The effects of patient cost-sharing on health expenditure and health among older people: Heterogeneity across income groups

Abstract

Despite rapidly rising health expenditure associated with population aging, empirical evidence on the effects of cost-sharing on older people is still limited. This study estimated the effects of cost-sharing on the utilization of healthcare and health among older people, the most intensive users of healthcare. We employed a regression discontinuity design by exploiting a drastic reduction in the coinsurance rate from 30 to 10% at age 70 in Japan. We used large administrative claims data as well as income information at the individual level provided by a municipality. Using the claims data with 1,420,252 person-month observations for health expenditure, we found that reduced cost-sharing modestly increased outpatient expenditure, with an implied price elasticity of – 0.07. When examining the effects of reduced cost-sharing by income, we found that the price elasticities for outpatient expenditure were almost zero, – 0.08, and – 0.11 for lower-, middle-, and higher-income individuals, respectively, suggesting that lower-income individuals do not have more elastic demand for outpatient care compared with other income groups. Using large-scale mail survey data with 3404 observations for self-reported health, we found that the cost-sharing reduction significantly improved self-reported health only among lower-income individuals, but drawing clear conclusions about health outcomes is difficult because of a lack of strong graphical evidence to support health improvement. Our results suggest that varying cost-sharing by income for older people (i.e., smaller cost-sharing for lower-income individuals and larger cost-sharing for higher-income individuals) may reduce health expenditure without compromising health.

Effect of no cost sharing for paediatric care on healthcare usage by household income levels: regression discontinuity design

“…This implies that affordability might play a limited role in patients’ decisions to use healthcare in settings like Japan, where the universal health insurance system allows everyone access to healthcare with relatively low cost sharing (the pricing for individual healthcare services in Japan is set low by government, making the out-of-pocket spending to be modest even with 30% co-insurance rate). Consistent with the discussion above, one study focusing on older people in Japan found that the effects of reducing the cost sharing on healthcare usage were larger among higher-income people than lower-income ones 20. Our findings indicate that high-income households benefit more from no cost sharing, suggesting that zero cost sharing policies for paediatric care may be aggravating income disparities in healthcare access and usage.…”

“…Consistent with the discussion above, one study focusing on older people in Japan found that the effects of reducing the cost sharing on healthcare usage were larger among higher-income people than lower-income ones. 20 Our findings indicate that high-income households benefit more from no cost sharing, suggesting that zero cost sharing policies for paediatric care may be aggravating income disparities in healthcare access and usage.…”

Multimorbidity patterns in the working age population with the top 10% medical cost from exhaustive insurance claims data of Japan Health Insurance Association

“…In addition, the co-payment amount is 30% of the total medical cost for those younger than 70 years of age, whereas that is 20% for those older than 70 years of age if their income is not the same as that of the working age population. Kato et al [ 48 ] examined the effects of different co-payments on the utilization of health care by a regression discontinuity design and demonstrated that a lower co-payment increased outpatient expenditure. Because of this, an increase in healthcare service utilization might be induced by not only multimorbidity but also the co-payment model in adults older than 70 years of age in the present database.…”

The Reality of Cost Sharing in Japan

“…It was assessed only in terms of estimated change in the length of stay and per diem healthcare cost. 2 Likewise, cost sharing among the elderly has also been examined mainly in terms of changes brought in healthcare utilization, [3][4][5][6][7][8] without incorporating ASCS in context. One recent study by Nishi et al however, reflected on ASCS of those who turned 70 after the revision (thus with 20% co-insurance rate).…”