TY  - JOUR
AU  - Dave,Dhaval
AU  - Kaestner,Robert
TI  - Health Insurance and Ex Ante Moral Hazard: Evidence from Medicare
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12764
PY  - 2006
Y2  - December 2006
UR  - http://www.nber.org/papers/w12764
L1  - http://www.nber.org/papers/w12764.pdf
N1  - Author contact info:
Dhaval M. Dave
Bentley University
Department of Economics
175 Forest Street, AAC 195
Waltham, MA 02452-4705
Tel: 212/817-7955
Fax: 212/817-1597
E-Mail: ddave@bentley.edu

Robert Kaestner
Institute of Government and Public Affairs
University of Illinois
815 West Van Buren Street, Suite 525
Chicago, IL  60607
Tel: 312/996-8227
E-Mail: kaestner.robert@gmail.com
AB  - Basic economic theory suggests that health insurance coverage may cause a reduction in prevention activities, but empirical studies have yet to provide much evidence to support this prediction.  However, in other insurance contexts that involve adverse health events, evidence of ex ante moral hazard is more consistent.  In this paper, we extend the analysis of the effect of health insurance on health behaviors by allowing for the possibility that health insurance has a direct (ex ante moral hazard) and indirect effect on health behaviors.  The indirect effect works through changes in health promotion information and the probability of illness that may be a byproduct of insurance-induced greater contact with medical professionals.  We identify these two effects and in doing so identify the pure ex ante moral hazard effect.  This study exploits the plausibly exogenous variation in health insurance as a result of obtaining Medicare coverage at age 65.  We find evidence that obtaining health insurance reduces prevention and increases unhealthy behaviors among elderly men.  We also find evidence that physician counseling is successful in changing health behaviors.
ER  -