling policy-relevant evidence of ex-post moral hazard that confirms a theoretical prediction and empirical regularity found in other settings. In contrast to other empirical findings though, our data reveals evidence of ex-ante moral hazard demonstrated by clear behavioural differences between those with self-funded supplemental health insurance and those for whom the workplace finances the additional insurance. We find no evidence that either form of insurance is related to improved self-assessed health.
Highlights
A wealth of empirical evidence confirms the theoretical prediction that health insurance lowers the price of utilising health care at the point of access and, gives rise to increased health care consumption
To our knowledge, the first such study focusing on Russia, we distinguish between ex-post and ex-ante moral hazard and explore how these vary according to gender, age, education, and region, using a range of econometric techniques, including a novel ‘Blow Up and Cluster’ (BUC) method [3] which we do not believe has been used in this context previously
The well-documented positive relationship between health insurance and health care utilisation has firmly established the existence of ex-post moral hazard as a necessary consideration to inform the design of health care systems and policies
Summary
A wealth of empirical evidence confirms the theoretical prediction that health insurance lowers the price of utilising health care at the point of access and, gives rise to increased health care consumption. The classical theoretical studies referred to above paved the way for a rich seam of empirical health economics research, much of which has been linked to the famous health insurance ‘experiments’ implemented in the United States Both the RAND Health Insurance Experiment, from the 1970s [1, 14] and the Oregon Health Insurance Experiment, from the 2000s [2] found compelling evidence of expost moral hazard: that is, spending on health care is lower when consumer cost-sharing and out-of-pocket spending requirements are higher.
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