The Impact of High Deductible Health Insurance Plans on Spending and Enrollee Behavioral Response
Sunday, April 9, 2017 : 2:45 PM
HUB 268 (University of California, Riverside)
*Names in bold indicate Presenter
High deductible health insurance plans (HDHPs) have become commonplace in the employer insurance market. To assess whether being exposed to higher initial out of pocket costs for medical care prompts a behavioral change in usage or simply a shifting of costs to patients I use a national sample of individuals who receive their health insurance from firms that self-insure through a major insurance carrier. I control for the endogeneity of selection into a HDHP by instrumenting for enrollment in a HDHP with whether a company offers a HDHP as an option in their health insurance choice set. I find HDHPs are associated with a 2 percent decrease in total medical spending, a 19 percent decrease in company spending, a doubling of individual out-of-pocket spending and no change in the likelihood of using medical services. This evidence suggests cost shifting occurs with the introduction of a HDHP and not the behavioral change predicted by demand theory.