(The) effect of private health insurance and self-selection bias

Abstract

As interest in health increases, private health insurance subscriptions are increasing. Many studies have been conducted to control the endogenous problem of private health insurance and usage of medical service. The change in medical expenditure after having private health insurance was analyzed using an instrumental variable. This study used panel data from 2011 to 2018 of the Korea Health Panel Survey and performed regression analysis using an instrumental variable called the number of families to control endogeneity. First, subscription of additional private health insurance increases the changes in medical expenditure. In addition, for specific type and form of insurance, the subscription of cancer and mixed private health insurance increases the change in medical expenditure. Finally, changes in medical expenditure due to private health insurance of patients with mild chronic diseases such as diabetes and hyperlipidemia appeared differently. The results of this study can find practical implications for the insurance company to develop insurance products.