The response to dynamic incentives in insurance contracts with a deductible: Evidence from a differences-in-regression-discontinuities design
Klein,Tobias Salm,Martin Upadhyay,Suraj
Klein,Tobias
Salm,Martin
Upadhyay,Suraj
Abstract
We develop a new approach to quantify how patients respond to dynamic incentives in health insurance contracts with a deductible. Our approach exploits two sources of variation in a differences-in-regression-discontinuities design: deductible contracts reset at the beginning of the year, and cost-sharing limits change over the years. Using rich claims-level data from a large Dutch health insurer we find that individuals are forward-looking. Changing dynamic incentives by increasing the deductible by €100 leads to a reduction in healthcare spending of around 3% on the first days of the year and 6% at the annual level. We find that the response to dynamic incentives is an important part of the overall effect of cost-sharing schemes on healthcare expenditures—much more so than what the previous literature has suggested.
Description
Funding Information: We would like to thank Sara Abrahamson, Raun van Ooijen, Joachim Winter and Erez Yerushalmi as well as conference participants at the 2018 EuHEA conference in Maastricht, the 2019 Essen Health Conference, the 2019 iHEA conference in Basel, and the 2019 Meeting of the Health Economics Committee of the German Economic Association in Munich for helpful comments and suggestions. This paper is a follow up to work on the PACOMED project on patient cost sharing that was funded by the Netherlands National Institute for Public Health and the Environment (RIVM). Funding Information: We would like to thank Sara Abrahamson, Raun van Ooijen, Joachim Winter and Erez Yerushalmi as well as conference participants at the 2018 EuHEA conference in Maastricht, the 2019 Essen Health Conference, the 2019 iHEA conference in Basel, and the 2019 Meeting of the Health Economics Committee of the German Economic Association in Munich for helpful comments and suggestions. This paper is a follow up to work on the PACOMED project on patient cost sharing that was funded by the Netherlands National Institute for Public Health and the Environment (RIVM). Publisher Copyright: © 2022 The Author(s)
Date
2022-06
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Keywords
patient cost-sharing, health insurance, dynamic incentives, I13 - Health Insurance, Public and Private, H51 - Government Expenditures and Health
Citation
Klein, T, Salm, M & Upadhyay, S 2022, 'The response to dynamic incentives in insurance contracts with a deductible: Evidence from a differences-in-regression-discontinuities design', Journal of Public Economics, vol. 210, 104660. https://doi.org/10.1016/j.jpubeco.2022.104660