Official websites use. Share sensitive information only on official, secure websites. Co-insurance rates in Japan decrease when patients turn 70 years of age. We used administrative data from large Japanese hospitals. We employed a discontinuity regression RD approach to control for unobserved endogeneity in the data.
For the younger cohort, we did not observe any changes in medical demand after a price decrease. We therefore conclude that the economic goal of cost sharing, namely a behavioural change towards lower health-care utilization, is not achieved in this particular cohort of chronic patients.
The online version of this article Medical insurance can increase the demand for medical care to a non-optimal level due to moral hazard [ 1 ]. In this context, moral hazard implies that patients do not consider the economic consequences of their behaviour, because under a free-care plan their marginal costs of health-care utilization is zero and only defined by their opportunity costs.
To tackle this problem, some health-care systems have introduced cost-sharing schemes in health insurance such as co-payments or co-insurance. An argument often made is that co-payments reduce moral hazard for health-care utilization and eventually lead to a more efficient allocation of scarce resources.
While the economic logic of this argument is compelling, there is limited empirical evidence to support this assertion. On average, the calculated price elasticity of demand for medical care was — 0. While the RAND study has been the only study in an experimental setting including randomization so far, there are a number of studies from several countries that evaluated the impact of co-payments and co-insurance using observational data.
