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Does Health Insurance Encourage the Rise in Medical Prices? A Test on Balance Billing in France


  • Brigitte Dormont
  • Mathilde Péron


We evaluate the causal impact of an improvement in insurance coverage on patients’ decisions to consult physicians whocharge more than the regulated fee. We use a French panel data set of 43,111 individuals observed from 2010 to 2012. Atthe beginning of the period, none of them were covered for balance billing; by the end, 3819 had switched to supplementaryinsurance contracts that cover balance billing. Using instrumental variables to deal with possible non-exogeneity of thedecision to switch, we find evidence that better coverage increases demand for specialists who charge high fees, therebycontributing to the rise in medical prices. People whose coverage improves increased their average amount of balancebilling per consultation by 32%. However, the impact of the coverage shock depends on the supply of physicians. Forpeople residing in areas where few specialists charge the regulated fee, better coverage increases not only prices but alsothe number of consultations, a finding that suggests that balance billing might limit access to care. Conversely, in areaswhere patients have a genuine choice between specialists who balance bill and those who do not, we find no evidence of aresponse to better coverage. Copyright © 2016 John Wiley & Sons, Ltd.
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Suggested Citation

  • Brigitte Dormont & Mathilde Péron, 2016. "Does Health Insurance Encourage the Rise in Medical Prices? A Test on Balance Billing in France," Health Economics, John Wiley & Sons, Ltd., vol. 25(9), pages 1073-1089, September.
  • Handle: RePEc:wly:hlthec:v:25:y:2016:i:9:p:1073-1089

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    References listed on IDEAS

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    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. Thesis Thursday: Mathilde Péron
      by Chris Sampson in The Academic Health Economists' Blog on 2017-10-19 11:00:45


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    Cited by:

    1. Benjamin Montmartin & Mathieu Escot, 2017. "Local Competition and Physicians’ Pricing Decisions: New Evidence from France," GREDEG Working Papers 2017-31, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.

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