The response to dynamic incentives in insurance contracts with a deductible: Evidence from a differences-in-regression-discontinuities design

Tobias Klein, Martin Salm, Suraj Upadhyay

Research output: Contribution to journalArticleScientificpeer-review

9 Citations (Scopus)

Abstract

We develop a new approach to quantify how patients respond to dynamic incentives in health insurance contracts with a deductible. Our approach exploits two sources of variation in a differences-in-regression-discontinuities design: deductible contracts reset at the beginning of the year, and cost-sharing limits change over the years. Using rich claims-level data from a large Dutch health insurer we find that individuals are forward-looking. Changing dynamic incentives by increasing the deductible by €100 leads to a reduction in healthcare spending of around 3% on the first days of the year and 6% at the annual level. We find that the response to dynamic incentives is an important part of the overall effect of cost-sharing schemes on healthcare expenditures—much more so than what the previous literature has suggested.
Original languageEnglish
Article number104660
JournalJournal of Public Economics
Volume210
DOIs
Publication statusPublished - Jun 2022

Keywords

  • patient cost-sharing
  • health insurance
  • dynamic incentives

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