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The Impact of Increased Cost-Sharing on Utilization of Low Value Services: Evidence from the State of Oregon

Listed author(s):
  • Gruber, Jonathan

    ()

    (MIT)

  • Maclean, J. Catherine

    ()

    (Temple University)

  • Wright, Bill

    ()

    (Providence Health and Services , CORE)

  • Wilkinson, Eric

    ()

    (Temple University)

  • Volpp, Kevin G.

    ()

    (University of Pennsylvania)

In this study we examine the impact of a value-based insurance design (V-BID) program implemented between 2010 and 2013 at a large public employer in the state of Oregon. The program substantially increased cost-sharing, specifically copayments and coinsurance, for several healthcare services believed to be of low value and overused (sleep studies, endoscopies, advanced imaging, and surgeries). Using a differences-in-differences design coupled with granular, administrative health insurance claims data, we estimate the change in low value healthcare service utilization among beneficiaries before and after program implementation relative to a comparison group of beneficiaries who were not exposed to the V-BID. Our findings suggest that the V-BID significantly reduced utilization of targeted services. These findings have important implications for both public and private healthcare policies as V-BID principles are rapidly proliferating in healthcare markets.

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File URL: http://ftp.iza.org/dp10477.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10477.

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Length: 52 pages
Date of creation: Jan 2017
Handle: RePEc:iza:izadps:dp10477
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  1. Zarek C. Brot-Goldberg & Amitabh Chandra & Benjamin R. Handel & Jonathan T. Kolstad, 2015. "What Does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics," NBER Working Papers 21632, National Bureau of Economic Research, Inc.
  2. Haviland, Amelia M. & Eisenberg, Matthew D. & Mehrotra, Ateev & Huckfeldt, Peter J. & Sood, Neeraj, 2016. "Do “Consumer-Directed” health plans bend the cost curve over time?," Journal of Health Economics, Elsevier, vol. 46(C), pages 33-51.
  3. Edward C. Norton & Hua Wang & Chunrong Ai, 2004. "Computing interaction effects and standard errors in logit and probit models," Stata Journal, StataCorp LP, vol. 4(2), pages 154-167, June.
  4. A. Colin Cameron & Douglas L. Miller, 2015. "A Practitioner’s Guide to Cluster-Robust Inference," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 317-372.
  5. Katherine Baicker & Dana Goldman, 2011. "Patient Cost-Sharing and Healthcare Spending Growth," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 47-68, Spring.
  6. Justin Wolfers, 2006. "Did Unilateral Divorce Laws Raise Divorce Rates? A Reconciliation and New Results," American Economic Review, American Economic Association, vol. 96(5), pages 1802-1820, December.
  7. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
  8. Peter J. Huckfeldt & Amelia Haviland & Ateev Mehrotra & Zachary Wagner & Neeraj Sood, 2015. "Patient Responses to Incentives in Consumer-directed Health Plans: Evidence from Pharmaceuticals," NBER Working Papers 20927, National Bureau of Economic Research, Inc.
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