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Does the Framing of Patient Cost-Sharing Incentives Matter? The Effects of Deductibles vs. No-Claim Refunds

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  • Hayen, Arthur P.

    (Tilburg University)

  • Klein, Tobias J.

    (Tilburg University)

  • Salm, Martin

    (Tilburg University)

Abstract

In light of increasing health care expenditures, patient cost-sharing schemes have emerged as one of the main policy tools to reduce medical spending. We show that the effect of patient cost-sharing schemes on health care expenditures is not only determined by the economic incentives they provide, but also by the way these economic incentives are framed. Patients react to changes in economic incentives almost twice as strongly under a deductible policy than under a no-claims refund policy. Our preferred explanation is that individuals are loss-averse and respond differently to both schemes because they perceive deductible payments as a loss and no-claim refunds as a gain.

Suggested Citation

  • Hayen, Arthur P. & Klein, Tobias J. & Salm, Martin, 2018. "Does the Framing of Patient Cost-Sharing Incentives Matter? The Effects of Deductibles vs. No-Claim Refunds," IZA Discussion Papers 11508, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp11508
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    Cited by:

    1. Minke Remmerswaal & Jan Boone, 2020. "A Structural Microsimulation Model for Demand-Side Cost-Sharing in Healthcare," CPB Discussion Paper 415, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Klein, Tobias & Salm, Martin & Upadhyay, Suraj, 2020. "The Response to Dynamic Incentives in Insurance Contracts with a Deductible: Evidence from a Differences-in-Regression-Disconti," CEPR Discussion Papers 14552, C.E.P.R. Discussion Papers.
    3. Markus Fels, 2020. "Incentivizing efficient utilization without reducing access: The case against cost‐sharing in insurance," Health Economics, John Wiley & Sons, Ltd., vol. 29(7), pages 827-840, July.
    4. Minke Remmerswaal & Jan Boone & Rudy Douven, 2019. "Selection and moral hazard effects in healthcare," CPB Discussion Paper 393, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Stefanie Thönnes, 2019. "Ex-post moral hazard in the health insurance market: empirical evidence from German data," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(9), pages 1317-1333, December.
    6. Minke Remmerswaal & Jan Boone & Michiel Bijlsma & Rudy Douven, 2017. "Cost-Sharing Design Matters: A Comparison of the Rebate and Deductible in Healthcare," CPB Discussion Paper 367.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    7. M. Antonini & R. C. van Kleef & J. Henriquez & F. Paolucci, 2023. "Can risk rating increase the ability of voluntary deductibles to reduce moral hazard?," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 48(1), pages 130-156, January.
    8. Minke Remmerswaal & Jan Boone & Rudy Douven, 2019. "Selection and moral hazard effects in healthcare," CPB Discussion Paper 393.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    9. Klein, Tobias J. & Salm, Martin & Upadhyay, Suraj, 2022. "The response to dynamic incentives in insurance contracts with a deductible: Evidence from a differences-in-regression-discontinuities design," Journal of Public Economics, Elsevier, vol. 210(C).
    10. Remmerswaal, Minke & Boone, Jan & Bijlsma, Michiel & Douven, Rudy, 2019. "Cost-sharing design matters: A comparison of the rebate and deductible in healthcare," Journal of Public Economics, Elsevier, vol. 170(C), pages 83-97.
    11. Minke Remmerswaal & Jan Boone, 2020. "A Structural Microsimulation Model for Demand-Side Cost-Sharing in Healthcare," CPB Discussion Paper 415.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    12. Klein, Tobias J. & Salm, Martin & Upadhyay, Suraj, 2024. "Patient Cost-Sharing and Redistribution in Health Insurance," IZA Discussion Papers 16778, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    framing; health insurance; patient cost-sharing; loss aversion;
    All these keywords.

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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