Volume 7, Number 2 (Spring) 1972
Joseph, Hyman. 1972. "Hospital Insurance and Moral Hazard." Journal of Human Resources 7(2):152-161.
Cross-section data are used to determine the effect of third-party payments on the length of stay in a hospital for 22 separate illnesses or conditions, thereby providing a test of the effect of third-party payments on resource allocation to hospitals. Also, estimates are made of price elasticities of demand for the separate illnesses or conditions. This study, by discovering patterns of behavior among medical categories that have been obscured in aggregate demand studies, has important implications regarding the existence and extent of "moral hazard," the effectiveness of coinsurance, and the effect of extended-care facilities on resource allocation.
The author is Assistant Professor of Economics, The University of Iowa. The author is indebted to M. F. Bognanno for his comments and suggestions. J.R. Jeffers, R. J. Ruffin, and C. D. Siebert provided advice on the economic aspects of this paper, while Dr. B. M. Merkel of Des Moines provided advice on the medical aspects.
© 2003 by the Board of Regents of the University of Wisconsin System
US ISSN 0022-166X