A structural microsimulation model for demand-side cost-sharing in healthcare

Jan Boone and Minke Remmerswaal

No 17057, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Demand-side cost-sharing schemes reduce moral hazard in healthcare at the expense of out-of-pocket risk. With a structural microsimulation model, we show that shifting the starting point of the deductible away from zero to 400 euros for all insured individuals, leads to an average 4% reduction in healthcare expenditure and 47% lower out-of-pocket payments for people without a chronic condition. We use administrative healthcare expenditure data for the Dutch population to analyze expenditure under different cost-sharing schemes. The model is estimated with a Bayesian mixture model to capture distributions of healthcare expenditure. This allows us to predict the effects of cost-sharing schemes that have not been used in the Netherlands.

Keywords: Moral hazard; Risk; Equity; Out-of-pocket; Shifted deductible; Co-insurance; Bayesian mixture model; Microsimulation model (search for similar items in EconPapers)
Date: 2022-02
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