Working Paper: NBER ID: w25156
Authors: Molly Frean; Mark Pauly
Abstract: Research has shown that higher cost-sharing lowers health care spending levels but less is known about whether cost-sharing also affects spending growth. From 2002 to 2016, private insurance deductibles more than tripled in magnitude. We use data from the Centers for Medicare and Medicaid Services and the Agency for Healthcare Research and Quality to estimate whether areas with relatively higher deductibles experienced lower spending growth during this period. We leverage panel variation in private deductibles across states and over time and address the potential endogeneity of deductibles using instrumental variables. We find that spending growth is significantly lower in states with higher average deductibles and observe this relationship with regard to both private insurance benefits and total spending (including Medicare and Medicaid), suggestive of potential spillovers. We hypothesize that the impact on spending growth happens because deductibles affect the diffusion of costly new technology.
Keywords: No keywords provided
JEL Codes: I11; I13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher average deductibles (G52) | lower growth in health spending (H51) |
| higher average deductibles (G52) | lower medical spending growth for privately insured individuals (H51) |
| higher average deductibles (G52) | lower growth in Medicare and Medicaid benefits per enrollee (I18) |
| change in deductibles (G52) | inconsistent negative effect on spending growth (E62) |