Moral Hazard in Health Insurance: Do Dynamic Incentives Matter?
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Finkelstein_Moral hazard.pdf
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538.13 KB
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Adobe PDF
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Author(s)
Einav, Liran
Cullen, Mark
Aron-Dine, Aviva Ronit
Finkelstein, Amy
Date Issued
September 2015
Journal
Review of Economics and Statistics
Publisher
MIT Press
Citation
Aron-Dine, Aviva, Liran Einav, Amy Finkelstein, and Mark Cullen. “Moral Hazard in Health Insurance: Do Dynamic Incentives Matter?” Review of Economics and Statistics 97, no. 4 (October 2015): 725–741.
Version
Final published version
Abstract
Using data from employer-provided health insurance and Medicare Part D, we investigate whether health care utilization responds to the dynamic incentives created by the nonlinear nature of health insurance contracts. We exploit the fact that because annual coverage usually resets every January, individuals who join a plan later in the year face the same initial (“spot”) price of health care but a higher expected end-of-year (“future”) price. We find a statistically significant response of initial utilization to the future price, rejecting the null that individuals respond only to the spot price. We discuss implications for analysis of moral hazard in health insurance.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1162/REST_a_00518
