the moral hazards in health insurance (Douglass and Trenam
2006): The first factor, for those who have private health
insurance, the cost of medical care services will be less,
therefore they overutilize health care services accordingly.
On the other hand, non-privately insured individuals will pay
more for the same medical services. Thus, their consumption
of health care will be less than those who are insured. Second factor causing moral hazard is the inequality of information between the patient and the medical service
providers. Medical service providers may order some further
investigations without informing the patient about the benefit
of this action. Physician self-interest in the billing of treatment will take place in such situation. The third cause of
moral hazards is the inequality of information between the
insurance company and the insured. The insurance companies do not know precisely the degree of risk of every
individual. Additionally, the insurance companies may have
more significant information about service providers with
better outcomes in specific diagnosis and treatment, but all
of this information is not shared with the insured for many
reasons (Douglass and Trenam 2006).
3 Literature Review
Ayako and Hitoshi (2013) examined the influence of the
massive expansion of health insurance coverage in Japan on
health and health care utilization, which reached widespread
coverage through universal health insurance for its entire
population in 1961 (Ayako and Hitoshi 2013). There were
three major findings in his research: First, health care utilization increases more than it would be expected from
previous estimates of the elasticities of individual-level
changes in health insurance status. Second, increases in the
supply of health care services tend to be smaller than
increases in the demand for these services. The size of the
supply response differs across different types of services,
while the number of beds increases, effects on the numbers
of medical institutions, physicians and nurses are negligible
or inconclusive. Third, no evidence of reduced mortality
rates is found at least in the short run.
The results suggested two lessons for countries planning a
large expansion in health insurance coverage: first, it
requires financial resources for the surge in health care
expenditures, which is likely to be much larger than predicted from individual-level changes in insurance status;
second, the slow supply-side response may constrain the
ability of the health care system to meet increased demand.
The research recognized the consequences of insurance by
using geographical differences in health insurance coverage
before the full implementation of universal coverage. The
authors have also studied the influence of the significant
increase of private health insurance plans in Japan on health
care utilization and health results. They reported abundant
increases in health care utilization, which were remarkably
higher than what other research determined (Manning et al.
1987; Shigeoka 2014). They do not report that the
enhancement of insurance increases the volume of health
facilities. Furthermore, their evidence showed an increase in
the number of beds as a response to the development of
health insurance coverage, which indicates that there was a
substantial demand for health care services.
A study by Anderson et al. (2012) reported that “reducing
health insurance decreases utilization of emergency care and
inpatient care in the United States. They studied the influence of the difference in coverage using emergency department administrative reports and hospital admission records
from several states in the USA. They have estimated that the
decrease in the insurance coverage rate among emergency
department patients reduced emergency department visits,
and a decrease in the insurance coverage rate among hospital
patients lowered hospital visits. The reduction in hospital
visits was stronger for non-urgent admissions and concentrated among for-profit and not-for-profit hospitals, as
opposed to public hospitals. Their result identified several
uncertainties about the impacts of insurance coverage on
utilization of health care services. First, losing insurance
coverage resulted in a net decrease in emergency department
care. Secondly, losing insurance did increase the proportion
of care that individuals receive at public hospitals”.
Jeon and Kwon (2013) examined the relationship
between private health insurance status and health care utilization in South Korea. After controlling the other independent variables (e.g., gender, age, marital status,
education, public health financing, income, employment,
number of chronic diseases, physical activity, smoking, and
self-rated health), two alternative independent variables of
whether or not enrolled in private health insurance, the
amount of private health insurance purchased is used for
each model. The analysis showed the results of the logistic
regression, which examined the probability of any outpatient
care utilization in one year. Individuals who have private
health insurance were significantly more likely to use outpatient care more than those who did not have it. After
eliminating the selection bias using regression analysis, the
private health insurance purchasers were more likely to use
outpatient care.
The number of private health insurance contracts was also
an essential factor, and the higher the number of private
health insurance contracts that a respondent purchased, the
higher the chances of using any outpatient care. The second
part estimators show the impact of private health insurance
on the quantity and expenditure of health care utilization
among those who used outpatient care at least once. The
results indicated that private health insurance status did not
have a significant impact on the number of outpatient visits.
The Impact of Privatizing Health Insurance …
257
2006): The first factor, for those who have private health
insurance, the cost of medical care services will be less,
therefore they overutilize health care services accordingly.
On the other hand, non-privately insured individuals will pay
more for the same medical services. Thus, their consumption
of health care will be less than those who are insured. Second factor causing moral hazard is the inequality of information between the patient and the medical service
providers. Medical service providers may order some further
investigations without informing the patient about the benefit
of this action. Physician self-interest in the billing of treatment will take place in such situation. The third cause of
moral hazards is the inequality of information between the
insurance company and the insured. The insurance companies do not know precisely the degree of risk of every
individual. Additionally, the insurance companies may have
more significant information about service providers with
better outcomes in specific diagnosis and treatment, but all
of this information is not shared with the insured for many
reasons (Douglass and Trenam 2006).
3 Literature Review
Ayako and Hitoshi (2013) examined the influence of the
massive expansion of health insurance coverage in Japan on
health and health care utilization, which reached widespread
coverage through universal health insurance for its entire
population in 1961 (Ayako and Hitoshi 2013). There were
three major findings in his research: First, health care utilization increases more than it would be expected from
previous estimates of the elasticities of individual-level
changes in health insurance status. Second, increases in the
supply of health care services tend to be smaller than
increases in the demand for these services. The size of the
supply response differs across different types of services,
while the number of beds increases, effects on the numbers
of medical institutions, physicians and nurses are negligible
or inconclusive. Third, no evidence of reduced mortality
rates is found at least in the short run.
The results suggested two lessons for countries planning a
large expansion in health insurance coverage: first, it
requires financial resources for the surge in health care
expenditures, which is likely to be much larger than predicted from individual-level changes in insurance status;
second, the slow supply-side response may constrain the
ability of the health care system to meet increased demand.
The research recognized the consequences of insurance by
using geographical differences in health insurance coverage
before the full implementation of universal coverage. The
authors have also studied the influence of the significant
increase of private health insurance plans in Japan on health
care utilization and health results. They reported abundant
increases in health care utilization, which were remarkably
higher than what other research determined (Manning et al.
1987; Shigeoka 2014). They do not report that the
enhancement of insurance increases the volume of health
facilities. Furthermore, their evidence showed an increase in
the number of beds as a response to the development of
health insurance coverage, which indicates that there was a
substantial demand for health care services.
A study by Anderson et al. (2012) reported that “reducing
health insurance decreases utilization of emergency care and
inpatient care in the United States. They studied the influence of the difference in coverage using emergency department administrative reports and hospital admission records
from several states in the USA. They have estimated that the
decrease in the insurance coverage rate among emergency
department patients reduced emergency department visits,
and a decrease in the insurance coverage rate among hospital
patients lowered hospital visits. The reduction in hospital
visits was stronger for non-urgent admissions and concentrated among for-profit and not-for-profit hospitals, as
opposed to public hospitals. Their result identified several
uncertainties about the impacts of insurance coverage on
utilization of health care services. First, losing insurance
coverage resulted in a net decrease in emergency department
care. Secondly, losing insurance did increase the proportion
of care that individuals receive at public hospitals”.
Jeon and Kwon (2013) examined the relationship
between private health insurance status and health care utilization in South Korea. After controlling the other independent variables (e.g., gender, age, marital status,
education, public health financing, income, employment,
number of chronic diseases, physical activity, smoking, and
self-rated health), two alternative independent variables of
whether or not enrolled in private health insurance, the
amount of private health insurance purchased is used for
each model. The analysis showed the results of the logistic
regression, which examined the probability of any outpatient
care utilization in one year. Individuals who have private
health insurance were significantly more likely to use outpatient care more than those who did not have it. After
eliminating the selection bias using regression analysis, the
private health insurance purchasers were more likely to use
outpatient care.
The number of private health insurance contracts was also
an essential factor, and the higher the number of private
health insurance contracts that a respondent purchased, the
higher the chances of using any outpatient care. The second
part estimators show the impact of private health insurance
on the quantity and expenditure of health care utilization
among those who used outpatient care at least once. The
results indicated that private health insurance status did not
have a significant impact on the number of outpatient visits.
The Impact of Privatizing Health Insurance …
257