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Does health insurance encourage the rise in medical prices? A test on balance billing in France

Author

Listed:
  • Brigitte Dormont
  • Mathilde Péron

    (Legos - Laboratoire d'Economie et de Gestion des Organisations de Santé - Université Paris-Dauphine)

Abstract

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.

Suggested Citation

  • Brigitte Dormont & Mathilde Péron, 2016. "Does health insurance encourage the rise in medical prices? A test on balance billing in France," Post-Print hal-01340009, HAL.
  • Handle: RePEc:hal:journl:hal-01340009
    DOI: 10.1002/hec.3347
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01340009
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    References listed on IDEAS

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    1. Liran Einav & Amy Finkelstein & Stephen P. Ryan & Paul Schrimpf & Mark R. Cullen, 2013. "Selection on Moral Hazard in Health Insurance," American Economic Review, American Economic Association, vol. 103(1), pages 178-219, February.
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    8. Vaithianathan, Rhema, 2006. "Health insurance and imperfect competition in the health care market," Journal of Health Economics, Elsevier, vol. 25(6), pages 1193-1202, November.
    9. Brigitte Dormont & Pierre-Yves Geoffard & Karine Lamiraud, 2009. "The influence of supplementary health insurance on switching behaviour: evidence from Swiss data," Health Economics, John Wiley & Sons, Ltd., vol. 18(11), pages 1339-1356.
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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.
    2. Péron, M.; & Dormont, B.;, 2018. "Heterogeneous moral hazard in Supplementary Health Insurance," Health, Econometrics and Data Group (HEDG) Working Papers 18/27, HEDG, c/o Department of Economics, University of York.

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