Health insurance and the demand for medical care: evidence from a randomized experiment.
We estimate how cost sharing, the portion of the bill the patient pays, affects the demand for medical services. The data come from a randomized experiment. A catastrophic insurance plan reduces expenditures 31 percent relative to zero out-of-pocket price. The price elasticity is approximately -0.2. We reject the hypothesis that less favorable coverage of outpatient services increases total expenditure (for example, by deterring preventive care or inducing hospitalization).
D000704:Analysis of Variance; D003669:Deductibles and Coinsurance; D006301:Health Services Needs and Demand / Q000191:economics*; D006302:Health Services Research / Q000191:economics*; D006304:Health Status; D007348:Insurance, Health; D007354:Insurance, Major Medical; D008962:Models, Theoretical; D011897:Random Allocation; D012107:Research Design; D014481:United States