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Does health insurance encourage the rise in medical prices?

Listed author(s):
  • Dormont, B.
  • Péron, M.

Our purpose is to evaluate the influence of health insurance coverage on the use of specialists who balance bill. We estimate the impact on patients' behavior of a shock consisting of better coverage of balance billing, while controlling for supply side drivers. We use a panel data set of 43,111 French individuals observed between January 2010 and December 2012. Individuals are observed when they are all covered by the same supplementary insurer, with no coverage for balance billing, and after 3,819 of them switched to other supplementary insurers which offer better coverage. Our estimations show that better coverage contributes to a rise in medical prices by increasing the demand for specialists who balance bill: for individuals who enjoy better coverage the proportion of consultations of specialists who balance bill is increased by 9%, and balance billing charged per consultation by 32%. However, the impact of the coverage shock depends on local supply side organization. When the proportion of specialists who do not balance bill their patients is high enough, patients have a real choice between specialist type: there is neither evidence of an inflationary effect of supplementary coverage, nor of limits in access to care due to balance billing.

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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 15/16.

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Date of creation: Sep 2015
Handle: RePEc:yor:hectdg:15/16
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
Web page: https://www.york.ac.uk/economics/postgrad/herc/hedg/
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  1. Brigitte Dormont & Pierre-Yves Geoffard & Karine Lamiraud, 2009. "The influence of supplementary health insurance on switching behaviour: evidence from Swiss data," Post-Print halshs-00754326, HAL.
  2. Izabela Jelovac, 2013. "Physicians' balance billing, supplemental insurance and access to health care," Working Papers halshs-00787602, HAL.
  3. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
  4. Mathias Kifmann & Florian Scheuer, 2011. "Balance billing: the patients' perspective," Health Economics Review, Springer, vol. 1(1), pages 1-14, December.
  5. Vaithianathan, Rhema, 2006. "Health insurance and imperfect competition in the health care market," Journal of Health Economics, Elsevier, vol. 25(6), pages 1193-1202, November.
  6. Feldman, Roger & Dowd, Bryan, 1991. "A New Estimate of the Welfare Loss of Excess Health Insurance," American Economic Review, American Economic Association, vol. 81(1), pages 297-301, March.
  7. Liran Einav & Amy Finkelstein & Stephen P. Ryan & Paul Schrimpf & Mark R. Cullen, 2013. "Selection on Moral Hazard in Health Insurance," American Economic Review, American Economic Association, vol. 103(1), pages 178-219, February.
  8. Jacob Glazer & Thomas G. McGuire, 1990. "Should Physicians Be Permitted to 'Balance Bill' Patients," Papers 0005, Boston University - Industry Studies Programme.
  9. Mitchell, Janet B. & Cromwell, Jerry, 1982. "Physician behavior under the medicare assignment option," Journal of Health Economics, Elsevier, vol. 1(3), pages 245-264, December.
  10. Robin McKnight, 2004. "Medicare Balance Billing Restrictions: Impacts on Physicians and Beneficiaries," University of Oregon Economics Department Working Papers 2004-13, University of Oregon Economics Department.
  11. Chiu, W. Henry, 1997. "Health insurance and the welfare of health care consumers," Journal of Public Economics, Elsevier, vol. 64(1), pages 125-133, April.
  12. Feldstein, Martin S, 1973. "The Welfare Loss of Excess Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 251-280, Part I, M.
  13. Feldstein, Martin S, 1970. "The Rising Price of Physicians' Services," The Review of Economics and Statistics, MIT Press, vol. 52(2), pages 121-133, May.
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