Moral hazard effects of supplemental private health insurance in Korea

Supplemental private health insurance has gained popularity despite having a mandatory social health insurance program in Korea. Private insurance supplements the social insurance program by covering co pays and services not covered by social insurance. Using longitudinal microdata from the 2008-2014 Korea Health Panel, this study finds evidence of favorable selection into supplemental private insurance. Results show that supplemental private insurance increases outpatient and hospitalization utilization. Private health insurance generates welfare benefits especially among the elderly and low-income individuals, though the coverage rate for these groups is low.