Working Paper: NBER ID: w25306
Authors: Toshiaki Iizuka; Hitoshi Shigeoka
Abstract: This study exploits over 5,000 variations in subsidy generosity across ages and municipalities in Japan to examine how children respond to healthcare prices. We find that free care significantly increases outpatient spending, with price elasticities considerably smaller than for adults. Price responses are substantially larger when small copayments are introduced, indicating more elastic demand around a zero price. We also find that increased utilization primarily reflects low-value and costly care: increased outpatient spending neither reduces subsequent hospitalization by “avoidable” conditions nor improves short- or medium-term health outcomes. By contrast, inappropriate use of antibiotics and costly after-hours visits increase.
Keywords: healthcare utilization; patient cost-sharing; subsidy; children; Japan
JEL Codes: I11; I13; I18; J13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Reducing patient cost-sharing (G52) | Increased outpatient care utilization (I11) |
| Increased outpatient spending (H51) | No reduction in subsequent hospitalizations for avoidable conditions (I11) |
| Increased outpatient spending (H51) | No improvement in short or medium-term health outcomes (I14) |
| Generous subsidies for child healthcare (I18) | Increases in unnecessary and costly visits (I11) |
| Small copayment introduction (Y20) | Reduced moral hazard associated with free care (I18) |