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Non-linear price schedules, demand for health care and response behavior

  • Helmut Farbmacher;
  • Joachim Winter

When health insurance reforms involve non-linear price schedules tied to payment periods (for example, a quarter or a year), the empirical analysis of its effects has to take the within-period time structure of incentives into account. The analysis is further complicated when demand data are obtained from a survey in which the reporting period does not coincide with the payment period. We illustrate these issues using as an example a health care reform in Germany which imposed a perquarter fee of e10 for doctor visits and additionally set an out-of-pocket maximum. This co-payment structure results in an effective "spot" price for a doctor visit which decreases over time within each payment period. Using this variation, we find a substantial effect of the new fee, in contrast to earlier studies of this reform. Overall, the probability of visiting a physician decreased by around 2.5 percentage points in response to the new fee for doctor visits. We verify the key assumptions of our approach using a separate data set of insurance claims in which the reporting period effects are absent by construction.

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Paper provided by HEDG, c/o Department of Economics, University of York in its series Health, Econometrics and Data Group (HEDG) Working Papers with number 12/15.

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Date of creation: Jul 2012
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Handle: RePEc:yor:hectdg:12/15
Contact details of provider: Postal: HEDG/HERC, Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
Phone: (0)1904 323776
Fax: (0)1904 323759
Web page: http://www.york.ac.uk/economics/postgrad/herc/hedg/
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  1. Amanda E. Kowalski, 2009. "Censored Quantile Instrumental Variable Estimates of the Price Elasticity of Expenditure on Medical Care," NBER Working Papers 15085, National Bureau of Economic Research, Inc.
  2. Rainer Winkelmann, 2003. "Co-Payments for Prescription Drugs and the Demand for Doctor Visits - Evidence from a Natural Experiment," SOI - Working Papers 0307, Socioeconomic Institute - University of Zurich.
  3. Aviva Aron-Dine & Liran Einav & Amy Finkelstein & Mark Cullen, 2012. "Moral hazard in health insurance: How important is forward looking behavior?," Discussion Papers 11-007, Stanford Institute for Economic Policy Research.
  4. Winkelmann, Rainer, 2006. "Reforming health care: Evidence from quantile regressions for counts," Journal of Health Economics, Elsevier, vol. 25(1), pages 131-145, January.
  5. Boris Augurzky & Thomas Bauer & Sandra Schaffner, 2006. "Copayments in the German Health System – Do They Work?," RWI Discussion Papers 0043, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  6. Jonas Schreyögg & Markus M. Grabka, 2008. "Copayments for Ambulatory Care in Germany: A Natural Experiment Using a Difference-in-Difference Approach," SOEPpapers on Multidisciplinary Panel Data Research 96, DIW Berlin, The German Socio-Economic Panel (SOEP).
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