IDEAS home Printed from https://ideas.repec.org/a/bla/annpce/v80y2009i4p499-519.html
   My bibliography  Save this article

Risk Attitudes And The Demand For Private Health Insurance: The Importance Of ‘Captive Preferences’

Author

Listed:
  • Joan Costa‐Font
  • Jaume García‐Villar

Abstract

ABSTRACT**: Captivity to a mainstream public insurer, is hypothesized to constrain the choice of purchasing private health insurance, by influencing risk attitudes. Namely, risk averse individuals are more likely to stay captive to the National Health System (NHS). To empirically test this hypothesis we use a small scale database from Catalonia to explore the determinants of private health insurance (PHI) purchase under different forms of captivity along with a measure of risk attitudes. Our results confirm that the captivity corrections are significant and can potentially bias the estimates of the demand for PHI. Risk aversion increases the probability of an individual being captive to the NHS. The latter suggests a potential behavioural (or cultural) mechanism to isolate the influence of risk attitudes on the demand for PHI in publicly financed health systems.

Suggested Citation

  • Joan Costa‐Font & Jaume García‐Villar, 2009. "Risk Attitudes And The Demand For Private Health Insurance: The Importance Of ‘Captive Preferences’," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 80(4), pages 499-519, December.
    • Handle: RePEc:bla:annpce:v:80:y:2009:i:4:p:499-519
    DOI: 10.1111/j.1467-8292.2009.00396.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-8292.2009.00396.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-8292.2009.00396.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Hugh Gravelle & Peter C. Smith & Ana Xavier, "undated". "Waiting Times and Waiting Lists: A Model of the Market for Elective Surgery," Discussion Papers 00/27, Department of Economics, University of York.
    2. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492, National Bureau of Economic Research, Inc.
    3. Propper, Carol, 1993. "Constrained choice sets in the U.K. demand for private medical insurance," Journal of Public Economics, Elsevier, vol. 51(3), pages 287-307, July.
    4. Ireland, Norman J., 1990. "The mix of social and private provision of goods and services," Journal of Public Economics, Elsevier, vol. 43(2), pages 201-219, November.
    5. Iversen, Tor, 1997. "The effect of a private sector on the waiting time in a national health service," Journal of Health Economics, Elsevier, vol. 16(4), pages 381-396, August.
    6. Van de Ven, Wynand P. M. M. & Van Praag, Bernard M. S., 1981. "The demand for deductibles in private health insurance : A probit model with sample selection," Journal of Econometrics, Elsevier, vol. 17(2), pages 229-252, November.
    7. Diego R. Palenzuela., "undated". "Provision of private health insurance under public insurance captivity," Working Papers 97-17, FEDEA.
    8. David M. Cutler & Jonathan Gruber, 1995. "Does Public Insurance Crowd Out Private Insurance?," NBER Working Papers 5082, National Bureau of Economic Research, Inc.
    9. Li, L. X. & Benton, W. C., 1996. "Performance measurement criteria in health care organizations: Review and future research directions," European Journal of Operational Research, Elsevier, vol. 93(3), pages 449-468, September.
    10. Kenkel, Donald S, 1991. "Health Behavior, Health Knowledge, and Schooling," Journal of Political Economy, University of Chicago Press, vol. 99(2), pages 287-305, April.
    11. Joan Costa & Jaume Garcia, 2003. "Demand for private health insurance: how important is the quality gap?," Health Economics, John Wiley & Sons, Ltd., vol. 12(7), pages 587-599, July.
    12. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-844, September.
    13. Nelson, Forrest & Olson, Lawrence, 1978. "Specification and Estimation of a Simultaneous-Equation Model with Limited Dependent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(3), pages 695-709, October.
    14. Manning, Willard G. & Marquis, M. Susan, 1996. "Health insurance: The tradeoff between risk pooling and moral hazard," Journal of Health Economics, Elsevier, vol. 15(5), pages 609-639, October.
    15. Besley, Timothy & Hall, John & Preston, Ian, 1999. "The demand for private health insurance: do waiting lists matter?," Journal of Public Economics, Elsevier, vol. 72(2), pages 155-181, May.
    16. Martin, Stephen & Smith, Peter C., 1999. "Rationing by waiting lists: an empirical investigation," Journal of Public Economics, Elsevier, vol. 71(1), pages 141-164, January.
    17. Bridget G. Hiedemann & Jutta M. Joesch, 2002. "The demand for nonrelative child care among families with infants and toddlers: A double-hurdle approach," Journal of Population Economics, Springer;European Society for Population Economics, vol. 15(3), pages 495-526.
    18. John Hall & Ian Preston, 1998. "Public and private choice in UK health insurance," IFS Working Papers W98/19, Institute for Fiscal Studies.
    19. Besley, Timothy & Hall, John & Preston, Ian, 1998. "Private and public health insurance in the UK," European Economic Review, Elsevier, vol. 42(3-5), pages 491-497, May.
    20. Besley, Timothy & Coate, Stephen, 1991. "Public Provision of Private Goods and the Redistribution of Income," American Economic Review, American Economic Association, vol. 81(4), pages 979-984, September.
    21. Nyman, John A., 1999. "The value of health insurance: the access motive," Journal of Health Economics, Elsevier, vol. 18(2), pages 141-152, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bonsang, Eric & Costa-Font, Joan, 2022. "Buying control? ‘Locus of control’ and the uptake of supplementary health insurance," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 476-489.
    2. Kiil, Astrid, 2012. "What characterises the privately insured in universal health care systems? A review of the empirical evidence," Health Policy, Elsevier, vol. 106(1), pages 60-75.
    3. Joan COSTA‐FONT & Christophe Courbage & Katherine Swartz, 2015. "Financing Long‐Term Care: Ex Ante, Ex Post or Both?," Health Economics, John Wiley & Sons, Ltd., vol. 24(S1), pages 45-57, March.
    4. Vo, Thang T. & Van, Pham Hoang, 2019. "Can health insurance reduce household vulnerability? Evidence from Viet Nam," World Development, Elsevier, vol. 124(C), pages 1-1.
    5. Kiil, Astrid, 2012. "Private health insurance and the use of health care services - a review of the theoretical literature with application to voluntary private health insurance in universal health care systems," DaCHE discussion papers 2012:1, University of Southern Denmark, Dache - Danish Centre for Health Economics.
    6. Shiqi Guan & Menglin Zhao & Feng Han & Zeng Tang, 2024. "The Impact of Herders’ Risk Attitudes on Livestock Insurance: Evidence from the Pastoral Areas of Tibetan Plateau," Agriculture, MDPI, vol. 14(7), pages 1-18, June.
    7. Xiaoxiao Li & Wen Mao & Peter A. Zaleski & Catherine Kenny, 2023. "The Ends Against the Middle: The Case of Municipal Golf," Public Finance Review, , vol. 51(3), pages 339-367, May.
    8. Kettlewell, Nathan, 2020. "Subjective Expectations for Health Service Use and Consequences for Health Insurance Behavior," IZA Discussion Papers 13445, Institute of Labor Economics (IZA).
    9. Alaitz Artabe & Waleska Sigüenza, 2019. "The effects of the economic recession on spending on private health insurance in Spain," International Journal of Health Economics and Management, Springer, vol. 19(2), pages 155-191, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Joan Costa & Jaume Garcia, 2001. "Demand for private health insurance: Is there a quality gap?," Working Papers, Research Center on Health and Economics 531, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Joan Costa & Jaume Garcia, 2003. "Demand for private health insurance: how important is the quality gap?," Health Economics, John Wiley & Sons, Ltd., vol. 12(7), pages 587-599, July.
    3. Sergi Jimenez & Natalia Jorgensen & José María Labeaga, 2008. "Immigration and the Demand for Health in Spain," Working Papers 2008-38, FEDEA.
    4. Joan Costa-i-Font & Ada Ferrer-i-Carbonell, 2017. "Can Regional Decentralisation Shift Health Care Preferences?," CESifo Working Paper Series 6779, CESifo.
    5. Simona GRASSI, 2006. "On the characteristics of a mixed system of provision of a private good. An application to health care," Departmental Working Papers 2006-14, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    6. Parry, Ian W.H., 2001. "On the Efficiency of Public and Private Health Care Systems: An Application to Alternative Health Policies in the United Kingdom," Discussion Papers 10822, Resources for the Future.
    7. Costa-Font, Joan & Ferrer-i-Carbonell, Ada, 2022. "Does devolution influence the choice and quality of public (vs private) health care?," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 632-653.
    8. López Nicolás, Ángel & Vera-Hernández, Marcos, 2008. "Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model," Journal of Health Economics, Elsevier, vol. 27(5), pages 1285-1298, September.
    9. Marisol Rodríguez & Alexandrina Stoyanova, 2008. "Changes in the demand for private medical insurance following a shift in tax incentives," Health Economics, John Wiley & Sons, Ltd., vol. 17(2), pages 185-202, February.
    10. Joan Costa-Font & Ada Ferrer-i-Carbonell, 2019. "Regional Decentralisation and the Demand for Public Health Care," Studies on the Spanish Economy eee2019-41, FEDEA.
    11. Ángel López-Nicolás & Marcos Vera-Hernández, 2002. "Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model for outpatient and inpatient episodes," Economics Working Papers 632, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2004.
    12. Finn, Claire & Harmon, Colm, 2006. "A dynamic model of demand for private health insurance in Ireland," Papers HRBWP17, Economic and Social Research Institute (ESRI).
    13. Haizhen Mou, 2012. "The political economy of public health expenditure and wait times in a public‐private mixed health care system," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(4), pages 1640-1666, November.
    14. Marisol Rodríguez & Alexandrina Stoyanova, 2006. "Changes in the demand for private medical insurance following a shift in tax incentives," Working Papers CREAP2006-12, Xarxa de Referència en Economia Aplicada (XREAP), revised Dec 2006.
    15. repec:ucn:wpaper:10197/1109 is not listed on IDEAS
    16. Cormac O'Dea & Ian Preston, 2012. "The distributional impact of public spending in the UK," IFS Working Papers W12/06, Institute for Fiscal Studies.
    17. Raymond Y.T. Yeung & Gabriel M. Leung & Sarah M. McGhee & Janice M. Johnston, 2004. "Waiting time and doctor shopping in a mixed medical economy," Health Economics, John Wiley & Sons, Ltd., vol. 13(11), pages 1137-1144, November.
    18. Rinaldo Brau & M. Lippi Bruni & Am Pinna, 2004. "Public vs private demand for covering long term care expenditures," Working Paper CRENoS 200408, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    19. Pau Olivella & Marcos Vera-Hernandez, 2006. "Testing for adverse selection into private medical insurance," IFS Working Papers W06/02, Institute for Fiscal Studies.
    20. Fossen, Frank M. & König, Johannes, 2015. "Public health insurance and entry into self-employment," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112934, Verein für Socialpolitik / German Economic Association.
    21. Panos Pashardes & Nicoletta Pashourtidou, 2011. "Consumer welfare from publicly supplemented private goods: age and income effects on demand for health care," Empirical Economics, Springer, vol. 41(3), pages 865-885, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:annpce:v:80:y:2009:i:4:p:499-519. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1370-4788 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.