Empirical Studies of Emergency Response Services (9-1-1) and an Examination of Moral Hazard in Health Insurance




Thomas, David Chandler

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The United States officially launched a universal emergency number (9-1-1) beginning in the early 1970s, followed by each state, county, or police department adding various technical capabilities after they became available. Improvements included capturing the caller’s phone number and address, automating the dispatching of emergency services personnel and providing support for wireless phones. The benefits of these services have been assumed for decades with only anecdotal data making the case. The first chapter of this paper estimates the impact of rapid reporting and response times on the lethality rate of aggravated assaults (homicides) in an effort to provide empirical support for the supposition. In other words, the availability of the 9-1-1 service, rapid response times of emergency medical technicians (EMTs), and improvements in trauma centers, should have resulted in higher survival rates of aggravated assault victims. The study concludes that much of the decline in homicide rates over the past few decades is the result of improvements in emergency services. The second chapter considers the effect of basic 9-1-1 emergency services on the reporting of crime. With the introduction of basic 9-1-1 services in the 1970s, the effort required to report a crime decreased. The lower cost of reporting had a positive impact on the number of crimes being reported for crimes that carried a direct financial cost on the victim. In addition, the reduction in cost encouraged witnesses to make the reporting call. This chapter estimates the impact of basic 9-1-1 on the various categories of property and violent crime and considers both positive and negative incentives affecting the reporting of crimes by citizens. The final chapter examines the role of moral hazard and subsidy effects in the U.S. thirdparty health insurance system. Having third-party payers (insurance companies) be responsible for reimbursing insurable events and routine care while both the insurance premiums and medical payments are largely subsidized by employers and government, makes isolating moral hazard effects from subsidy effects very challenging. The two classes of economic effects present in different ways: The subsidy of a product or service tends to result in higher levels of consumption of that product or service, while moral hazard effects are changes in behavior resulting from insurance against risk. The combination of subsidized health insurance premiums and subsidized routine care results in a bizarre combination of over-consumption and risky behavior often miscategorized by economists. This chapter seeks to clarify the various ways in which subsidy and moral hazard effects alter the behavior of consumers, physicians, employers, and insurance companies in the complex third-party payer system.



Emergency services, Homicide, Moral hazard, September 11 Terrorist Attacks, 2001, Trauma center, Crime rate