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Heterogeneous Effects of a Nonlinear Price Schedule for Outpatient Care

Author

Listed:
  • Helmut Farbmacher
  • Peter Ihle
  • Ingrid Schubert
  • Joachim Winter
  • Amelie C. Wuppermann

Abstract

Theoretical considerations suggest that nonlinear health care price schedules have heterogeneous effects on health care demand. In this paper, we develop and apply a finite mixture bivariate probit model to analyze whether there are heterogeneous reactions to the introduction of a nonlinear price schedule in the German statutory health insurance system. In administrative insurance claims data from the largest German health insurance plan, we find that some individuals strongly react to the new price schedule while a second group of individuals does not react. Post-estimation analyses reveal that the group of the individuals who do not react to the reform includes the relatively sick. These results are in line with forward-looking behavior: Individuals who are already sick expect that they will hit the kink in the price schedule and thus are less sensitive to the co-payment.

Suggested Citation

  • Helmut Farbmacher & Peter Ihle & Ingrid Schubert & Joachim Winter & Amelie C. Wuppermann, 2013. "Heterogeneous Effects of a Nonlinear Price Schedule for Outpatient Care," CESifo Working Paper Series 4499, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_4499
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp4499.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Johannes S. Kunz & Rainer Winkelmann, 2017. "An Econometric Model of Healthcare Demand With Nonlinear Pricing," Health Economics, John Wiley & Sons, Ltd., vol. 26(6), pages 691-702, June.
    2. Rainer Winkelmann, 2014. "An Empirical Model of Health Care Demand under Non-linear Pricing," SOEPpapers on Multidisciplinary Panel Data Research 688, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Galina Besstremyannaya, 2014. "Heterogeneous effect of coinsurance rate on healthcare costs: generalized finite mixtures and matching estimators," Discussion Papers 14-014, Stanford Institute for Economic Policy Research.

    More about this item

    Keywords

    finite mixture models; bivariate probit; demand for health care; nonlinear price schedule;

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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