Asymmetric information in medical health insurance
Student name: Ms Varsha Gupta
Guide: Dr Kavita Sardana
Year of completion: 2014
Host Organisation: TERI University
Abstract: This paper aims to study the asymmetric information in the health insurance industry from
the demand side and check whether there is presence of asymmetric information in health
insurance in India. An inter-dependent model of health insurance demand and health care
demand is used to check for informational asymmetries using cross-section data for India.
Econometric modelling involves an application of count data while controlling for
endogenity of insurance choice. Health Status is an important determinant of health care
demand rather than health insurance demand, while income plays a role in health insurance
determination. Evidence of moral hazard has been found in health insurance markets of other
countries, this is the first study testing for the same in India. In the demand for health care we
see more visits to the doctor on account of being insured; indicating presence of moral
hazard. The social loss of moral hazard is not entirely negative though, it prevents negative
externalities and prevents poor decision making on account of individuals.
