Do Deductibles reduce Moral Hazard in the German Statutory Health Insurance? - Empirical Evidence

This paper estimates the effect of participating in the optional tariff "Premium Refund", an implicit optional deductible tariff, on different measures of medical demand. Specifically, it analyzes whether participating in the tariff can reduce ex-post moral hazard. Therefore, I use panel data from a German company health insurance fund covering the years 2008 to 2012. In order to remove potential selection bias of healthy individuals selecting into the tariff, I match the group of participants with the group of nonparticipants by socioeconomic characteristics and baseline medical characteristics, amongst others. In addition, I combine matching with regression to make results more robust. I find that participating in the premium refund tariff significantly reduces the probability of visiting a general practitioner by 6 percentage points. However, the probability of visiting a doctor because of a trivial disease such as a common cold is not reduced. I conclude that there is evidence that participation in the tariff reduces medical demand. It remains unclear, though, whether this is due to a reduction in moral hazard or whether it is driven through some other channel.