(M)oral Hazard?

Would you go to the dentist more often if it were free? Observational data is here used to analyze the impact of full-coverage insurance on dental care utilization using di¤erent identi…cation strategies. The challenge of assessing the bite of moral hazard without an experimental study design is to separate it from adverse selection, as agents act on private and generally unobservable information. By utilizing a quasi-experimental feature of the insurance scheme the moral hazard e¤ect is identi…ed on observables, and by having access to an instrument the e¤ect is identi…ed with IV. Moral hazard is assessed using both di¤erence-in-di¤erences and cross-sectional estimations. Keywords: Asymmetric information, Moral Hazard, Health Insurance, Porpensity Score Matching, IV. JEL codes: D82, G22, I11. This paper has bene…ted from comments by Magnus Johannesson, Michael Lechner, Douglas Lundin, Mark Pauly, Alexander Spearmann, and seminar participants at Stockholm School of Economics, Stockholm University, Uppsala University, 2nd Conference on Evaluation Research in Mannheim 2004, 26th Nordic Health Economics Study Group Meeting, and EEA congress 2006. Per Johansson, Je¤rey Smith and Niklas Zethraeus have made suggestions on the estimations. I am grateful to the National Dental Service in Värmland, Sweden, especially to Jörgen Paulander, for providing data and odontological expertise, and to Ann-Britt Emilsson for generously answering questions on registration practices. All remaining cavities in the analysis are mine. Financial support from Finanspolitiska Forskningsinstitutet is gratefully acknowledged. Centre for Health Economics, Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden, e-mail: [email protected]