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MORAL HAZARD IN HEALTH INSURANCE: DO DYNAMIC INCENTIVES MATTER?

ABSTRACT: Using data from employer-provided health insurance and Medicare Part D, we investigate whether healthcare 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 healthcare 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.

SUBMITTER: Aron-Dine A

PROVIDER: S-EPMC4710379 | biostudies-literature | 2015 Oct

REPOSITORIES: biostudies-literature

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MORAL HAZARD IN HEALTH INSURANCE: DO DYNAMIC INCENTIVES MATTER?

Aron-Dine Aviva A Einav Liran L Finkelstein Amy A Cullen Mark M

The review of economics and statistics 20151001 4

Using data from employer-provided health insurance and Medicare Part D, we investigate whether healthcare 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 healthcare but a higher expected end-of-year ("future") price. We find a statistically significant response of initial ...[more]

PMID: 26769985

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Project description:ObjectiveThe huge loss of health insurance funds has been a topic of concern around the world. This study aims to explore the network of moral hazard activities and the attribution mechanisms that lead to the loss of medical insurance funds.MethodsData were derived from 314 typical cases of medical insurance moral hazards reported on Chinese government official websites. Social network analysis (SNA) was utilized to visualize the network structure of the moral hazard activities, and crisp-set qualitative comparative analysis (cs/QCA) was conducted to identify conditional configurations leading to funding loss in cases.ResultsIn the moral hazard activity network of medical insurance funds, more than 50% of immoral behaviors mainly occur in medical service institutions. Designated private hospitals (degree centrality = 33, closeness centrality = 0.851) and primary medical institutions (degree centrality = 30, closeness centrality = 0.857) are the main offenders that lead to the core problem of medical insurance fraud (degree centrality = 50, eigenvector centrality = 1). Designated public hospitals (degree centrality = 27, closeness centrality = 0.865) are main contributor to another important problem that illegal medical charges (degree centrality = 26, closeness centrality = 0.593). Non-medical insurance items swap medical insurance items (degree centrality = 28), forged medical records (degree centrality = 25), false hospitalization (degree centrality = 24), and overtreatment (degree centrality = 23) are important immoral nodes. According to the results of cs/QCA, low-economic pressure, low informatization, insufficient policy intervention, and organization such as public medical institutions, were the high-risk conditional configuration of opportunism; and high-economic pressure, insufficient policy intervention, and organizations, such as public medical institutions and high violation rates, were the high-risk conditional configuration of risky adventurism (solution coverage = 31.03%, solution consistency = 90%).ConclusionThere are various types of moral hazard activities in medical insurance, which constitute a complex network of behaviors. Most moral hazard activities happen in medical institutions. Opportunism lack of regulatory technology and risky adventurism with economic pressure are two types causing high loss of funds, and the cases of high loss mainly occur before the government implemented intervention. The government should strengthen the regulatory intervention and improve the level of informatization for monitoring the moral hazard of medical insurance funds, especially in areas with low economic development and high incident rates, and focus on monitoring the behaviors of major medical services providers.

Project description:Background Consumer moral hazard refers to an increase in demand for health services or a decrease in preventive care due to insurance coverage. This phenomenon as one of the most evident forms of moral hazard must be reduced and prevented because of its important role in increasing health costs. This study aimed to determine and analyze the strategies used to control consumer moral hazards in health systems. Methods In this systematic review. Web of Sciences, PubMed, Scopus, Embase, ProQuest, Iranian databases(Magiran and SID), and Google Scholar engine were searched using search terms related to moral hazard and healthcare utilization without time limitation. Eligible English and Persian studies on consumer moral hazard in health were included, and papers outside the health and in other languages were excluded. Thematic content analysis was used for data analysis. Results Content analysis of 68 studies included in the study was presented in the form of two group, six themes, and 11 categories. Two group included “changing behavior at the time of receiving health services” and “changing behavior before needing health services.” The first group included four themes: demand-side cost sharing, health savings accounts, drug price regulation, and rationing of health services. The second approach consisted of two themes Development of incentive insurance programs and community empowerment. Conclusion Strategies to control consumer moral hazards focus on changing consumer consumptive and health-related behaviors, which are designed according to the structure of health and financing systems. Since “changing consumptive behavior” strategies are the most commonly used strategies; therefore, it is necessary to strengthen strategies to control health-related behaviors and develop new strategies in future studies. In addition, in the application of existing strategies, the adaptation to the structure of the health and financing system, and the pattern of consumption of health services in society should be considered. Supplementary Information The online version contains supplementary material available at 10.1186/s12913-022-08613-y.

Dataset Information

MORAL HAZARD IN HEALTH INSURANCE: DO DYNAMIC INCENTIVES MATTER?

Publications

MORAL HAZARD IN HEALTH INSURANCE: DO DYNAMIC INCENTIVES MATTER?

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