Cost sharing and the demand for health services in a regulated market

Abstract

This paper measures consumer responsiveness to cost sharing in healthcare using a regression discontinuity design. I use a novel and detailed claims-level dataset from the Colombian healthcare market, where the government exogenously determines a tier system for coinsurance rates and copays based on the enrollee's monthly income. I find that patients exposed to higher coinsurance rates demand fewer services relative to patients facing lower cost sharing. This reduction holds for both discretionary and preventive services.Lower utilization translates into lower costs, despite evidence that patients facing higher prices do not substitute away from more expensive providers.

A systematic review of strategies used for controlling consumer moral hazard in health systems

“…The results of the study showed that “demand side cost sharing“ or “consumer cost sharing” were the main strategies used for controlling consumer moral hazard as addressed by 56 studies [ 5 , 6 , 9 , 10 , 13 , 15 , 18 – 25 , 30 – 71 ].…”

“…The studies included in this theme investigated consequences such as the utilization of health services, health costs, health related behavior, the choice of insurance plan, and the opinion and acceptance of consumers using quantitative, qualitative, review, and theoretical approaches (model-based), the results of quantitative studies are reported in narrative form as follows: modest to high reduction in health services and medications utilization [ 9 , 20 , 21 , 23 , 33 , 38 , 44 , 45 , 47 , 49 , 51 , 55 , 56 , 64 , 69 , 71 ], reduction in health cost [ 21 , 39 , 41 , 42 , 44 , 53 , 65 , 68 ], low or no significant effect on health services utilization [ 6 , 34 , 35 , 40 , 62 , 63 , 65 ], low or no significant effect on health costs [ 5 ], increasing cost contaminate incentive (CCI) [ 57 ], significant correlation with higher preventive behavior [ 13 , 50 ] modest efficiency gain [ 18 ], increasing medication adherence [ 48 ], increasing demand for low price drug [ 61 ], optimal insurance [ 54 ].…”

“…The reported negative consequences are as follows: Decreasing the utilization of both necessary and unnecessary care [ 44 , 55 , 71 ], substitution effect from cares with cost-sharing to free care or with lower cost sharing [ 18 , 70 ], and vulnerability of low-income groups [ 49 , 60 , 68 ].…”

“…The outcomes analyzed in the included studies are other points of debate in this review. The majority of the outcomes analyzed included demand and utilization of health services [ 5 , 15 , 18 – 24 , 30 , 33 , 37 – 40 , 43 – 45 , 47 – 51 , 55 , 56 , 58 , 60 , 62 – 65 , 68 – 71 , 75 , 84 , 86 ] and health services costs and expenditures, optimality and efficiency of strategies [ 5 , 15 , 30 – 32 , 36 , 37 , 39 , 41 – 44 , 53 , 54 , 57 , 59 , 68 , 70 , 73 – 76 , 83 , 85 , 87 , 94 ]. Limited studies have addressed other important aspects such as access to low-income people [ 49 , 60 , 68 ], reduction in the consumption of both essential (such as preventive and diagnostic services) and non-essential services [ 24 , 44 , 58 ], and people’s attitudes and acceptance [ 25 , 34 , 52 , 67 ].…”

Understanding patient and physician responses to various cost-sharing programs for prescription drugs in South Korea: A multilevel analysis

“…Economic theory suggests that cost sharing would reduce patients' demand for health services by increasing prices paid by patients at the time of health services utilization ( 7 , 8 ). The true effects of cost sharing on demand for various health services, however, vary within health insurance systems ( 9 , 10 ). For instance, cost-sharing tactics for prescription drugs might not be generalizable to effective cost sharing for doctors' outpatient or inpatient services.…”