Discussion Paper No.1305
Abstract :
We use two national individual-level claim data sets to examine the strategic behaviors
of beneficial patients of the medical assistance system and medical suppliers by
investigating the existence of an ex-post moral hazard and physician agency problem in
the medical assistance system in Japan. Since social assistance benefits including
medical assistance benefits are not randomly assigned but are determined via means
testing by the local government, we apply the bias-corrected matching estimator to
adjust for the sample selection bias. There are three major findings. First, we find that
access regulations for beneficiaries control the ex-post moral hazard for the first-month
visit, but have no effect on visits in subsequent months. Second, we find that medical
suppliers provide beneficiaries with unnecessary treatments. Third, medical suppliers
respond to fee reductions and provide patients with unnecessary treatments in the long
term. The results suggest that scrupulous system design that considers incentives for
patients and medical suppliers is needed to improve the efficiency of health care
systems.
Keywords :Ex-post moral hazard, Physician agency, Medical Assistance system, Sample
selection bias, Bias-corrected matching estimator, Japan
JEL Classification Number: C21, I13, I18, I38