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Heterogeneous Effects of a Nonlinear Price Schedule for Outpatient Care

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  • Helmut Farbmacher
  • Peter Ihle
  • Ingrid Schubert
  • Joachim Winter
  • Amelie C. Wuppermann

Abstract

Theoretical considerations suggest that nonlinear health care price schedules have heterogeneous effects on health care demand. In this paper, we develop and apply a finite mixture bivariate probit model to analyze whether there are heterogeneous reactions to the introduction of a nonlinear price schedule in the German statutory health insurance system. In administrative insurance claims data from the largest German health insurance plan, we find that some individuals strongly react to the new price schedule while a second group of individuals does not react. Post-estimation analyses reveal that the group of the individuals who do not react to the reform includes the relatively sick. These results are in line with forward-looking behavior: Individuals who are already sick expect that they will hit the kink in the price schedule and thus are less sensitive to the co-payment.

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  • Helmut Farbmacher & Peter Ihle & Ingrid Schubert & Joachim Winter & Amelie C. Wuppermann, 2013. "Heterogeneous Effects of a Nonlinear Price Schedule for Outpatient Care," CESifo Working Paper Series 4499, CESifo.
    • Handle: RePEc:ces:ceswps:_4499
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    Citations

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    Cited by:

    1. Michael Gerfin & Boris Kaiser & Christian Schmid, 2015. "Healthcare Demand in the Presence of Discrete Price Changes," Health Economics, John Wiley & Sons, Ltd., vol. 24(9), pages 1164-1177, September.
    2. Klein, Tobias & Salm, Martin & Upadhyay, Suraj, 2020. "The Response to Dynamic Incentives in Insurance Contracts with a Deductible: Evidence from a Differences-in-Regression-Disconti," CEPR Discussion Papers 14552, C.E.P.R. Discussion Papers.
    3. Helmut Farbmacher & Peter Ihle & Ingrid Schubert & Joachim Winter & Amelie Wuppermann, 2017. "Heterogeneous Effects of a Nonlinear Price Schedule for Outpatient Care," Health Economics, John Wiley & Sons, Ltd., vol. 26(10), pages 1234-1248, October.
    4. Johannes S. Kunz & Rainer Winkelmann, 2017. "An Econometric Model of Healthcare Demand With Nonlinear Pricing," Health Economics, John Wiley & Sons, Ltd., vol. 26(6), pages 691-702, June.
    5. Giampiero Marra & Matteo Fasiolo & Rosalba Radice & Rainer Winkelmann, 2023. "A flexible copula regression model with Bernoulli and Tweedie margins for estimating the effect of spending on mental health," Health Economics, John Wiley & Sons, Ltd., vol. 32(6), pages 1305-1322, June.
    6. Klein, Tobias J. & Salm, Martin & Upadhyay, Suraj, 2022. "The response to dynamic incentives in insurance contracts with a deductible: Evidence from a differences-in-regression-discontinuities design," Journal of Public Economics, Elsevier, vol. 210(C).
    7. Galina Besstremyannaya, 2012. "Heterogeneous effect of coinsurance rate on the demand for health care: a finite mixture approach," Working Papers w0163, New Economic School (NES).
    8. Stefanie Thönnes, 2019. "Ex-post moral hazard in the health insurance market: empirical evidence from German data," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(9), pages 1317-1333, December.
    9. Rainer Winkelmann, 2014. "An Empirical Model of Health Care Demand under Non-linear Pricing," SOEPpapers on Multidisciplinary Panel Data Research 688, DIW Berlin, The German Socio-Economic Panel (SOEP).
    10. Sá, Luís & Straume, Odd Rune, 2021. "Quality provision in hospital markets with demand inertia: The role of patient expectations," Journal of Health Economics, Elsevier, vol. 80(C).
    11. Galina Besstremyannaya, 2014. "Heterogeneous effect of coinsurance rate on healthcare costs: generalized finite mixtures and matching estimators," Discussion Papers 14-014, Stanford Institute for Economic Policy Research.
    12. Haaga, Tapio & Böckerman, Petri & Kortelainen, Mika & Tukiainen, Janne, 2024. "Effects of nurse visit copayment on primary care use: Do low-income households pay the price?," Journal of Health Economics, Elsevier, vol. 94(C).
    13. Johansson, Naimi & de New, Sonja C. & Kunz, Johannes S. & Petrie, Dennis & Svensson, Mikael, 2023. "Reductions in out-of-pocket prices and forward-looking moral hazard in health care demand," Journal of Health Economics, Elsevier, vol. 87(C).

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    More about this item

    Keywords

    finite mixture models; bivariate probit; demand for health care; nonlinear price schedule;
    All these keywords.

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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