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The impact of patient cost-sharing on low-income populations: Evidence from Massachusetts

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  • Chandra, Amitabh
  • Gruber, Jonathan
  • McKnight, Robin

Abstract

Greater patient cost-sharing could help reduce the fiscal pressures associated with insurance expansion by reducing the scope for moral hazard. But it is possible that low-income recipients are unable to cut back on utilization wisely and that, as a result, higher cost-sharing will lead to worse health and higher downstream costs through increased use of inpatient and outpatient care. We use exogenous variation in the copayments faced by low-income enrollees in the Massachusetts Commonwealth Care program to study these effects. We estimate separate price elasticities of demand by type of service. Overall, we find price elasticities of about −0.16 for this low-income population — similar to elasticities calculated for higher-income populations in other settings. These elasticities are somewhat smaller for the chronically sick, especially for those with asthma, diabetes, and high cholesterol. These lower elasticities are attributable to lower responsiveness to prices across all categories of service, and to some statistically insignificant increases in inpatient care.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jhecon:v:33:y:2014:i:c:p:57-66
    DOI: 10.1016/j.jhealeco.2013.10.008
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    References listed on IDEAS

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    4. Amitabh Chandra & Jonathan Gruber & Robin McKnight, 2010. "Patient Cost-Sharing and Hospitalization Offsets in the Elderly," American Economic Review, American Economic Association, vol. 100(1), pages 193-213, March.
    5. Amitabh Chandra & Jonathan Gruber & Robin McKnight, 2010. "Patient Cost Sharing in Low Income Populations," American Economic Review, American Economic Association, vol. 100(2), pages 303-308, May.
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    Cited by:

    1. repec:hit:hitjec:v:58:y:2017:i:1:p:69-88 is not listed on IDEAS
    2. 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.
    3. Jakobsson, Niklas & Svensson, Mikael, 2016. "Copayments and physicians visits: A panel data study of Swedish regions 2003–2012," Health Policy, Elsevier, vol. 120(9), pages 1095-1099.
    4. 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.
    5. repec:eee:joecag:v:6:y:2015:i:c:p:24-43 is not listed on IDEAS
    6. Chung Jen Yang & Ying Che Tsai & Joseph J. Tien, 2017. "The Impacts of Persistent Behaviour and Cost-Sharing Policy on Demand for Outpatient Visits by the Elderly: Evidence from Taiwan’s National Health Insurance," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(1), pages 31-52, January.
    7. Feng Huang & Li Gan, 2015. "Impact of China's Urban Employee Basic Medical Insurance on Health Care Expenditure and Health Outcomes," NBER Working Papers 20873, National Bureau of Economic Research, Inc.
    8. Borrescio-Higa, Florencia, 2015. "Can Walmart make us healthier? Prescription drug prices and health care utilization," Journal of Health Economics, Elsevier, vol. 44(C), pages 37-53.
    9. Fels, Markus Peter, 2017. "Incentivizing efficient utilization without reducing access: The case against cost-sharing in insurance," Working Paper Series in Economics 105, Karlsruhe Institute of Technology (KIT), Department of Economics and Business Engineering.

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    Keywords

    Heath insurance; Cost sharing;

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