Moral hazard and the demand for health services: a matching estimator approach.

We estimate the impact of extra health insurance coverage beyond a National Health System on the demand for several health services. Traditionally, the literature has tried to deal with the endogeneity of the private (extra) insurance decision by finding instrumental variables. Since a priori instrumental variables are hard to find we take a different approach. We focus on the most common health insurance plan in Portugal, ADSE, which is given to all civil servants and their dependents. We argue that this insurance is exogenous, i.e., not correlated with the beneficiaries' health status. This identifying assumption allows us to estimate the impact of having ADSE coverage on the demand for three different health services using a matching estimator technique. The health services used are number of visits, number of blood and urine tests, and the probability of visiting a dentist. Results show large positive effects of ADSE coverage for number of visits and tests among the young (18-30 years old) but only the latter is statistically significantly different from zero. The effects represent 21.8% and 30% of the average number of visits and tests for the young. On the contrary, we find no evidence of moral hazard on the probability of visiting a dentist.

Substance abuse treatment, what do we know? An economist's perspective.

The literature on treating substance abuse has dealt basically with four important questions: (a) Is treatment effective? (b) Are all programs equally effective? (c) Why do programs differ in their effectiveness? (d) Which treatments are more cost-effective? This paper reviews the substance abuse treatment literature around these four questions and discusses methodological issues that hinder the interpretation and generalization of results to date. The answer to the first question is a sounding "yes," treatment is effective but not all programs are equally effective. Researchers have moved beyond the "black box" literature that concentrated on patient and program characteristics as explanations for differences in effectiveness and search for the "active" ingredients of treatment. These include, for example, the treatment philosophy of the program's director and staff attitudes towards patients. Cost-effectiveness studies are less common, and their conclusions are mixed. In general, it is probably safe to say that for the majority of patients, outpatient or shorter programs are more cost-effective.