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Medical Insurance Coverage and Health Production Efficiency
Author(s) -
Bates Laurie J.,
Mukherjee Kankana,
Santerre Rexford E.
Publication year - 2010
Publication title -
journal of risk and insurance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.055
H-Index - 63
eISSN - 1539-6975
pISSN - 0022-4367
DOI - 10.1111/j.1539-6975.2009.01336.x
Subject(s) - inefficiency , data envelopment analysis , production (economics) , moral hazard , actuarial science , ex ante , health care , production function , health insurance , managed care , economics , business , incentive , microeconomics , economic growth , statistics , macroeconomics , mathematics
Conventional economic theory predicts that medical insurance coverage causes an inefficient production of health because of ex ante and ex post moral hazard effects. However, no research has empirically examined the magnitude of the inefficiency. This study empirically examines the impact of medical insurance on the technical efficiency of health production at the metropolitan level. The underlying health production function allows for preventive care, curative care, and behavioral factors. Data envelopment analysis determines relative technical efficiency. The multiple regression results indicate that insurance coverage generates inefficiency but the efficiency loss appears to be relatively small on the extensive margin.