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Supply-side and demand-side cost sharing in deregulated social health insurance: Which is more effective?

  • Trottmann, Maria
  • Zweifel, Peter
  • Beck, Konstantin
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    Microeconomic theory predicts that if patients are fully insured and providers are paid fee-for-service, utilization of medical services exceeds the efficient level (‘moral hazard effect’). In Switzerland, both demand-side and supply-side cost sharing have been introduced to mitigate this problem. Analyzing a panel dataset of about 160,000 adults, we find both types of cost sharing to be effective in curtailing the use of medical services. However, when moral hazard mitigation is traded off against risk selection, the minimum-deductible, supply-side cost sharing option ranks first, followed by the medium-deductible demand-side alternative, making the supply-side option somewhat more effective.

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    Article provided by Elsevier in its journal Journal of Health Economics.

    Volume (Year): 31 (2012)
    Issue (Month): 1 ()
    Pages: 231-242

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    Handle: RePEc:eee:jhecon:v:31:y:2012:i:1:p:231-242
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