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Effects of cost sharing on physician utilization under favourable conditions for supplier-induced demand

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  • Carine Van De Voorde

    (Department of Economics, University of Leuven, Belgium)

  • Eddy Van Doorslaer

    (Department of Health Policy and Management, Erasmus University Rotterdam, Netherlands)

  • Erik Schokkaert

    (Department of Economics, University of Leuven, Belgium)

Abstract

The effects of cost sharing on the demand for ambulatory care in experimental circumstances are well understood since the Rand Health Insurance Experiment (HIE). However, in a non-experimental real-world context, supplier-induced demand of doctors might erode some of the significant negative out-of-pocket price elasticity identified in the HIE. Belgium is an interesting test case for this hypothesis because it has relatively high rates of patient cost sharing in its public health insurance system and a very high density of physicians, all remunerated fee-for-service. We have exploited the price variation generated by a substantial increase in patient co-payment rates in 1994 to estimate out-of-pocket price elasticities for three groups of users, and for three types of services using a fixed-effects model in levels and in differences. We obtain significant out-of-pocket price elasticities for the general population in the range from −0.39 to −0.28 for GP home visits, −0.16 to −0.12 for GP office visits and −0.10 for specialist visits. The estimates were generally lower and less significant for the groups of elderly and disabled. The differences we find in price responsiveness appear to be fairly robust and consistent with the HIE predictions. These results suggest that-at least in the short run-non-experimental utilization effects of cost sharing are very similar to the experimental evidence, even in a situation of favourable conditions for supplier-induced demand. Copyright © 2001 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 10 (2001)
Issue (Month): 5 ()
Pages: 457-471

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Handle: RePEc:wly:hlthec:v:10:y:2001:i:5:p:457-471

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Chiappori, Pierre-Andre & Durand, Franck & Geoffard, Pierre-Yves, 1998. "Moral hazard and the demand for physician services: First lessons from a French natural experiment," European Economic Review, Elsevier, vol. 42(3-5), pages 499-511, May.
  2. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-77, June.
  3. Zweifel, Peter & Manning, Willard G., 2000. "Moral hazard and consumer incentives in health care," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 8, pages 409-459 Elsevier.
  4. Bhargava, A & Franzini, L & Narendranathan, W, 1982. "Serial Correlation and the Fixed Effects Model," Review of Economic Studies, Wiley Blackwell, vol. 49(4), pages 533-49, October.
  5. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  6. Cutler, David M. & Zeckhauser, Richard J., 2000. "The anatomy of health insurance," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 11, pages 563-643 Elsevier.
  7. Arellano, M, 1987. "Computing Robust Standard Errors for Within-Groups Estimators," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(4), pages 431-34, November.
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Cited by:
  1. Barros, Pedro Pita & Machado, Matilde P. & Sanz-de-Galdeano, Anna, 2008. "Moral hazard and the demand for health services: A matching estimator approach," Journal of Health Economics, Elsevier, vol. 27(4), pages 1006-1025, July.
  2. Madden, David & Nolan, Anne & Nolan, Brian, 2004. "GP Reimbursement and Visiting Behaviour in Ireland," Papers HRBWP09, Economic and Social Research Institute (ESRI).
  3. Cockx, Bart & Brasseur, Carine, 2003. "The demand for physician services: Evidence from a natural experiment," Journal of Health Economics, Elsevier, vol. 22(6), pages 881-913, November.
  4. Mas, Nuria & Cirera, Laia & Viñolas, Guillem, 2011. "Los sistemas de copago en Europa, Estados Unidos y Canadá: Implicaciones para el caso español," IESE Research Papers D/939, IESE Business School.
  5. Paolo Buonanno & Matteo M. Galizzi, 2009. "Advocatus, et non latro? Testing the supplier-induced demand hypothesis for Italian courts of justice," Working Papers 0914, University of Brescia, Department of Economics.
  6. Schokkaert, Erik & Van de Voorde, Carine, 2003. "Belgium: risk adjustment and financial responsibility in a centralised system," Health Policy, Elsevier, vol. 65(1), pages 5-19, July.
  7. Erik Schokkaert & Carine Van de Voorde, 2005. "Health care reform in Belgium," Health Economics, John Wiley & Sons, Ltd., vol. 14(S1), pages S25-S39.
  8. Nicolas Ziebarth, 2014. "Assessing the effectiveness of health care cost containment measures: evidence from the market for rehabilitation care," International Journal of Health Care Finance and Economics, Springer, vol. 14(1), pages 41-67, March.
  9. Farbmacher, Helmut, 2009. "Copayments for doctor visits in Germany and the probability of visiting a physician - Evidence from a natural experiment," Discussion Papers in Economics 10951, University of Munich, Department of Economics.
  10. Kwon, Hye-Young & Hong, Ji-Min & Godman, Brian & Yang, Bong-Min, 2013. "Price cuts and drug spending in South Korea: The case of antihyperlipidemic agents," Health Policy, Elsevier, vol. 112(3), pages 217-226.
  11. Kim, Jiyun & Ko, Sukyoung & Yang, Bongmin, 2005. "The effects of patient cost sharing on ambulatory utilization in South Korea," Health Policy, Elsevier, vol. 72(3), pages 293-300, June.
  12. Perronnin, Marc, 2013. "Effet de l'assurance complémentaire santé sur les consommations médicales, entre risque moral et amélioration de l'accès aux soins," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/13659 edited by Wittwer, Jérôme, September.

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