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
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Suraj Upadhyay: Tilburg University

No 13108, IZA Discussion Papers from Institute of Labor Economics (IZA)

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. 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: health insurance; patient cost-sharing; dynamic incentives (search for similar items in EconPapers)
JEL-codes: H51 I13 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2020-03
New Economics Papers: this item is included in nep-cta, nep-hea and nep-ias
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Published - revised version published in: Journal of Public Economics, 2022, 210, 104660

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Journal Article: The response to dynamic incentives in insurance contracts with a deductible: Evidence from a differences-in-regression-discontinuities design (2022)
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