Responses to cost-sharing: do socio-demographic characteristics matter?

Patient cost-sharing in health insurance tends to reduce moral hazard, but the effect may differ between subgroups. For instance, one may expect low-income groups to react more strongly to cost-sharing than high-income groups. We use rich individual-level administrative data covering nearly all Dutch policyholders between 2011 and 2019, combined with a structural microsimulation model, to estimate how healthcare spending responds to changes in the mandatory deductible across age, gender, and income groups. The model separates two channels through which cost-sharing can affect spending: whether individuals expect to be near the deductible threshold, and whether the expected out-of-pocket price exceeds their valuation of care. Using the estimated parameters, we simulate expenditure under a low (€300) and a high (€600) deductible and calculate the resulting deductible elasticities and changes in out-of-pocket spending. We find an overall average elasticity of approximately -0.11, with considerable variation in elasticities across age groups but only minimal variation across income quintiles or between genders. An increase in cost-sharing causes the largest increase in out-of-pocket expenditure for the elderly across all income quintiles. In this sense, our results do not support the notion that the current Dutch deductible represents a disproportionately large burden for low-income groups.