Patient Cost Sharing in Low Income Populations
Author(s)
Chandra, Amitabh; Gruber, Jonathan; McKnight, Robin
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Economic theory suggests that a natural tool to control medical costs is increased consumer
cost sharing for medical care. While such cost
sharing reduces “full insurance” (wherein
patients are indifferent between falling sick
or remaining healthy), a greater reliance on
coinsurance and copayments can, in theory,
stem patient and provider incentives to engage
in moral hazard. These issues are particularly
salient for low income populations who are at
the center of current efforts to expand coverage
(among the uninsured in 2008, 38 percent had
incomes below the federal poverty line (FPL),
and 52 percent had incomes between 100 and
299 percent of the FPL (Kaiser Commission on
Medicaid and the Uninsured 2009)). As insurance
is expanded to these groups, it is important
to understand how they respond to greater levels
of patient cost sharing. On the one hand, smarter
plan design could help reduce the fiscal pressures
associated with insurance expansion. But
on the other, it is also possible that low income
recipients are unable to cut back on utilization
wisely and, consequently, experience hospitalization
“offsets” as a result of greater levels of
patient cost sharing. In particular, there remains
a concern among many that higher cost sharing
on primary care will lead to less effective use of
primary care, worse health, and, consequently,
higher downstream costs at hospitals (the so-called
“offset effects”).
Date issued
2010-05Department
Massachusetts Institute of Technology. Department of EconomicsJournal
American Economic Review
Publisher
American Economic Association
Citation
Chandra, Amitabh, Jonathan Gruber, and Robin McKnight. “Patient Cost Sharing in Low Income Populations.” American Economic Review 100.2 (2010): 303-308. © 2011 AEA. The American Economic Association
Version: Final published version
ISSN
0002-8282