IDEAS home Printed from https://ideas.repec.org/p/yor/hectdg/19-12.html
   My bibliography  Save this paper

Does the framing of patient cost-sharing incentives matter? The effects of deductibles vs. no-claim refunds

Author

Listed:
  • Hayen, A.P.;
  • Klein, T.J.;
  • Salm, M.;

Abstract

Understanding how health care utilization responds to cost-sharing incentives is of central importance for providing high quality care and limiting the growth of costs. While there is compelling evidence that patients react to financial incentives, it is less well understood how and why specific aspects of the design of contracts shape the size of this reaction. In this paper, we focus on the question whether the framing of cost-sharing incentives has an effect on health care utilization. To study this we make use of a policy change that occurred in the Netherlands. Until 2007, patients received a a no-claim refund if they consumed little or no health care; from 2008 onward there was a deductible. This means that very similar economic incentives were first framed in terms of smaller gains and later as losses. We use claims-level data for a broad sample from the Dutch population to estimate whether the reaction to economic incentives was affected by this. Our empirical approach is to exploit within-year variation using an instrumental variables approach while controlling for differences across years. Our central finding is that patients react to incentives much more strongly when they are framed in terms of losses. Simulations based on our estimates show that the effect on yearly spending is 8.6 percent. This suggests that discussions on the optimal design of cost-sharing incentives should not only involve coinsurance rates and cost-sharing limits, but also how these are presented to patients.

Suggested Citation

  • Hayen, A.P.; & Klein, T.J.; & Salm, M.;, 2019. "Does the framing of patient cost-sharing incentives matter? The effects of deductibles vs. no-claim refunds," Health, Econometrics and Data Group (HEDG) Working Papers 19/12, HEDG, c/o Department of Economics, University of York.
  • Handle: RePEc:yor:hectdg:19/12
    as

    Download full text from publisher

    File URL: https://www.york.ac.uk/media/economics/documents/hedg/workingpapers/1912.pdf
    File Function: Main text
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. Zarek C. Brot-Goldberg & Amitabh Chandra & Benjamin R. Handel & Jonathan T. Kolstad, 2017. "What does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics," The Quarterly Journal of Economics, Oxford University Press, vol. 132(3), pages 1261-1318.
    3. Janet Currie & Jonathan Gruber, 1996. "Health Insurance Eligibility, Utilization of Medical Care, and Child Health," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 431-466.
    4. Randall P. Ellis, 1986. "Rational Behavior in the Presence of Coverage Ceilings and Deductibles," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 158-175, Summer.
    5. Jeffrey R. Brown & Arie Kapteyn & Olivia S. Mitchell, 2016. "Framing And Claiming: How Information-Framing Affects Expected Social Security Claiming Behavior," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 83(1), pages 139-162, January.
    6. Hendrik Schmitz & Nicolas R. Ziebarth, 2017. "Does Price Framing Affect the Consumer Price Sensitivity of Health Plan Choice?," Journal of Human Resources, University of Wisconsin Press, vol. 52(1), pages 88-127.
    7. Ellis, Randall P. & Martins, Bruno & Zhu, Wenjia, 2017. "Health care demand elasticities by type of service," Journal of Health Economics, Elsevier, vol. 55(C), pages 232-243.
    8. Wynand P. M. M. Van de Ven & Frederik T. Schut, 2009. "Managed competition in the Netherlands: still work‐in‐progress," Health Economics, John Wiley & Sons, Ltd., vol. 18(3), pages 253-255, March.
    9. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    10. David M. Cutler & Jonathan Gruber, 1996. "Does Public Insurance Crowd out Private Insurance?," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 391-430.
    11. Johnson, Eric J & Hershey, John & Meszaros, Jacqueline & Kunreuther, Howard, 1993. "Framing, Probability Distortions, and Insurance Decisions," Journal of Risk and Uncertainty, Springer, vol. 7(1), pages 35-51, August.
    12. Currie, Janet & Gruber, Jonathan, 1996. "Saving Babies: The Efficacy and Cost of Recent Changes in the Medicaid Eligibility of Pregnant Women," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1263-1296, December.
    13. Abaluck, Jason & Gruber, Jonathan & Swanson, Ashley, 2018. "Prescription drug use under Medicare Part D: A linear model of nonlinear budget sets," Journal of Public Economics, Elsevier, vol. 164(C), pages 106-138.
    14. Marika Cabral, 2017. "Claim Timing and Ex Post Adverse Selection," Review of Economic Studies, Oxford University Press, vol. 84(1), pages 1-44.
    15. Hayen, A.P. & van den Berg, M.J. & Meijboom, B.R. & Struijs, J.N. & Westert, G.P., 2015. "Incorporating shared savings programs into primary care : From theory to practice," Other publications TiSEM 2e26be96-1dc3-41fe-8dc9-c, Tilburg University, School of Economics and Management.
    16. 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.
    17. K. P. M. Winssen & R. C. Kleef & W. P. M. M. Ven, 2016. "Potential determinants of deductible uptake in health insurance: How to increase uptake in The Netherlands?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(9), pages 1059-1072, December.
    18. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-277, June.
    19. Liran Einav & Amy Finkelstein & Paul Schrimpf, 2015. "The Response of Drug Expenditure to Nonlinear Contract Design: Evidence from Medicare Part D," The Quarterly Journal of Economics, Oxford University Press, vol. 130(2), pages 841-899.
    20. Amitabh Chandra & Jonathan Gruber & Robin McKnight, 2010. "Patient Cost-Sharing and Hospitalization Offsets in the Elderly," American Economic Review, American Economic Association, vol. 100(1), pages 193-213, March.
    21. David Card & Carlos Dobkin & Nicole Maestas, 2008. "The Impact of Nearly Universal Insurance Coverage on Health Care Utilization: Evidence from Medicare," American Economic Review, American Economic Association, vol. 98(5), pages 2242-2258, December.
    22. Keeler, Emmett B & Newhouse, Joseph P & Phelps, C E, 1977. "Deductibles and the Demand for Medical Care Services: The Theory of a Consumer Facing a Variable Price Schedule under Uncertainty," Econometrica, Econometric Society, vol. 45(3), pages 641-655, April.
    23. Brown, T.M. & Cueto, M. & Fee, E., 2006. "The World Health Organization and the transition from international to global public health," American Journal of Public Health, American Public Health Association, vol. 96(1), pages 62-72.
    24. Manel Baucells & Martin Weber & Frank Welfens, 2011. "Reference-Point Formation and Updating," Management Science, INFORMS, vol. 57(3), pages 506-519, March.
    25. Keeler, Emmett B. & Rolph, John E., 1988. "The demand for episodes of treatment in the health insurance experiment," Journal of Health Economics, Elsevier, vol. 7(4), pages 337-367, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Klein, Tobias & Salm, Martin & Upadhyay, Suraj, 2020. "The Response to Dynamic Incentives in Insurance Contracts with a Deductible: Evidence from a Differences-in-Regression-Discontinuities Design," CEPR Discussion Papers 14552, C.E.P.R. Discussion Papers.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. Klein, Tobias & Salm, Martin & Upadhyay, Suraj, 2020. "The Response to Dynamic Incentives in Insurance Contracts with a Deductible: Evidence from a Differences-in-Regression-Discontinuities Design," CEPR Discussion Papers 14552, C.E.P.R. Discussion Papers.
    8. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Toshiaki Iizuka & Hitoshi Shigeoka, 2018. "Free for Children? Patient Cost-sharing and Healthcare Utilization," NBER Working Papers 25306, National Bureau of Economic Research, Inc.
    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-Discontinuities Design," CEPR Discussion Papers 14552, C.E.P.R. Discussion Papers.
    3. Klein, Tobias & Salm, Martin & Upadhyay, Suraj, 2020. "The Response to Dynamic Incentives in Insurance Contracts with a Deductible: Evidence from a Differences-in-Regression-Discontinuities Design," CEPR Discussion Papers 14552, C.E.P.R. Discussion Papers.
    4. Guo, Audrey & Zhang, Jonathan, 2019. "What to expect when you are expecting: Are health care consumers forward-looking?," Journal of Health Economics, Elsevier, vol. 67(C).
    5. Lin, Haizhen & Sacks, Daniel W., 2019. "Intertemporal substitution in health care demand: Evidence from the RAND Health Insurance Experiment," Journal of Public Economics, Elsevier, vol. 175(C), pages 29-43.
    6. Remmerswaal, Minke & Boone, Jan & Bijlsma, Michiel & Douven, R.C.M.H., 2017. "Cost-Sharing Design Matters : A Comparison of the Rebate and Deductible in Healthcare," Discussion Paper 2017-049, Tilburg University, Center for Economic Research.
    7. 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, CPB Netherlands Bureau for Economic Policy Analysis.
    8. Ellis, Randall P. & Martins, Bruno & Zhu, Wenjia, 2017. "Health care demand elasticities by type of service," Journal of Health Economics, Elsevier, vol. 55(C), pages 232-243.
    9. Kowalski, Amanda E., 2015. "Estimating the tradeoff between risk protection and moral hazard with a nonlinear budget set model of health insurance," International Journal of Industrial Organization, Elsevier, vol. 43(C), pages 122-135.
    10. Kurt J. Lavetti & Thomas DeLeire & Nicolas R. Ziebarth, 2019. "How Do Low-Income Enrollees in the Affordable Care Act Marketplaces Respond to Cost-Sharing?," NBER Working Papers 26430, National Bureau of Economic Research, Inc.
    11. Benjamin Ly Serena, 2021. "Revisiting Offsets of Psychotherapy Coverage," CEBI working paper series 21-05, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    12. Kevin Devereux & Mona Balesh Abadi & Farah Omran, 2019. "Correcting for Transitory Effects in RCTs: Application to the RAND Health Insurance Experiment," Working Papers 201910, School of Economics, University College Dublin.
    13. Raj Chetty & Amy Finkelstein, 2012. "Social Insurance: Connecting Theory to Data," NBER Working Papers 18433, National Bureau of Economic Research, Inc.
    14. repec:hrv:faseco:34330197 is not listed on IDEAS
    15. Bijlsma, Michiel & Boone, Jan & Douven, Rudy & Remmerswaal, Minke, 2017. "Cost-Sharing Design Matters: A Comparison of the Rebate and Deductible in Healthcare," CEPR Discussion Papers 12507, C.E.P.R. Discussion Papers.
    16. Charles Courtemanche & James Marton & Benjamin Ukert & Aaron Yelowitz & Daniela Zapata, 2018. "Early Effects of the Affordable Care Act on Health Care Access, Risky Health Behaviors, and Self‐Assessed Health," Southern Economic Journal, John Wiley & Sons, vol. 84(3), pages 660-691, January.
    17. Kondo, Ayako & Shigeoka, Hitoshi, 2013. "Effects of universal health insurance on health care utilization, and supply-side responses: Evidence from Japan," Journal of Public Economics, Elsevier, vol. 99(C), pages 1-23.
    18. Kaufmann, Cornel & Schmid, Christian & Boes, Stefan, 2017. "Health insurance subsidies and deductible choice: Evidence from regional variation in subsidy schemes," Journal of Health Economics, Elsevier, vol. 55(C), pages 262-273.
    19. Dunn, Abe, 2016. "Health insurance and the demand for medical care: Instrumental variable estimates using health insurer claims data," Journal of Health Economics, Elsevier, vol. 48(C), pages 74-88.
    20. A. S. Yelowitz, "undated". "Public Policy and Health Care Choices of the Elderly: Evidence from the Medicare Buy-In Program," Institute for Research on Poverty Discussion Papers 1136-97, University of Wisconsin Institute for Research on Poverty.
    21. Tzu-Ting Yang & Hsing-Wen Han & Hsien-Ming Lien, 2014. "Patient Cost-Sharing and Healthcare Utilization in Early Childhood: Evidence from a Regression Discontinuity Design," Working Papers 14C003, Canadian Centre for Health Economics.

    More about this item

    Keywords

    patient cost-sharing; health insurance; framing;
    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:yor:hectdg:19/12. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Rawlings). General contact details of provider: https://edirc.repec.org/data/deyoruk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.