Topic 3 Paper: (Einav et al 2013)

Question 1

What does this paper aim to explore?

Answer 1

The possibility that moral hazard effects are heterogenous - and that an individuals selection of insurance coverage is affected by their anticipated moral hazard effect

Question 2

How does this paper measure moral hazard?

Answer 2

It considers moral hazard the slope of health care spending with respect to the out of pocket price

Question 3

Explain how adverse selection for moral hazard might work

Answer 3

Those who expect to be more ‘morally hazardous’ might pick plans with lower copayments, coinsurance, ect.

Question 4

What data does this paper use?

Answer 4

It uses data from US employees at Alcoa, who were moved over from low cost sharing plans to high cost sharing plans, gradually in groups, and were given the option of picking from a variety of new plans.

Question 5

What does the paper find?

Answer 5

• Adverse selection based on moral hazard is just as quantitatively important as adverse selection based on the expected level of spending