Cost-Sharing and Productivity

A growing body of literature examines the cross price elasticities between different health care services. For example, increasing the patient out of pocket price for some health care services increases the utilization of other health care services. Yet, the literature has generally ignored the connection between cost sharing for health care services and labor market outcomes. This paper examines the direction and magnitude of the reduced form relationship between patient cost-sharing and work loss following methods used to study the impact of cost-sharing and medical spending, finding a positive, quantitatively meaningful association between cost-sharing and hours absent. We find no such association between cost-sharing and the probability of incurring short-term disability days. This suggests that the cross-market ramifications of higher patient cost sharing extend beyond other health care services to include broad labor market outcomes.