Author Description

In this study, we report that unobserved common factors are powerful explanation of the decision to have private health insurance and the use of medical care by elderly Medicare recipients. This indicates that unobserved factors leading some individuals to have private health insurance coverage to fill in the gaps in Medicare also cause these individuals to seek more medical care than other Medicare enrollees. Simultaneity is also significant between the decisions to have private health insurance in addition to Medicare coverage and to visit a doctor, but not between the decisions to have private health insurance and the number of doctor visits nor the use of hospital care.