This paper investigates moral hazard problems. By using the matching estimator technique to estimate the effect of health care insurance on the demand for health care treatment, we find that the new health care policy enacted in 2005 is more likely to generate the effect of moral hazard on outpatient visits at state health care providers, but not on inpatient visits. In other words, we find strong evidence for the existence of moral hazard effect on outpatient visits at the state hospital system. Therefore, it is too risk bearing to manage health insurance funds at local or state levels if there are no appropriate policies to share the risk and prevent an overconsumption scenario beca...
