Complementary insurance and free-choice modality expenditure in Chile's public insurer Fonasa: Moral hazard or selection bias?

Authors

Matías Goyenechea, Alberto Aylwin

Published in

Medwave. Volume 26. Issue 9. Pages e3242. Oct 20, 2026. Epub Oct 20, 2026.

Abstract

The Isapre system crisis, enrollee migration to the public insurer, and the expansion of complementary insurance have reshaped spending incentives in Fonasa's free-choice modality. Whether the higher spending of insured beneficiaries reflects moral hazard or selection bias is unclear.
To estimate, from the public payer's perspective, the additional free-choice-modality spending attributable to holding complementary insurance, and to decompose it into selection bias and moral hazard, between 2022 and 2025.
Analytical observational study on individual-level administrative microdata (January 2022 to May 2025). Insurance was identified through its effective use. A counterfactual was built using nearest-neighbour (k = 1, without replacement) on observable covariates, and the classification error was corrected with a non-linear household-size decay model. The outcome was the percentage difference in FAM free-choice-modality spending per beneficiary, in inflation-indexed units.
The crude per-capita spending gap was 57.6% higher among the insured; it fell to 44.2% after matching and converged to an average treatment effect on the treated of 30.2% (95% CI: 28.2 to 32.2%) after correcting the classification error, with annual estimates ranging from 28.8% to 31.3%.
The higher spending associated with complementary insurance reflects both risk selection and moral hazard; at least 13 percentage points are attributable to differences in the composition of the population purchasing complementary insurance. Complementary insurance is associated with an increase of approximately 30% in spending under the Free Choice Modality, after controlling for observable and classification biases.

PMID:
42900648
Bibliographic data and abstract were imported from PubMed on 21 Oct 2026.

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