The second aim of the project was to establish the economic determinants of the demand for private health insurance. This has an important equity dimension in its own right, but is also important given the scope for choice of insurance coverage and the need to take this into account when trying to estimate the moral hazard effect. One of the factors explored in this work is the possibility that high anticipated expenditures may encourage people to demand private insurance (adverse selection). These issues will be investigated using micro-econometric models of the demand for insurance, again estimated on ECHP and national survey data. A variety of econometric techniques will be used, including instrumental variables approaches to estimate an adverse selection effect. As in the case of the first objective, the aim is to shed light on cross-country differences as well as country-specific factors.

The third aim of the project was to explore the role of user charges, private insurance and income in influencing health care utilisation in various European countries. The structure of user charges was analysed, especially their relationship with income, as will the effect of user charges on utilisation. The effects of private insurance (moral hazard) and income also was explored, again in a comparative context. The work involved the estimation of micro-econometric models of health care utilisation. Estimations were based on data from the European Community's Household Panel (ECHP) and were complemented by models estimated from richer national surveys. The models estimated employed a variety of econometric techniques, including two-part models, count-data models, latent variable models, sample selection models, and panel data methods.