The response to dynamic incentives in insurance contracts with a deductible: Evidence from a differences-in-regression-discontinuities design

Tobias Klein, Martin Salm and Suraj Upadhyay

Journal of Public Economics, 2022, vol. 210, issue C

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.

Keywords: Patient cost-sharing; Health insurance; Dynamic incentives (search for similar items in EconPapers)
JEL-codes: H51 I13 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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Related works:
Working Paper: The Response to Dynamic Incentives in Insurance Contracts with a Deductible: Evidence from a Differences-in-Regression-Discontinuities Design (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:210:y:2022:i:c:s0047272722000627

DOI: 10.1016/j.jpubeco.2022.104660

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