Ex-post moral hazard in the health insurance market: empirical evidence from German data

In this paper, I analyze whether premium refunds can reduce ex-post moral hazard behavior in the health insurance market. I do so by estimating the effect of these refunds on different measures of medical demand. I use panel data from German sickness funds that cover the years 2006–2010 and I estimate effects for the year 2010. Applying regression adjusted matching, I find that choosing a tariff that contains a premium refund is associated with a significant reduction in the probability of visiting a general practitioner. Furthermore, the probability of visiting a doctor due to a trivial ailment such as a common cold is reduced. Effects are mainly driven by younger (and, therefore, healthier) individuals, and they are stronger for men than for women. Medical expenditures for doctor visits are also reduced. I conclude that there is evidence that premium refunds are associated with a reduction in ex-post moral hazard. Robustness checks support these findings. Yet, using observable characteristics for matching and regression, it is never possible to completely eliminate a potentially remaining selection bias and results may not be interpreted in a causal manner.