People are not effective price-sensitive consumers for health insurance. We can argue why they are not. But first we need to admit that we are not: Zarek C. Brot-Goldberg, Amitabh Chandra, Benjamin R. Handel, and Jonathan T. Kolstad: What does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics: "We leverage a natural experiment at a large self-insured firm that required all of its employees to switch... to a nonlinear, high-deductible plan...
...The switch caused a spending reduction between 11.8% and 13.8% of total firm-wide health spending.... Spending reductions are entirely due to outright reductions in quantity. We find no evidence of consumers learning to price shop after two years in high-deductible coverage. Consumers reduce quantities across the spectrum of health care services, including potentially valuable care (e.g., preventive services) and potentially wasteful care (e.g., imaging services).... Consumers respond heavily to spot prices at the time of care, reducing their spending by 42% when under the deductible, conditional on their true expected end-of-year price and their prior year end-of-year marginal price. There is no evidence of learning to respond to the true shadow price in the second year post-switch...
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