Wait-for-Discount: Strategic Deferral, Health Deterioration, and the Hidden Costs of Cost-Sharing Design

When patients anticipate a reduction in their healthcare copayment, do they wait for the lower price before seeking care—and if so, at what cost? We answer this question by exploiting Japan's age-70 copayment threshold—a sharp and fully anticipated price reduction determined solely by date of birth—using administrative claims from Japan's National Database of Health Insurance Claims tracking over 5.7 million individuals. We document significant wait-for-discount behavior within universal health insurance. Using a dynamic difference-in-differences event study design, we show that standard regression discontinuity estimates overstate long-run price elasticity by conflating intertemporal substitution with structural demand: the immediate elasticity of −0.200 reflects a transitory spike driven by pent-up demand, while the steady-state elasticity stabilizes at −0.088 once deferred demand is absorbed. The welfare consequences are severe and concentrated among the relatively healthy: heterogeneity analysis reveals a behavioral decoupling in which healthy individuals strategically time elective procedures, exhibiting a 5% drop in admissions pre-threshold and an 8.5% spike post-threshold. Crucially, deferral triggers a deterioration mechanism: inpatient expenditures escalate steadily in subsequent months, peaking at a 4.3% surge in months seven through nine—reflecting the progression of conditions left unmanaged during deferral rather than a simple release of pent-up demand. Cost-benefit analysis reveals a severe targeting inefficiency: for every 1 yen saved by a patient through deferral, the social insurance system incurs approximately 47 yen in downstream social costs—a ratio that represents a strict lower bound on the true social cost and that standard static policy evaluations miss entirely.