Does health insurance encourage the rise in medical prices? A test on balance billing in France

In this paper, we estimate the causal impact of a positive shock on supplementary health insurance coverage on the use of specialists who balance bill. For that purpose, we evaluate the impact on patients' behavior of a shock consisting of better coverage of balance billing, while controlling for supply side drivers, i.e. proportions of physicians who balance bill and physicians who do not. We use a panel dataset of 58,336 individuals observed between January 2010 and December 2012, which provides information, at the individual level, on health care claims and reimbursements provided by basic and supplementary insurance. Our data makes it possible to observe enrollees that are heterogeneous in their propensity to use physicians who balance bill. We observe them when they are all covered by the same supplementary insurer, with no coverage for balance billing, and after 5,134 of them switched to other supplementary insurers which offer better coverage. Our estimations show that better coverage contributes to a rise in medical prices by increasing the demand for specialists who balance bill. On the whole sample, we find that better coverage leads individuals to raise their proportion of consultations of specialists who balance bill by 9 %, which results in a 34 % increase in the amount of balance billing per consultation. However, the effect of supplementary health insurance clearly depends on the local supply side organization. The inflationary impact arises when specialists who balance bill are numerous and specialists who do not are relatively scarce. When people have a real choice between physicians, a coverage shock has no impact on the use of specialists who balance bill. When the number of specialists who charge the regulated fee is sufficiently high, there is no evidence of limits in access to health care, nor of an inflationary effect of supplementary coverage.