The first chapter uses the propensity score matching method to measure the average impact of insurance on health service utilization in terms of office-based physician visits, total number of reported visits to hospital outpatient departments, and emergency room visits. Four matching algorithms are employed to match propensity scores. The results show that insurance significantly increases office-based physician visits, and its impacts on reported visits to hospital outpatient departments and emergency room visits are positive, but not significant. This implies that physician offices will receive a substantial increase in demand if universal insurance is imposed. Government will need to allocate more resources to physician offices relative to outpatient or emergency room services in the case of universal insurance in order to accommodate the increased demand.

The second chapter studies the sensitivity of propensity score matching methods to different estimation methods. Traditionally, parametric models, such as logit and probit, are used to estimate propensity score. Current technology allows us to use computationally intensive methods, either semiparametric or nonparametric, to estimate it. We use the Monte Carlo experimental method to investigate the sensitivity of the treatment effect to different propensity score estimation models under the unconfoundedness assumption. The results show that the average treatment effect on the treated (ATT) estimates are insensitive to the estimation methods when index function for treatment is linear, but logit and probit model do better jobs when the index function is nonlinear.

The third chapter proposes a Cross-Sectionally Varying (CVC) Coefficient method to approximate individual treatment effects with nonexperimental data, the distribution of treatment effects, the average treatment effect on the treated and the average treatment effect. The CVC method reparameterizes the outcome of no treatment and the treatment effect in terms of observable variables, and uses these observables together with a Bayesian estimator of their coefficients to approximate individual treatment effects. Monte Carlo simulations demonstrate the efficacy and applicability of the proposed estimator. This method is applied to two datasets: data from the U.S. Job Training Partnership ACT (JTPA) program and a dataset that contains firms’ seasoned equity offerings and operating performances.