Asymmetric information in health insurance: Evidence from the national medical expenditure survey

James H. Cardon, Igal Hendel

Research output: Contribution to journalArticlepeer-review

160 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)408-427
Number of pages20
JournalRAND Journal of Economics
Volume32
Issue number3
DOIs
StatePublished - 2001

ASJC Scopus subject areas

  • Economics and Econometrics

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