IDEAS home Printed from https://ideas.repec.org/a/aea/aejpol/v12y2020i3p238-78.html
   My bibliography  Save this article

Patient Cost-Sharing and Healthcare Utilization in Early Childhood: Evidence from a Regression Discontinuity Design

Author

Listed:
  • Hsing-Wen Han
  • Hsien-Ming Lien
  • Tzu-Ting Yang

Abstract

This paper estimates the price elasticity of healthcare utilization in early childhood. We employ a regression discontinuity design by exploiting a subsidy that reduces patient cost-sharing for children under age 3 in Taiwan. Using longitudinal medical claims of over 410,000 children, we find a modest price elasticity of outpatient expenditure (e.g., −0.10 for regular outpatient care). Furthermore, increased cost-sharing at age 3 largely decreases the chance of visiting high-intensity healthcare providers (e.g., teaching hospitals) for minor illnesses. In contrast, children's utilization of inpatient care is price insensitive, providing a rationale for full inpatient care coverage to children.

Suggested Citation

  • Hsing-Wen Han & Hsien-Ming Lien & Tzu-Ting Yang, 2020. "Patient Cost-Sharing and Healthcare Utilization in Early Childhood: Evidence from a Regression Discontinuity Design," American Economic Journal: Economic Policy, American Economic Association, vol. 12(3), pages 238-278, August.
  • Handle: RePEc:aea:aejpol:v:12:y:2020:i:3:p:238-78
    DOI: 10.1257/pol.20170009
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/pol.20170009
    Download Restriction: no

    File URL: https://doi.org/10.3886/E111421V1
    Download Restriction: no

    File URL: https://www.aeaweb.org/doi/10.1257/pol.20170009.appx
    Download Restriction: no

    File URL: https://www.aeaweb.org/doi/10.1257/pol.20170009.ds
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.

    File URL: https://libkey.io/10.1257/pol.20170009?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Katherine Baicker & Sendhil Mullainathan & Joshua Schwartzstein, 2015. "Behavioral Hazard in Health Insurance," The Quarterly Journal of Economics, Oxford University Press, vol. 130(4), pages 1623-1667.
    2. Prashant Bharadwaj & Katrine Vellesen L?ken & Christopher Neilson, 2013. "Early Life Health Interventions and Academic Achievement," American Economic Review, American Economic Association, vol. 103(5), pages 1862-1891, August.
    3. Pedro Carneiro & Katrine V. Løken & Kjell G. Salvanes, 2015. "A Flying Start? Maternity Leave Benefits and Long-Run Outcomes of Children," Journal of Political Economy, University of Chicago Press, vol. 123(2), pages 365-412.
    4. Manning, Willard G. & Marquis, M. Susan, 1996. "Health insurance: The tradeoff between risk pooling and moral hazard," Journal of Health Economics, Elsevier, vol. 15(5), pages 609-639, October.
    5. James Heckman & Rodrigo Pinto & Peter Savelyev, 2013. "Understanding the Mechanisms through Which an Influential Early Childhood Program Boosted Adult Outcomes," American Economic Review, American Economic Association, vol. 103(6), pages 2052-2086, October.
    6. Michael Grossman, 1972. "The Demand for Health: A Theoretical and Empirical Investigation," NBER Books, National Bureau of Economic Research, Inc, number gros72-1, September.
    7. Lemieux, Thomas & Milligan, Kevin, 2008. "Incentive effects of social assistance: A regression discontinuity approach," Journal of Econometrics, Elsevier, vol. 142(2), pages 807-828, February.
    8. Aviva Aron-Dine & Liran Einav & Amy Finkelstein, 2013. "The RAND Health Insurance Experiment, Three Decades Later," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 197-222, Winter.
    9. Zarek C. Brot-Goldberg & Amitabh Chandra & Benjamin R. Handel & Jonathan T. Kolstad, 2017. "What does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics," The Quarterly Journal of Economics, Oxford University Press, vol. 132(3), pages 1261-1318.
    10. Heckman, James J. & Moon, Seong Hyeok & Pinto, Rodrigo & Savelyev, Peter A. & Yavitz, Adam, 2010. "The rate of return to the HighScope Perry Preschool Program," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 114-128, February.
    11. David Card & Carlos Dobkin & Nicole Maestas, 2008. "The Impact of Nearly Universal Insurance Coverage on Health Care Utilization: Evidence from Medicare," American Economic Review, American Economic Association, vol. 98(5), pages 2242-2258, December.
    12. Guido Imbens & Karthik Kalyanaraman, 2012. "Optimal Bandwidth Choice for the Regression Discontinuity Estimator," Review of Economic Studies, Oxford University Press, vol. 79(3), pages 933-959.
    13. 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 251-277, June.
    14. David S. Lee & Thomas Lemieux, 2010. "Regression Discontinuity Designs in Economics," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 281-355, June.
    15. Chandra, Amitabh & Gruber, Jonathan & McKnight, Robin, 2014. "The impact of patient cost-sharing on low-income populations: Evidence from Massachusetts," Journal of Health Economics, Elsevier, vol. 33(C), pages 57-66.
    16. Currie, Janet & Madrian, Brigitte C., 1999. "Health, health insurance and the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 50, pages 3309-3416, Elsevier.
    17. Ming-Jen Lin & Jin-Tan Liu & Nancy Qian, 2014. "More Missing Women, Fewer Dying Girls: The Impact Of Sex-Selective Abortion On Sex At Birth And Relative Female Mortality In Taiwan," Journal of the European Economic Association, European Economic Association, vol. 12(4), pages 899-926, August.
    18. Toshiaki Iizuka & Hitoshi Shigeoka, 2018. "Free for Children? Patient Cost-sharing and Healthcare Utilization," NBER Working Papers 25306, National Bureau of Economic Research, Inc.
    19. repec:eee:labchp:v:3:y:1999:i:pc:p:3309-3416 is not listed on IDEAS
    20. Jens Ludwig & Douglas L. Miller, 2007. "Does Head Start Improve Children's Life Chances? Evidence from a Regression Discontinuity Design," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 159-208.
    21. David Card & Carlos Dobkin & Nicole Maestas, 2009. "Does Medicare Save Lives?," The Quarterly Journal of Economics, Oxford University Press, vol. 124(2), pages 597-636.
    22. Lehmann, Jee-Yeon K. & Nuevo-Chiquero, Ana & Vidal-Fernández, Marian, 2012. "Explaining the Birth Order Effect: The Role of Prenatal and Early Childhood Investments," IZA Discussion Papers 6755, Institute of Labor Economics (IZA).
    23. Case, Anne & Fertig, Angela & Paxson, Christina, 2005. "The lasting impact of childhood health and circumstance," Journal of Health Economics, Elsevier, vol. 24(2), pages 365-389, March.
    24. Lee, David S. & Card, David, 2008. "Regression discontinuity inference with specification error," Journal of Econometrics, Elsevier, vol. 142(2), pages 655-674, February.
    25. Jeffrey Clemens & Joshua D. Gottlieb, 2017. "In the Shadow of a Giant: Medicare’s Influence on Private Physician Payments," Journal of Political Economy, University of Chicago Press, vol. 125(1), pages 1-39.
    26. Hitoshi Shigeoka, 2014. "The Effect of Patient Cost Sharing on Utilization, Health, and Risk Protection," American Economic Review, American Economic Association, vol. 104(7), pages 2152-2184, July.
    27. Liran Einav & Amy Finkelstein & Maria Polyakova, 2018. "Private Provision of Social Insurance: Drug-Specific Price Elasticities and Cost Sharing in Medicare Part D," American Economic Journal: Economic Policy, American Economic Association, vol. 10(3), pages 122-153, August.
    28. Dague, Laura, 2014. "The effect of Medicaid premiums on enrollment: A regression discontinuity approach," Journal of Health Economics, Elsevier, vol. 37(C), pages 1-12.
    29. Vivian Wu, 2010. "Hospital cost shifting revisited: new evidence from the balanced budget act of 1997," International Journal of Health Economics and Management, Springer, vol. 10(1), pages 61-83, March.
    30. Janet Currie, 2009. "Healthy, Wealthy, and Wise: Socioeconomic Status, Poor Health in Childhood, and Human Capital Development," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 87-122, March.
    31. Nilsson, Anton & Paul, Alexander, 2018. "Patient cost-sharing, socioeconomic status, and children's health care utilization," Journal of Health Economics, Elsevier, vol. 59(C), pages 109-124.
    32. Michael Anderson & Carlos Dobkin & Tal Gross, 2012. "The Effect of Health Insurance Coverage on the Use of Medical Services," American Economic Journal: Economic Policy, American Economic Association, vol. 4(1), pages 1-27, February.
    33. Lien, Hsien-Ming & Chou, Shin-Yi & Liu, Jin-Tan, 2008. "Hospital ownership and performance: Evidence from stroke and cardiac treatment in Taiwan," Journal of Health Economics, Elsevier, vol. 27(5), pages 1208-1223, September.
    34. Joseph Price, 2008. "Parent-Child Quality Time: Does Birth Order Matter?," Journal of Human Resources, University of Wisconsin Press, vol. 43(1).
    35. Fukushima, Kazuya & Mizuoka, Sou & Yamamoto, Shunsuke & Iizuka, Toshiaki, 2016. "Patient cost sharing and medical expenditures for the Elderly," Journal of Health Economics, Elsevier, vol. 45(C), pages 115-130.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Chris Sampson’s journal round-up for 24th August 2020
      by Chris Sampson in The Academic Health Economists' Blog on 2020-08-24 11:00:07

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Natalia Serna, 2021. "Cost sharing and the demand for health services in a regulated market," Health Economics, John Wiley & Sons, Ltd., vol. 30(6), pages 1259-1275, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tzu-Ting Yang & Hsing-Wen Han & Hsien-Ming Lien, 2014. "Patient Cost-Sharing and Healthcare Utilization in Early Childhood: Evidence from a Regression Discontinuity Design," Working Papers 14C003, Canadian Centre for Health Economics.
    2. Naimi Johansson & Niklas Jakobsson & Mikael Svensson, 2019. "Effects of primary care cost-sharing among young adults: varying impact across income groups and gender," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(8), pages 1271-1280, November.
    3. Nilsson, Anton & Paul, Alexander, 2018. "Patient cost-sharing, socioeconomic status, and children's health care utilization," Journal of Health Economics, Elsevier, vol. 59(C), pages 109-124.
    4. Feng, Jin & Song, Hong & Wang, Zhen, 2020. "The elderly's response to a patient cost-sharing policy in health insurance: Evidence from China," Journal of Economic Behavior & Organization, Elsevier, vol. 169(C), pages 189-207.
    5. Toshiaki Iizuka & Hitoshi Shigeoka, 2018. "Free for Children? Patient Cost-sharing and Healthcare Utilization," NBER Working Papers 25306, National Bureau of Economic Research, Inc.
    6. Robert W. Fairlie & Kanika Kapur & Susan Gates, 2016. "Job Lock: Evidence from a Regression Discontinuity Design," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(1), pages 92-121, January.
    7. Fan, Elliott & Lien, Hsienming & Ma, Ching-to Albert, 2019. "Uterus at a price: Disability insurance and hysterectomy," Journal of Health Economics, Elsevier, vol. 66(C), pages 1-17.
    8. Dillender, Marcus, 2018. "What happens when the insurer can say no? Assessing prior authorization as a tool to prevent high-risk prescriptions and to lower costs," Journal of Public Economics, Elsevier, vol. 165(C), pages 170-200.
    9. Giesecke, Matthias & Jäger, Philipp, 2020. "Pension incentives and labor supply: Evidence from the introduction of universal old-age assistance in the UK," Ruhr Economic Papers 844, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    10. Beatty, Timothy K.M. & Blow, Laura & Crossley, Thomas F. & O'Dea, Cormac, 2014. "Cash by any other name? Evidence on labeling from the UK Winter Fuel Payment," Journal of Public Economics, Elsevier, vol. 118(C), pages 86-96.
    11. Christelis, Dimitris & Georgarakos, Dimitris & Sanz-de-Galdeano, Anna, 2020. "The impact of health insurance on stockholding: A regression discontinuity approach," Journal of Health Economics, Elsevier, vol. 69(C).
    12. Remmerswaal, Minke & Boone, Jan & Bijlsma, Michiel & Douven, Rudy, 2019. "Cost-sharing design matters: A comparison of the rebate and deductible in healthcare," Journal of Public Economics, Elsevier, vol. 170(C), pages 83-97.
    13. Bijlsma, Michiel & Boone, Jan & Douven, Rudy & Remmerswaal, Minke, 2017. "Cost-Sharing Design Matters: A Comparison of the Rebate and Deductible in Healthcare," CEPR Discussion Papers 12507, C.E.P.R. Discussion Papers.
    14. Remmerswaal, Minke & Boone, Jan & Bijlsma, Michiel & Douven, R.C.M.H., 2017. "Cost-Sharing Design Matters : A Comparison of the Rebate and Deductible in Healthcare," Other publications TiSEM 624251d4-89fb-4c0b-8dd1-f, Tilburg University, School of Economics and Management.
    15. David S. Lee & Thomas Lemieux, 2010. "Regression Discontinuity Designs in Economics," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 281-355, June.
    16. David Wilkinson & Rebecca Riley, 2011. "The UK Minimum Wage at Age 22: A Regression Discontinuity Approach," National Institute of Economic and Social Research (NIESR) Discussion Papers 378, National Institute of Economic and Social Research.
    17. Feng Huang & Li Gan`, 2017. "The Impacts of China's Urban Employee Basic Medical Insurance on Healthcare Expenditures and Health Outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 149-163, February.
    18. Maya Rossin-Slater & Miriam Wüst, 2016. "What is the Added Value of Preschool for Poor Children? Long-Term and Intergenerational Impacts and Interactions with an Infant Health Intervention," NBER Working Papers 22700, National Bureau of Economic Research, Inc.
    19. Gong, Jie & Lu, Yi & Xie, Huihua, 2020. "The average and distributional effects of teenage adversity on long-term health," Journal of Health Economics, Elsevier, vol. 71(C).
    20. Lavetti, Kurt & DeLeire, Thomas & Ziebarth, Nicolas R., 2019. "How Do Low-Income Enrollees in the Affordable Care Act Marketplaces Respond to Cost-Sharing?," IZA Discussion Papers 12731, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejpol:v:12:y:2020:i:3:p:238-78. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.