The effect of increased cost‐sharing on low‐value service use

Jonathan Gruber, Johanna Catherine Maclean, Bill Wright, Eric Wilkinson and Kevin G. Volpp

Health Economics, 2020, vol. 29, issue 10, 1180-1201

Abstract: We examine the effect of a value‐based insurance design (VBID) program implemented at a large public employer in the state of Oregon. The program substantially increased cost‐sharing for several healthcare services likely to be of low value for most patients: diagnostic services (e.g., imaging services) and surgeries (e.g., spinal surgeries for pain). Using a difference‐in‐differences design coupled with granular, administrative health insurance claims data over the period 2008–2012, we estimate the change in low‐value service use among beneficiaries before and after program implementation relative to a comparison group not exposed to the VBID. Our findings suggest that the VBID significantly reduced the use of targeted services, with an implied elasticity of demand of −0.22. We find no evidence that the VBID led to substitution to non‐targeted services or increased overall healthcare costs. However, we also observe no evidence that the program led to cost‐savings.

Date: 2020
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https://doi.org/10.1002/hec.4127

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Persistent link: https://EconPapers.repec.org/RePEc:wly:hlthec:v:29:y:2020:i:10:p:1180-1201

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