This study examined the effect of private health insurance (PHI) on health care utilization in South Korea using a nationally representative sample of 9512 adults participating in Korea Health Panel Survey (KHPS). We compared the health care utilization and subsequent expenditure according to whether or not and how many PHIs are purchased, controlling for the endogeneity of insurance purchase by propensity score matching method and Heckman-type treatment effect model. The results of this study show that the probability of any health care utilization, both outpatient care and inpatient care, is higher for the people who have PHI. For those who utilize health care, PHI has a positive impact on outpatient expenditure, but not on the number of outpatient visits. The effect of PHI on the number of inpatient days and expenditure is not statistically significant among the users of inpatient care. These results imply a need for policy options to mitigate the moral hazard effect of PHI in the outpatient care sector.
Keywords: Health care utilization; Moral hazard; Private health insurance; South Korea; Universal health care system.
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