A Microeconometric Model of the Demand for Health Care and Health Insurance in Australia
TL;DR: A model for interdependent demand for health insurance and health care under uncertainty is developed to throw light on the issue of insurance-induced distortions in thedemand for health care services.
Abstract: This paper develops a model for interdependent demand for health insurance and health care under uncertainty to throw light on the issue of insurance-induced distortions in the demand for health care services. The model is used to empirically analyse the determinants of the choice of health insurance type and seven types of health care services using micro-level data from the 1977–78 Australian Health Survey. Econometric implementation of the model involves, simultaneously, issues of discreteness of choice, selectivity and stochastic dependence between health insurance and utilization. Health status appears to be more important in determining health care service use than health insurance choice, while income appears to be more important in determining health insurance choice than in determining health care service use. For a broad range of health care services both moral hazard and self selection are found to be important determinants of utilization of health care services.
Citations
More filters
Book•
24 Apr 2007TL;DR: This article explores the copula approach for econometric modeling of joint parametric distributions and demonstrates that practical implementation and estimation of copulas are relatively straightforward.
Abstract: This article explores the copula approach for econometric modeling of joint parametric distributions. Although theoretical foundations of copulas are complex, this paper demonstrates that practical implementation and estimation are relatively straightforward. An attractive feature of parametrically specified copulas is that estimation and inference are based on standard maximum likelihood procedures, and thus copulas can be estimated using desktop econometric software. This represents a substantial advantage of copulas over recently proposed simulationbased approaches to joint modeling.
798 citations
Cites background from "A Microeconometric Model of the Dem..."
...Similarly for the case of joint discrete distributions, a number of studies that explore models of correlated count variables, without explicitly 5 using copulas, are developed in Cameron et al. (1988), Munkin and Trivedi (1999), and Chib and Winkelmann (2001)....
[...]
TL;DR: This work examines the 1998 Health and Retirement Survey (HRS) and 1995 Asset and Health Dynamics Among the Oldest-Old Panel Survey (AHEAD) using two-part utilization models and addresses how informal care by all children affects formal care.
615 citations
TL;DR: In this paper, the authors introduce a negative binomial distributed hurdle model that specifies the two stages of the decision-making process as different stochastic processes, while at the same time taking care of the discrete nature of the data.
Abstract: The decision to contact a physician and the decision about how often to contact a physician are determined by different decisionmakers. We introduce a negative binomial distributed hurdle model that specifies the two stages of the decisionmaking process as different stochastic processes, while at the same time taking care of the discrete nature of the data. Empirical results are based on a cross-section of the West German Socioeconomic Panel. Specification tests reveal that the two stages of the process need to be treated as two distinct processes. This, in turn, implies that ignoring this distinction leads to serious misinterpretation.
574 citations
TL;DR: In this article, the authors developed a finite mixture negative binomial count model that accommodates unobserved heterogeneity in an intuitive and analytically tractable manner for six measures of medical care demand by the elderly.
Abstract: SUMMARY In this article we develop a finite mixture negative binomial count model that accommodates unobserved heterogeneity in an intuitive and analytically tractable manner. This model, the standard negative binomial model, and its hurdle extension are estimated for six measures of medical care demand by the elderly using a sample from the 1987 National Medical Expenditure Survey. The finite mixture model is preferred overall by statistical model selection criteria. Two points of support adequately describe the distribution of the unobserved heterogeneity, suggesting two latent populations, the ‘healthy’ and the ‘ill’ whose fitted distributions diAer substantially from each other. #1997 by John Wiley & Sons, Ltd.
526 citations
Cites methods from "A Microeconometric Model of the Dem..."
...(1983) and Cameron et al. (1988), among others. The second approach uses a principal±agent set-up (Zweifel, 1981) in which the physician (agent) determines utilization on behalf of the patient (principal) once initial contact is made. Econometric models which have an interpretation in the principal±agent tradition are estimated by Manning et al. (1987), Pohlmeier and Ulrich (1995), and others....
[...]
...One-step econometric models in this tradition are estimated by Duan et al. (1983) and Cameron et al. (1988), among others....
[...]
TL;DR: A structural model of health insurance and health care choices using data on single individuals from the NMES is estimated and it is found that riskier types buy more coverage and, on average, end up using more care.
Abstract: Adverse selection is perceived to be a major source of market failure in insurance markets. There is little empirical evidence on the extent of the problem. We estimate a structural model of health insurance and health care choices using data on single individuals from the NMES. A robust prediction of adverse-selection models is that riskier types buy more coverage and, on average, end up using more care. We test for unobservables linking health insurance status and health care consumption. We find no evidence of informational asymmetries.
436 citations
References
More filters
TL;DR: In this article, the null hypothesis of no misspecification was used to show that an asymptotically efficient estimator must have zero covariance with its difference from a consistent but asymptonically inefficient estimator, and specification tests for a number of model specifications in econometrics.
Abstract: Using the result that under the null hypothesis of no misspecification an asymptotically efficient estimator must have zero asymptotic covariance with its difference from a consistent but asymptotically inefficient estimator, specification tests are devised for a number of model specifications in econometrics. Local power is calculated for small departures from the null hypothesis. An instrumental variable test as well as tests for a time series cross section model and the simultaneous equation model are presented. An empirical model provides evidence that unobserved individual factors are present which are not orthogonal to the included right-hand-side variable in a common econometric specification of an individual wage equation.
16,198 citations
Journal Article•
TL;DR: In this article, the authors focus on the way in which the operation of the medical-care industry and the efficacy with which it satisfies the needs of society differ from a norm, and the most obvious distinguishing characteristics of an individual's demand for medical services is that it is not steady in origin as, for example, for food or clothing but is irregular and unpredictable.
Abstract: Publisher Summary This chapter focuses on the way in which the operation of the medical-care industry and the efficacy with which it satisfies the needs of society differ from a norm. The term norm that the economist usually uses for the purposes of such comparisons is the operation of a competitive model, that is, the flows of services that would be offered and purchased and the prices that would be paid for them. The interest in the competitive model stems partly from its presumed descriptive power and partly from its implications for economic efficiency. If a competitive equilibrium exists at all and if all commodities relevant to costs or utilities are in fact priced in the market, then the equilibrium is necessarily optimal. There is no other allocation of resources to services that will make all participants in the market better off. The most obvious distinguishing characteristics of an individual's demand for medical services is that it is not steady in origin as, for example, for food or clothing but is irregular and unpredictable. Medical services, apart from preventive services, afford satisfaction only in the event of illness, a departure from the normal state of affairs.
3,500 citations
TL;DR: In this article, the authors considered the formulation and estimation of simultaneous equation models with both discrete and continuous endogenous variables and proposed a statistical model that is sufficiently rich to encompass the classical simultaneous equation model for continuous endogenous variable and more recent models for purely discrete endogenous variables as special cases of a more general model.
Abstract: This paper considers the formulation and estimation of simultaneous equation models with both discrete and continuous endogenous variables. The statistical model proposed here is sufficiently rich to encompass the classical simultaneous equation model for continuous endogenous variables and more recent models for purely discrete endogenous variables as special cases of a more general model.
1,956 citations
TL;DR: In this article, the authors deal with specification, estimation and tests of single equation reduced form type equations in which the dependent variable takes only non-negative integer values, and provide a detailed application of the estimators and tests to a model of the number of doctor consultations.
Abstract: This paper deals with specification, estimation and tests of single equation reduced form type equations in which the dependent variable takes only non-negative integer values. Beginning with Poisson and compound Poisson models, which involve strong assumptions, a variety of possible stochastic models and their implications are discussed. A number of estimators and their properties are considered in the light of uncertainty about the data generation process. The paper also considers the role of tests in sequential revision of the model specification beginr ing with the Poisson case and provides a detailed application of the estimators and tests to a model of the number of doctor consultations.
1,838 citations
TL;DR: In this paper, the authors used a subsample of the 1975 survey of 3249 households carried out by the Washington Center for Metropolitan Studies (WCMS) for the Federal Energy Administration for the purpose of testing the statistical exogeneity of appliance dummy variables typically included in demand for electricity equations.
Abstract: Recent micro-simulation studies of the demand for clectricity hy residences have attempted to modlel jointly the demand for appliance and the denmanid for electricity by appliance. Within this context it becomes important to test the statistical exogeneity of appliance dummy variables typically included in demand for electricity equations. If, as the theory would suggest, the demand for durables and their use are related decisions by the consumer, specifications which ignore this fact will lead to biased and inconsistent estimates of price and income elasticities. The present paper attempts to test this bias using a subsample of the 1975 survey of 3249 households carried out by the Washington Center for Metropolitan Studies (WCMS) for the Federal Energy Administration. We discuss and derive a unified model of the demand for consumer durables and the derived demand for electricity. To determine the magnitude of the bias resulting from estimating a unit electricity" consumption (UEC) equation bv ordinary least squares when unobserved factors influence both choice of appliances and intensity of use. we intr-oduce and cstimate a joint water-heat space-heat choice model, and concluide with the consistent estimation and specification of demand for electricity equations.
1,667 citations