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Patient Cost-Sharing and Hospitalization Offsets in the Elderly

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Author Info

  • Amitabh Chandra
  • Jonathan Gruber
  • Robin McKnight

Abstract

In the Medicare program, increases in cost sharing by a supplemental insurer can exert financial externalities. We study a policy change that raised patient cost sharing for the supplemental insurer for retired public employees in California. We find that physician visits and prescription drug usage have elasticities that are similar to those of the RAND Health Insurance Experiment (HIE). Unlike the HIE, however, we find substantial "offset" effects in terms of increased hospital utilization. The savings from increased cost sharing accrue mostly to the supplemental insurer, while the costs of increased hospitalization accrue mostly to Medicare. (JEL G22, I12, I18, J14)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.100.1.193
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File URL: http://www.aeaweb.org/aer/data/mar2010/20070254_data.zip
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 100 (2010)
Issue (Month): 1 (March)
Pages: 193-213

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Handle: RePEc:aea:aecrev:v:100:y:2010:i:1:p:193-213

Note: DOI: 10.1257/aer.100.1.193
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Cited by:
  1. Liran Einav & Amy Finkelstein & Stephen P. Ryan & Paul Schrimpf & Mark R. Cullen, 2011. "Selection on Moral Hazard in Health Insurance," NBER Working Papers 16969, National Bureau of Economic Research, Inc.
  2. Jean M. Abraham & Anne Beeson Royalty & Thomas DeLeire, 2011. "Gauging the Generosity of Employer-Sponsored Insurance: Differences Between Households With and Without a Chronic Condition," NBER Working Papers 17232, National Bureau of Economic Research, Inc.
  3. Jeffrey Clemens & Joshua D. Gottlieb, 2012. "Do Physicians' Financial Incentives Affect Medical Treatment and Patient Health?," Discussion Papers 11-017, Stanford Institute for Economic Policy Research.
  4. Benjamin R. Handel, 2011. "Adverse Selection and Switching Costs in Health Insurance Markets: When Nudging Hurts," NBER Working Papers 17459, National Bureau of Economic Research, Inc.
  5. Herr, A.; & Suppliet, M.;, 2011. "Co-Payment Exemptions and Reference Prices: an Empirical Study of Pharmaceutical Prices in Germany," Health, Econometrics and Data Group (HEDG) Working Papers 11/18, HEDG, c/o Department of Economics, University of York.
  6. Thomas Mayer, 2012. "Ziliak and McClosky’s Criticisms of Significance Tests: A Damage Assessment," Working Papers 126, University of California, Davis, Department of Economics.
  7. Thomas Mayer, 2012. "Ziliak and McCloskey's Criticisms of Significance Tests: An Assessment," Econ Journal Watch, Econ Journal Watch, vol. 9(3), pages 256-297, September.
  8. Amitabh Chandra & Jonathan Skinner, 2012. "Technology Growth and Expenditure Growth in Health Care," Journal of Economic Literature, American Economic Association, vol. 50(3), pages 645-80, September.
  9. Mayer, Thomas, 2012. "Ziliak and McClosky's Criticisms of Significance Tests: A Damage Assessment," Working Papers 2012-06, University of California at Davis, Department of Economics.
  10. Niels Skipper, 2010. "On Utilization and Stockpiling of Prescription Drugs when Co-payments Increase: Heterogeneity across Types of Drugs," Economics Working Papers 2010-12, School of Economics and Management, University of Aarhus.

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