Estimating Demand Elasticities Using Nonlinear Pricing

Dalton, Christina Marsh

doi:10.2139/ssrn.2211787

Cited by 10 publications

(9 citation statements)

References 30 publications

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“…Much of the initial work in this area focused on analyzing the labor supply response to progressive taxation. Recently, however, researchers have begun to apply the techniques of non-linear budget set estimation to the analysis of the impact of (non-linear) health insurance contracts (Marsh 2011; Kowalski 2012), and further work in this area could be of great value.…”

Section: Estimating the Effect Of Cost-sharing On Medical Spendingmentioning

confidence: 99%

The RAND Health Insurance Experiment, Three Decades Later

Aron-Dine

Einav

Finkelstein

2013

Journal of Economic Perspectives

221

124

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We re-present and re-examine the analysis from the famous RAND Health Insurance Experiment from the 1970s on the impact of consumer cost sharing in health insurance on medical spending. We begin by summarizing the experiment and its core findings in a manner that would be standard in the current age. We then examine potential threats to the validity of a causal interpretation of the experimental treatment effects stemming from different study participation and differential reporting of outcomes across treatment arms. Finally, we re-consider the famous RAND estimate that the elasticity of medical spending with respect to its out-of-pocket price is −0.2, emphasizing the challenges associated with summarizing the experimental treatment effects from non-linear health insurance contracts using a single price elasticity.

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Section: Estimating the Effect Of Cost-sharing On Medical Spendingmentioning

confidence: 99%

The RAND Health Insurance Experiment, Three Decades Later

Aron-Dine

Einav

Finkelstein

2013

Journal of Economic Perspectives

221

124

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“…For example, the RAND elasticity of −0.2 is calculated assuming individuals respond only to the spot price. Newer studies have assumed that individuals respond to the actual (realized) end‐of‐year price (Eichner ; Kowalski,, forthcoming; Marsh, ). Aron‐Dine et al.…”

Section: Introductionmentioning

confidence: 99%

Does Full Insurance Increase the Demand for Health Care?

Boes

Gerfin

2015

Health Econ.

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractWe estimate the causal effect of having full health insurance on health care expenditures. We take advantage of a unique quasi-experimental setup in which deductibles and copayments were zero in a managed care plan, and non-zero in regular insurance, until a policy change forced all individuals with an active plan to cover a minimum amount of their expenses. Using panel data and a non-linear difference-in-differences strategy, we find a demand elasticity of about -0.14 comparing full insurance with the cost-sharing model, and a significant upward shift in the likelihood to generate costs.JEL Classification: I11, C14

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“…Aron-Dine et al (2012) also showed that while there are some forward-looking aspects in health care utilization, individuals' behavior is much closer to full myopia, such that they respond only to the spot price instead of looking forward as individuals responding only to the future price. See alsoKowalski (2012) andMarsh (2012) on the recent application of nonlinear budget set estimation to analyze the effect of health insurance contracts.…”

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confidence: 99%

The Effect of Patient Cost-Sharing on Utilization, Health and Risk Protection

Shigeoka

2012

SSRN Journal

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This paper exploits a sharp reduction in patient cost sharing at age 70 in Japan, using a regression discontinuity design to examine its effect on utilization, health, and financial risk arising from outof-pocket expenditures. Due to the national policy, cost sharing is 60-80 percent lower at age 70 than at age 69. I find that both outpatient and inpatient care are price sensitive among the elderly. While I find little impact on mortality and other health outcomes, the results show that reduced cost sharing is associated with lower out-of-pocket expenditures, especially at the right tail of the distribution.

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Estimating Demand Elasticities Using Nonlinear Pricing

Cited by 10 publications

References 30 publications

The RAND Health Insurance Experiment, Three Decades Later

The RAND Health Insurance Experiment, Three Decades Later

Does Full Insurance Increase the Demand for Health Care?

The Effect of Patient Cost-Sharing on Utilization, Health and Risk Protection

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