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Opt Out or Top Up? Voluntary Health Care Insurance and the Public vs. Private Substitution
Author(s) -
Fabbri Daniele,
Monfardini Chiara
Publication year - 2016
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/obes.12107
Subject(s) - endogeneity , turnover , private insurance , adverse selection , instrumental variable , public health insurance , business , health insurance , actuarial science , public economics , consumption (sociology) , private consumption , health care , economics , monetary economics , economic growth , econometrics , social science , management , fiscal policy , sociology
Abstract We investigate whether in a mixed insurance system, people enrolled into voluntary health care insurance (VHI) substitute public consumption with private (opt out) or just enlarge their private consumption without reducing reliance upon public provisions (top up). We specify a joint model for public and private specialist visits counts, allowing for different degrees of endogenous supplementary insurance coverage. We find evidence of opting out: richer and wealthier individuals consume more private services and concomitantly reduce those services publicly provided through selection into for‐profit VHI. Accounting for VHI endogeneity in the joint model of the two counts is crucial to this conclusion.