Asymmetric Information in Health Insurance: Evidence from the National Medical Expenditure Survey

Posted: 4 Sep 2001

See all articles by James Cardon

James Cardon

Princeton University - Department of Economics

Igal Hendel

Northwestern University - Department of Economics; National Bureau of Economic Research (NBER)

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.

Suggested Citation

Cardon, James H. and Hendel, Igal E., Asymmetric Information in Health Insurance: Evidence from the National Medical Expenditure Survey. Available at SSRN: https://ssrn.com/abstract=279771

James H. Cardon

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

Igal E. Hendel (Contact Author)

Northwestern University - Department of Economics ( email )

2003 Sheridan Road
Evanston, IL 60208
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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