Empirical studies have found it difficult to separately identify adverse selection from moral hazard since the individual effects tend to affect observable behavior in the same way. Using the state level dependent coverage mandates that were passed before the Affordable Care Act's dependent coverage mandate took effect, I am able to control for selection into insurance and more credibly identify moral hazard. More specifically, I use the variation in eligibility criteria and the timing of implementations of the mandates across states over time in order to discern among the individual effects of hidden information. Data from the Behavioral Risk Factor Surveillance System allows me to consider the potential role of moral hazard in health insurance markets and more generally allows me to consider the effects of dependent health insurance on health outcomes for young adults.
Willardsen presented on his upcoming article with the same title. The abstract from this paper is as follows:
Understanding the relative significance of adverse selection and moral hazard is important in determining effective policy for insurance markets. Separate identification of these two effects, empirically, is difficult. To overcome this limitation, this paper uses experimental methods to examine how adverse selection and moral hazard separately affect agent performance in a real-effort task. In particular, we explore how agent behavior (effort in the task) changes across a baseline with no insurance option, a treatment where individuals can choose to purchase insurance, and a third treatment where individuals must purchase insurance. We find that our platform can be helpful in studying issues that may arise in different insurance settings (e.g., workers compensation insurance or unemployment insurance).