Health Insurance Choice, Moral Hazard and Adverse Selection: A Study of the Chilean Case Using Panel Data

Using panel data from Chile’s National Socio Economic Characterization Survey 1996-2001- 2006, this article examines health insurance choice and its dynamics. The article takes advantage of the panel data to examine the dynamics and determinants of insurance change. Evidence indicates that private insurance is losing customers to the public sector. Two analyses are undertaken in the article using logistic regressions. For each of the three years studied, the paper looks at insurance choice and its determinants. Income seems to be highly important in determining the choice, as well as age, education, gender, geographical location and health shocks. Evidence of moral hazard and adverse selection was found in the longitudinal and cross sectional analysis. The results of this research are aligned with most of the previous investigations done on Chile’s health insurance system and advance previous knowledge on the topic by including the dynamism that panel data permits.