The Effect of Moral Hazards in the Health Insurance Industry in Iran in 2008-2010

Health insurance is one of the most important financial resources for covering the growing costs of health care. Asymmetric information in the insurance market means that the insurer has less information about the health status of the insured person than the insured person him/herself and this leads to waste of treatment resources due to moral hazards. The aim of this study was to determine the effect of moral hazards in the health insurance industry.
This study was a cross-sectional descriptive-analytic research. The study population was all households residing in Iran. For data collection, the questionnaire of urban and rural households Income and Expenditure Survey of Iran Statistics Center was used. For identification and estimation of utility function parameters , the generalized method of moments (GMM) and instrumental variables model were used. GAUSS and E-views software were used for data analysis.
According to the results, there were moral hazards in the basic health insurance organizations (medical service insurance organization and Social Security organization) and the complementary insurance. In addition, during these three years, individuals covered by the medical service insurance, with an average elasticity of -2.78, had the lowest moral hazards and those covered by the complementary insurance, with an average elasticity of -3.86, had the highest moral hazards.
Insurance policy makers should control consumer's moral hazards.