Deductibles and health care expenditures: empirical estimates of price sensitivity based on administrative data.
OBJECTIVE
To estimate the price sensitivity of demand for health care by analysing the relation between deductibles and expenditures found in an administrative database.


METHODS
Data are from 100,048 privately insured in the Netherlands. Information is available on expenditures in 1996, demographic variables, deductibles, and both diagnoses from hospitalisations and pharmacy costs for the years 1993-1995. The data are unique because prior pharmacy costs are good predictors of future expenditures while in the three years concerned these costs were covered by a separate national, mandatory insurance scheme. Therefore, these costs are not affected by deductibles and can be seen as excellent proxies for health status, which this study uses to correct for the existing adverse selection with respect to the choice of deductible.


METHODS
For the group of insured without deductibles an expenditure model is estimated which is subsequently used to estimate expected expenditures for insurance policies with various levels of deductible. From the difference between actual and expected expenditures the impact of deductibles on expenditures is estimated, and from this price sensitivity.


RESULTS
The principal finding is an estimated price elasticity of -0.14. The highest price sensitivity is found for GP care (-0.40) and physiotherapy (-0.32), and the lowest for specialist care (-0.12) and prescription drugs (-0.08); hospital care was hardly affected.
van Vliet
René C J A
RC
Institute of Health Policy and Management (iBMG), Erasmus University Rotterdam, P.O. Box 1738, 3000 DR Rotterdam, The Netherlands. r.vanvliet@bmg.eur.nl
D000328:Adult; D003669:Deductibles and Coinsurance / Q000191:economics* / Q000706:statistics & numerical data; D005249:Fees and Charges; D005260:Female; D017048:Health Care Costs; D005102:Health Expenditures / Q000706:statistics & numerical data*; D006301:Health Services Needs and Demand / Q000191:economics* / Q000706:statistics & numerical data; D006801:Humans; D008297:Male; D017059:Models, Econometric; D009426:Netherlands; D010342:Patient Acceptance of Health Care / Q000706:statistics & numerical data; D012044:Regression Analysis