Reports Outline Global Economics Study Results from Department of Economics (The Effect of Health Insurance On Hospitalization: Identification of Adverse Selection, Moral Hazard and the Vulnerable Population In the Indian Healthcare Market)

2019 OCT 04 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Investigators discuss new findings in Economics - Global Economics. According to news reporting from Maharashtra, India, by NewsRx journalists, research stated, “The Indian healthcare sector is growing at a rapid pace; nevertheless, inequality in healthcare consumption and catastrophic healthcare expenditure is also increasing at an alarming rate. In addition to socioeconomic differences, poor healthcare infrastructure, and inadequate risk-pooling mechanisms; asymmetric information in the healthcare market is also a potential contributor to this inequity and increasing costs.”

Financial support for this research came from FLAME University.

The news correspondents obtained a quote from the research from the Department of Economics, “The consequences of information asymmetry are adverse selection (AS) and moral hazard (MH). AS occurs if people with health risks (high-risk individuals) are more prone to buying health insurance as compared to low-risk individuals. MH occurs when insured individuals are more likely to use healthcare than the uninsured individuals, inflating insurance premiums and medical care costs. Empirically, AS and MH lead to endogeneity due to unobserved heterogeneity. In practice, endogeneity is often addressed by using the instrumental variable estimation technique; however, this approach suffers from identification problems. Therefore, in this paper, we use an instrument-free semi-parametric copula regression technique to examine how health insurance status affects hospitalization using a sample of individuals from a large nationally representative survey for India. Our results suggest the presence of AS and potential MH in the Indian healthcare market. We observe that chronically ill individuals are probable sources of AS, which leads to possible MH. A spline regression analysis suggests nonlinearity in health insurance choice and healthcare utilization across age, education, family size, and household consumption expenditure. We find chronically ill women in India exhibit less insurance coverage and lower hospital care usage. We also identify the vulnerable groups, such as older adults and rural residents, who have low insurance participation and high healthcare consumption.”

According to the news reporters, the research concluded: “Our results indicate toward the need for evidence-based health care policy to manage the healthcare system and support the disadvantaged population of India.”

For more information on this research see: The Effect of Health Insurance On Hospitalization: Identification of Adverse Selection, Moral Hazard and the Vulnerable Population In the Indian Healthcare Market. World Development, 2019;122():110-129. World Development can be contacted at: Pergamon-Elsevier Science Ltd, The Boulevard, Langford Lane, Kidlington, Oxford OX5 1GB, England. (Elsevier - www.elsevier.com; World Development - http://www.journals.elsevier.com/world-development/)

Our news journalists report that additional information may be obtained by contacting R. Sengupta, Flame Univ, Dept. of Economics, Gat 1270, Off Pune Bangalore Highway, Pune 412115, Maharashtra, India.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.worlddev.2019.05.012. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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