Patient cost-sharing and redistribution in health insurance

Klein, T.J.;, Salm, M.; and Upadhyay, S.;

Health, Econometrics and Data Group (HEDG) Working Papers from HEDG, c/o Department of Economics, University of York

Abstract: The Health insurance premiums often do not reflect individual health risks, implying redistribution from individuals with low health risks to individuals with high health risks. This paper studies whether more cost-sharing leads to less redistribution and to lower welfare of high-risk individuals. This could be the case because more cost-sharing increases outof-pocket payments especially for high-risk individuals. We estimate a structural model of healthcare consumption using administrative data from a Dutch health insurer. We use the model to simulate the effects of a host of counterfactual policies. The policy that was in place was a 350 euro deductible. Our counterfactual experiments show that redistribution would decrease when the deductible would increase. Nonetheless, high-risk individuals can benefit from higher levels of cost-sharing. The reason is that this leads to lower premiums because both high -risk and low-risk individuals strongly react to the financial incentives cost-sharing provides.

Keywords: health insurance; moral hazard; patient cost-sharing; redistribution (search for similar items in EconPapers)
JEL-codes: I13 (search for similar items in EconPapers)
Date: 2024-08
New Economics Papers: this item is included in nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.york.ac.uk/media/economics/documents/h ... papers/2024/2415.pdf Main text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:yor:hectdg:24/15

Access Statistics for this paper

More papers in Health, Econometrics and Data Group (HEDG) Working Papers from HEDG, c/o Department of Economics, University of York HEDG/HERC, Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom. Contact information at EDIRC.
Bibliographic data for series maintained by Jane Rawlings ().