Association for Public Policy Analysis & Management

The effect of health insurance on medical utilization plays a prominent role in the unsustainable growth in medical spending. However, the effect of insurance on risky health behaviors (ex ante moral hazard) is rarely discussed, let alone disentangled from the price effect of insurance (ex post moral hazard). A major obstacle to observing ex ante moral hazard is that current health behaviors, such as smoking, often take several years to result in health consequences; future, not current, insurance status covers and theoretically should affect most current health behaviors. 

This paper develops a theoretical model of how insurance affects risky sex and the resulting health consequences as well as empirically tests the resulting hypotheses. There are two advantages of focusing on risky sex, defined here as sex without a condom. First, many of the health consequences of risky sex – such as unplanned pregnancy or contraction of a sexually transmitted infection – occur quickly and should be affected by current insurance status. Second, two recent policies in the Patient Protection and Affordable Care Act (ACA) allow me to isolate some of the behavior effect from the overall effect of insurance. The adult dependent coverage mandate of 2010 causes an exogenous shock to the extensive margin of how many people are insured. The zero cost-sharing for prescription contraception mandate of 2012 changes the intensive margin of health insurance in terms of the degree each person is insured; this policy should largely affect the outcomes examined here through changes in risky behavior. 

I use state-year level data and a dose-response difference-in-differences approach to determine the effect of each policy on a number of outcomes related to risky sex, such as condom sales, sexually transmitted disease, and fertility. The treatment for each policy in my analysis is the percent of each state that is potentially exposed; uninsured young adults are exposed to the dependent coverage mandate, and people with insurance are affected by the requirement that insurance cover contraception with zero cost-sharing. 

The hypothesized effects of zero cost-sharing for contraceptives are clear-cut: lowering the cost of contraceptives decreases the cost of having sex without a condom and leads to substitution away from condoms. This, in turn, increases STDs and decreases fertility. The predictions of the overall effect of health insurance are mostly ambiguous. There is strong empirical evidence of ex ante moral hazard in risky sex in the form of increased STDs, and this result is obscured in the overall effect of health insurance. 

This study makes two main economic contributions. First, it presents a novel model of the effect of insurance on risky sex and considers the two main consequences of unprotected sex, STDs and pregnancy. Second, it provides evidence of ex ante moral hazard. Additionally, the outcomes examined here and the ACA itself are of great public and policy interest.