Estimating asymmetric information effects in health care with uninsurable costs.

We use a structural approach to separately estimate moral hazard and adverse selection effects in health care utilization using hospital invoices data. Our model explicitly accounts for the heterogeneity in the non-insurable transactions costs associated with hospital visits which increase the individuals' total cost of health care and dampen the moral hazard effect. A measure of moral hazard is derived as the difference between the observed and the counterfactual health care consumption.

Estimating adverse selection and moral hazard effects with hospital invoices data in a government-controlled healthcare system.

We use invoices for hospital services from a regional hospital in Croatia to test for adverse selection and moral hazard. There are three categories of patients: with no supplemental insurance, who bought it, and who are entitled to it for free. Our identification procedure relies on the premise that the difference in the observed medical care consumption between the patients who bought the insurance and those entitled to free insurance is caused by pure selection effect, whereas the difference in healthcare consumption between the group that received the free insurance and the group that has no insurance is due to moral hazard.