Year of Graduation
Selection In Private Health Insurance In Russia
Applied Economics and Mathematical Methods
Due to presence of private information about consumers’ risk of suffering a loss in health insurance markets these markets are disposed to adverse selection and moral hazard. In this case there should be an evidence of positive correlation between insurance coverage and occurrence of insured risk. A number of studies have tested this prediction using data from different countries (e.g. USA, UK, France) and different types of insurance markets. However, as a result of empirical research most of the studies found either no correlation between risk and insurance coverage or a negative correlation. Therefore in our work we are investigating the demand on private health insurance using RLMS HSE data. We test two separate hypotheses of moral hazard and adverse selection using different sets of variables. To test the presence of adverse selection on private health insurance market we use self-assessed health status, body mass index and chronic conditions to measure the unobservable ex ante risk. For moral hazard testing we use risk behaviours as proxies for ex post risk. Our results suggest the presence of asymmetric information in Russian private health insurance market, although there is a positive association between private health coverage and self-reported health status.