The effects of patient cost-sharing on health expenditure and health among older people: Heterogeneity across income groups

• Published in: The European journal of health economics Vol. 23; no. 5; pp. 847 - 861
• Main Authors: Kato, Hirotaka, Goto, Rei, Tsuji, Taishi, Kondo, Katsunori
• Format: Journal Article
• Language: English
• Published: Berlin/Heidelberg Springer Berlin Heidelberg 01.07.2022; Springer Nature B.V
• Subjects: Aged; Ambulatory Care; Cost Sharing; Deductibles and Coinsurance; Economic Policy; Expenditures; Health care; Health care expenditures; Health Care Management; Health Economics; Health Expenditures; Heterogeneity; Humans; Income; Income inequality; Medicine; Medicine & Public Health; Older people; Original Paper; Patients; Pharmacoeconomics and Health Outcomes; Public Finance; Public Health; Cost-sharing; Income inequality; I18; Health expenditure; Older people; Regression discontinuity design; I13; I14
• ISSN: 1618-7598; 1618-7601
• DOI: 10.1007/s10198-021-01399-6

Despite rapidly rising health expenditure associated with population aging, empirical evidence on the effects of cost-sharing on older people is still limited. This study estimated the effects of cost-sharing on the utilization of healthcare and health among older people, the most intensive users of healthcare. We employed a regression discontinuity design by exploiting a drastic reduction in the coinsurance rate from 30 to 10% at age 70 in Japan. We used large administrative claims data as well as income information at the individual level provided by a municipality. Using the claims data with 1,420,252 person-month observations for health expenditure, we found that reduced cost-sharing modestly increased outpatient expenditure, with an implied price elasticity of  – 0.07. When examining the effects of reduced cost-sharing by income, we found that the price elasticities for outpatient expenditure were almost zero,  – 0.08, and  – 0.11 for lower-, middle-, and higher-income individuals, respectively, suggesting that lower-income individuals do not have more elastic demand for outpatient care compared with other income groups. Using large-scale mail survey data with 3404 observations for self-reported health, we found that the cost-sharing reduction significantly improved self-reported health only among lower-income individuals, but drawing clear conclusions about health outcomes is difficult because of a lack of strong graphical evidence to support health improvement. Our results suggest that varying cost-sharing by income for older people (i.e., smaller cost-sharing for lower-income individuals and larger cost-sharing for higher-income individuals) may reduce health expenditure without compromising health.