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Forward-looking Behavior in Health Insurance.
Caroline Chuard1, Fabienne Loetscher2, Christian P R Schmid3
1CSS Institute for Empirical Health Economics, Tribschenstrasse 21, 6002, Lucerne, Switzerland. caroline.chuard@css.ch.
Summary
Individuals anticipating higher health insurance costs increase outpatient spending by 5% to get ahead. This forward-looking behavior was observed in specific low-cost male demographics, not in inpatient care.
Area of Science:
- Health Economics
- Behavioral Economics
- Public Health Policy
Background:
- Understanding how individuals respond to changes in healthcare costs is crucial for effective policy.
- Anticipatory behavior in healthcare utilization can significantly impact overall spending and resource allocation.
Purpose of the Study:
- To investigate if individuals alter their healthcare utilization in response to anticipated future price changes.
- To quantify the impact of expected cost-sharing increases on current healthcare demand.
Main Methods:
- Leveraged an exogenous increase in cost-sharing at age 18 in the Swiss healthcare system.
- Estimated the effect of future price changes on current healthcare demand using econometric analysis.
Main Results:
- Individuals expecting higher future healthcare prices increased current outpatient spending by approximately 5% (CHF 40).
- This anticipatory spending was primarily observed in low-cost male individuals.
- No significant forward-looking behavior was detected in the inpatient healthcare sector.
Conclusions:
- Forward-looking behavior significantly influences healthcare demand, particularly in outpatient settings.
- Findings have implications for health insurance design and the welfare effects of patient cost-sharing policies.
- Healthcare policy should consider individuals' anticipatory responses to price changes.
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