How does copayment for health care services affect demand, health and redistribution? A systematic review of the empirical evidence from 1990 to 2011

Abstract

This article reviews the quantitative evidence on the behavioural effects of copayment within the health area across a wide range of countries. The review distinguishes itself from previous similar reviews by having a high degree of transparency for the search strategy used to identify the studies included in the review as well as the criteria for inclusion and by including the most recent literature. Empirical studies were identified by performing searches in EconLit. The literature search identified a total of 47 studies of the behavioural effects of copayment. Considering the demand effects, the majority of the reviewed studies found that copayment reduces the use of prescription medicine, consultations with general practitioners and specialists, and ambulatory care, respectively. The literature found no significant effects of copayment on the prevalence of hospitalisations. The empirical evidence on whether copayment for some services, but not for others, causes substitution from the services that are subject to copayment to the ‘free’ services rather than lower total use is sparse and mixed. Likewise, the health effects of copayment have only been analysed empirically in a limited number of studies, of which half did not find any significant effects in the short term. Finally, the empirical evidence on the distributional consequences of copayment indicates that individuals with low income and in particular need of care generally reduce their use relatively more than the remaining population in consequence of copayment. Hence, it is clear that copayment involves some important economic and political trade-offs.

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Notes

  1. 1.

    Given that demand is approximated by actual use in all of the reviewed studies, the terms demand and use are applied interchangeably throughout the article.

  2. 2.

    Examples of health care services for which the price elasticity of demand is most likely limited are chemotherapy, bypass operations and other major interventions, which may be lifesaving but pose considerable health risks in themselves.

  3. 3.

    For example, it is possible that increased copayment for prescription medicine reduces the demand for general practice consultations, which often result in a prescription.

  4. 4.

    Master Theses are not systematically available from all institutes and faculties and are therefore not included.

  5. 5.

    A review of the empirical literature on the consequences of different types of copayment within the pharmaceutical area found that indirect copayment has the ability to shift use from expensive to cheaper types of medicine, although often with modest savings in consequence [5].

  6. 6.

    See Atherly [20] for a review of effect studies for the elderly in the US, for whom variation in the level of copayment is mainly cause by voluntary purchase of supplementary private health insurance and Kiil [21] for an overview of effect studies of voluntary private health insurance in universal health care systems.

  7. 7.

    * Indicates a truncated search, i.e. a search on the stem of the word as well as its different endings.

  8. 8.

    Relevant employees at a number of Danish research institutions, ministries and interest groups were also contacted in order to ensure that all relevant literature was included. However, this did not result in the identification of additional studies.

  9. 9.

    In consequence of the rather general search terms used, the main reason that many studies were classified as being irrelevant and discarded was that they dealt with something else than copayment. More specific groups of discarded studies include studies that investigate effects of supply-side payment systems, studies based on data collected prior to 1990, studies of indirect copayment, and studies that identified the effect of copayment by using variation in copayment rates between individuals who have voluntarily selected themselves into different schemes or purchased complementary private health insurance.

  10. 10.

    Some of the more recent working papers may reasonably be expected to be published in article format at a later point in time.

  11. 11.

    This group of studies includes [22, 26, 32, 33, 37, 43, 44, 49].

  12. 12.

    Specifically, while there is an upper limit for the total earnings of doctors, they are allowed to exceed the threshold with income stemming from copayment. This structure may unintentionally have created an incentive for the doctors to seek to increase the visit rate among the patients who are required to copay in order to increase total earnings.

  13. 13.

    Cockx and Brasseur [30] adjust the estimates reported in van de Voorde et al. [62] by taking into account that the increases in the relative copayments for the three types of doctor visits considered were not proportional and decomposing the demand effect into an income effect and a substitution effect.

  14. 14.

    The authors note that the fact that general practitioners receive a fixed fee for patients aged 70 and above creates an incentive for the general practitioners to seek to limit the number of visits for this patient group.

  15. 15.

    With the exception of Puig-Junoy et al. [53].

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Acknowledgments

The authors would like to thank research librarian Lisa la Cour for providing valuable guidance on how to search for literature and helping us collect the relevant studies and two anonymous reviewers for their helpful comments.

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Correspondence to Astrid Kiil.

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Kiil, A., Houlberg, K. How does copayment for health care services affect demand, health and redistribution? A systematic review of the empirical evidence from 1990 to 2011. Eur J Health Econ 15, 813–828 (2014). https://doi.org/10.1007/s10198-013-0526-8

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Keywords

  • Copayment
  • Demand effects
  • Behavioural effects
  • Health
  • Distributional consequences

JEL Classification

  • I11 (Analysis of healthcare markets)
  • I14 (Health and inequality)
  • I18 (Government policy; regulation, public health)