The Distributional Effects of Cost-Sharing in a Universal Healthcare System

Simon Bensnes, Ingrid Huitfeldt and Victoria Marone

No 21077, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Patient cost-sharing is used as a tool to limit over-utilization of insured healthcare services in almost all high-income countries. We study its distributional consequences in the context of a publicly funded universal health insurance system, where consumers (as taxpayers) are residual claimants on insurer spending. We highlight the distinction between consumers’ elasticity of demand for healthcare services—which moderates how cost-sharing rules affect healthcare utilization—and their baseline level of demand—which moderates how cost-sharing rules affect out-of-pocket costs. Using detailed administrative data on the Norwegian national health insurance scheme, we study a 2010 policy change that raised the age threshold for cost-sharing exemption, thereby increasing patient cost-sharing substantially for adolescents. We find that females and native-born Norwegians have higher average utilization and thus have more at stake financially from cost-sharing, but are relatively less responsive to cost-sharing. In contrast, lower-income individuals as well as individuals with a chronic health condition have both higher average healthcare utilization and higher responsiveness. Cost-sharing therefore places a larger burden on these groups both in terms of the financial cost of out-of-pocket spending and in terms of reduced quantities of healthcare used.

Date: 2026-01
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