Supplemental Health Insurance and Healthcare ConsumptionA Dynamic Approach to Moral Hazard

We analyze the existence and persistence of moral hazard over time to test the assumption of pent-up demand. We consider the effects of supplemental health insurance provided by a private insurer when added to compulsory public insurance that is already supplemented by private insurance. Using original panel data from a French mutuelle, we study the influence of insurance on all of the dimensions of healthcare expenditures: (1) the probability of using health care, (2) the number of uses conditional on use, and (3) the per unit cost of care. To conduct this study, we control, to the extent possible, for endogeneity because of adverse selection using the characteristics of our panel data. Our study allows us to confirm a positive and significant effect of the extra complementary health insurance on healthcare consumption, primarily in terms of the probability of using care. More interestingly, our results show that these effects are principally transitory mainly for the probability of using dental care and optical care and depend on income. Finally, we show that individuals did not postpone health care before enrollment. Copyright (c) 2015 John Wiley & Sons, Ltd.