Consumption of medical services and the regulatory framework in the Brazilian market for health insurance

Abstract

This article aims to investigate whether the 9.656/1998 Act, which established the new regulatory framework for the private health insurance market, has affected the behavior of people insured with private health plans in Brazil. More specifically, we investigate whether there is evidence of increased consumption of medical services, which could arise as a reflection of moral hazard. In fact, the new law introduced minimal coverage to insured patients, which could lead them to overconsumption of medical services. The literature on this subject shows considerable evidence of a solid connection between moral hazard and consumption of medical services in the presence of health insurance. We assume that this law constitutes an exogenous event and, through a differences-in-differences estimator, aim at evaluating whether private health insured individuals have exhibited changes in their behavior on medical services consumption. We use data from PNAD for 1998 and 2003, which contain a Health Supplement. Two main results emerge: on one hand, there is evidence that the insured consume more health goods than the uninsured in the Brazilian market for health insurance, in accordance with the literature; on the other hand, the new law had no impact on the consumption of medical services.