Incentive effects in the demand for health care: a bivariate panel count data estimation

Abstract

Abstract This paper contributes in three dimensions to the literature on health care demand. First, it features the first application of a bivariate random effects estimator in a count data setting, to permit the efficient estimation of this type of model with panel data. Second, it provides an innovative test of adverse selection and confirms that high‐risk individuals are more likely to acquire supplemental add‐on insurance. Third, the estimations yield that in accordance with the theory of moral hazard, we observe a much lower frequency of doctor visits among the self‐employed, and among mothers of small children. Copyright © 2002 John Wiley & Sons, Ltd.