Assessing the effectiveness of health care cost containment measures: evidence from the market for rehabilitation care

Article
First Online:
Received:
Accepted:

Abstract

This study empirically evaluates the effectiveness of different health care cost containment measures. The measures investigated were introduced in Germany in 1997 to reduce moral hazard and public health expenditures in the market for rehabilitation care. Of the analyzed measures, doubling the daily copayments was clearly the most effective cost containment measure, resulting in a reduction in utilization of about \(20\,\%\) . Indirect measures such as allowing employers to cut federally mandated sick pay or paid vacation during inpatient post-acute care stays did not significantly reduce utilization. There is evidence neither for adverse health effects nor for substitution effects in terms of more doctor visits.

Keywords

Health care demand Cost-sharing Health effects Preventive care Substitution effects SOEP 

JEL Classification

G22 H51 I11 I12 I18 J14 J22 
This is a preview of subscription content, log in to check access

References

  1. Ai, C., & Norton, E. C. (2004). Interaction terms in logit and probit models. Economics Letters, 80, 123–129.CrossRefGoogle Scholar
  2. Angrist, J. D., & Pischke, J.-S. (2009). Mostly harmless econometrics: An empiricist’s companion (1st ed.). Princeton: Princeton University Press.Google Scholar
  3. Augurzky, B., Reichert, A., & Tauchmann, H. (2013). Self-perceived job insecurity and the demand for medical rehabilitation: does fear of unemployment reduce health care utilization? Health economics. forthcoming.Google Scholar
  4. Autor, D. H., & Duggan, M. G. (2003). The rise in the disability rolls and the decline in unemployment. The Quarterly Journal of Economics, 118(1), 157–205.CrossRefGoogle Scholar
  5. Baicker, K., & Goldman, D. (2011). Patient cost-sharing and healthcare spending growth. Journal of Economic Perspectives, 25(2), 47–68.PubMedCrossRefGoogle Scholar
  6. Bertrand, M., Duflo, E., & Sendhil, M. (2004). How much should we trust differences-in-differences estimates? Quarterly Journal of Economics, 119(1), 249–275.CrossRefGoogle Scholar
  7. Buntin M. B., Escarce J. J., Hoverman C., Paddock S. M., Totten M. E., & Wynn B. O. (2005). Effects of payment changes on trends in access to post-acute care. Technical report, RAND Corporation. http://www.rand.org/pubs/technical_reports/TR259, last accessed on February 27, 2012.
  8. Burkhauser, R. V., & Daly, M. C. (2011). The declining work and welfare of people with disabilities: What went wrong and a strategy for change (1st ed.). Washington, DC: American Enterprise Institute.Google Scholar
  9. Chandra, A., Gruber, J., & McKnight, R. (2010). Patient cost-sharing, hospitalization offsets, and the design of optimal health insurance for the elderly. American Economic Review, 100(1), 193–213.PubMedCentralPubMedCrossRefGoogle Scholar
  10. Chiappori, P.-A., Durand, F., & Geoffard, P.-Y. (1998). Moral hazard and the demand for physician services: First lessons from a natural experiment. European Economic Review, 42, 499–511.CrossRefGoogle Scholar
  11. Cockx, B., & Brasseur, C. (2003). The demand for physician services: Evidence from a natural experiment. Journal of Health Economics, 22(6), 881–913.PubMedCrossRefGoogle Scholar
  12. Congressional Research Service (2006). Medicare payment issues affecting Inpatient Rehabilitation Facilities (IRFs). CRS Report for Congress. http://www.policyarchive.org/handle/10207/bitstreams/2254.pdf, last accessed on February 27, 2012.
  13. Crown, W. H., Berndt, E. R., Baser, O., Finkelstein, S. N., Witt, W. P., Maguire, J., et al. (2004). Benefit plan design and prescription drug utilization among asthmatics: Do patient copayments matter? Forum for Health Economics & Policy, 7(1), 1–5.CrossRefGoogle Scholar
  14. Donald, S. G., & Lang, K. (2007). Inference with difference-in-differences and other panel data. The Review of Economics and Statistics, 82(2), 221–233.CrossRefGoogle Scholar
  15. Frölich, M., Heshmati, A., & Lechner, M. (2004). A microeconometric evaluation of rehabilitation of long-term sickness in Sweden. Journal of Applied Econometrics, 19(3), 375–396.CrossRefGoogle Scholar
  16. Gaynor M., Li J., & Vogt W. B. (2007). Substitution, spending offsets, and prescription drug benefit design. Forum for Health Economics & Policy, 10(2), article 4.Google Scholar
  17. Gerfin, M., & Schellhorn, M. (2006). Nonparametric bounds on the effect of deductibles in health care insurance on doctor visits–Swiss evidence. Health Economics, 15(9), 1011–1020.PubMedCrossRefGoogle Scholar
  18. German Federal Statistical Office (2013). Federal health monitoring. http://www.gbe-bund.de, last accessed on October 11, 2013.
  19. Glied, S., & Zivin, J. G. (2002). How do doctors behave when some (but not all) of their patients are in managed care? Journal of Health Economics, 21(2), 337–353.PubMedCrossRefGoogle Scholar
  20. Goldman, D. P., Joyce, G. F., Escarce, J. J., Pace, J. E., Solomon, M. D., Laouri, M., et al. (2004). Pharmacy benefits and the use of drugs by the chronically ill. Journal of the American Medical Association, 291(19), 2344–2350.PubMedCrossRefGoogle Scholar
  21. Goldman, Dana P, Joyce, Geoffrey F, & Zheng, Yuhui. (2007). Prescription drug cost sharing. Journal of the American Medical Association, 298(1), 61–69.PubMedCrossRefGoogle Scholar
  22. Handelsblatt (1998). Gesundheitsreform sorgt für Aderlaß. Handelsblatt 10.03.1998, 21.Google Scholar
  23. Jahn J. (1998). Lohnfortzahlung: Gerichte stehen vor Herkulesaufgabe. Handelsblatt 124: 02.07.1998, 4.Google Scholar
  24. Jönsson, L., & Skogman Thoursie, P. (2012). Does privatisation of vocational rehabilitation improve labour market opportunities? Evidence from a field experiment in Sweden. Working Paper Series 2012:2, IFAU-Institute for Evaluation of Labour Market and Education Policy.Google Scholar
  25. Keeler, E. B., Manning, W. G., & Wells, K. B. (1988). The demand for episodes of mental health services. Journal of Health Economics, 7(4), 369–392.PubMedCrossRefGoogle Scholar
  26. Landsman, P. B., Yu, W., Liu, X. F., Teutsch, S. M., & Berger, M. L. (2005). Impact of 3-tier pharmacy benefit design and increased consumer cost-sharing on drug utilization. American Journal of Managed Care, 11(10), 621–628.PubMedGoogle Scholar
  27. Lauterbach, K. W., Gandjour, A., & S.G., (2000). Zuzahlungen bei Arzneimitteln. See Winkelmann, (2004), pp. 455–472.Google Scholar
  28. Manning, W. G., Newhouse, J. P., Duan, N., Keeler, E. B., & Leibowitz, A. (1987). Health insurance and the demand for medical care: Evidence from a randomized experiment. The American Economic Review, 77(3), 251–277.PubMedGoogle Scholar
  29. McKnight, R. (2006). Home care reimbursement, long-term care utilization, and health outcomes. Journal of Public Economics, 90(1–2), 293–323.CrossRefGoogle Scholar
  30. MedPac Washington, D. (ed.) (2012). Post-acute care. Medicare payment advisory commission (MedPAC). www.medpac.gov/documents/Jun12DataBookEntireReport.pdf, last accessed on November 7, 2013.
  31. Mukhopadhyay, S., Wendel, J. (2013). Evaluating an employee wellness program. International Journal of Health Care Finance and Economics. forthcoming.Google Scholar
  32. Newhouse, J. P. (1993). Free for all: Lessons from the RAND health insurance experiment. Cambridge, MA: Harvard University Press.Google Scholar
  33. Newhouse, J. P. (2004). Consumer-directed health plans and the rand health insurance experiment. Health Affairs, 23(6), 107–113.PubMedCrossRefGoogle Scholar
  34. OECD (2012). OECD Health Data 2012. http://stats.oecd.org, last accessed on February 4, 2013.
  35. Paddock, S. M., Escarce, J. J., Hayden, O., & Buntin, M. B. (2007). Did the Medicare Inpatient Rehabilitation Facility prospective payment system result in changes in relative patient severity and relative resource use? Medical Care, 45(2), 123–130.Google Scholar
  36. Pauly, M. V. (1968). The economics of moral hazard: Comment. The American Economic Review, 58(3), 531–537.Google Scholar
  37. Pauly, M. V., & Blavin, F. E. (2008). Moral hazard in insurance, value-based cost sharing, and the benefits of blissful ignorance. Journal of Health Economics, 27(6), 1407–1417.PubMedCrossRefGoogle Scholar
  38. Phelps, C.E., & Mooney, C. (1993). Variations in medical practice use: causes and consequences. In R.J. Arnould, R. F. Rich, and W. D. White (eds), Competitive approaches to health care reform. The Urban Institute Press. http://hdl.handle.net/1802/2664, last accessed on November 4, 2011.
  39. Puhani, P. A. (2012). The treatment effect, the cross difference, and the interaction term in nonlinear “difference-in-differences” models. Economic Letters, 115(1), 85–87.CrossRefGoogle Scholar
  40. Rauch, A., Dornette, J., Schubert, M., & Behrens, J. (2008). Berufliche Rehabilitation in Zeiten des SGB II. IBA-Kurzbericht 25.Google Scholar
  41. Ridinger, R. (1997). Einfluss arbeitsrechtlicher Regelungen auf die Beschäftigungsentwicklung im Handwerk-Ergebnisse von Befragungen von Handwerksbetrieben im 3. Quartal 1997. Dokumentation, Zentralverband des Deutschen Handwerks. www.zdh.de, last accessed on August 14, 2009.
  42. Sauga, M. (1996). Gesundheit im eigenen Bett: Bonn will den Anstieg der Kur-Ausgaben begrenzen. Die Bäderlobby macht mobil. Handelsblatt, 11.01.1996. 21.Google Scholar
  43. Schmitz, H. (1996). Politiker, Wissenschaftler und Praktiker suchen Wege, die Verschwendung bei Rehabilitation und Heilmaßnahmen zu stoppen. Kuren sollten für Arbeitnehmer kein preiswerter Urlaub sein. Handelsblatt 01.04.1996, 2.Google Scholar
  44. Schreyögg, J., & Grabka, M. M. (2010). Copayments for ambulatory care in Germany: A natural experiment using a difference-in-difference approach. European Journal of Health Economics, 11(3), 331–341.PubMedCrossRefGoogle Scholar
  45. Schut, F. T., Greß, S., & Wasem, J. (2003). Consumer price sensitivity and social health insurer choice in Germany and the Netherlands. International Journal of Health Care Finance and Economics, 3(2), 117–138.PubMedCrossRefGoogle Scholar
  46. Sood, N., Huckfeldt, P. J., Grabowski, D. C., Newhouse, J. P., & Escarce, J. J. (2013). The effect of prospective payment on admission and treatment policy: Evidence from inpatient rehabilitation facilities. Journal of Health Economics, 32(5), 965–979.PubMedCrossRefGoogle Scholar
  47. Spithoven, A. (2009). Why US health care expenditure and ranking on health care indicators are so different from Canada’s. International Journal of Health Care Finance and Economics, 9(1), 1–24.PubMedCrossRefGoogle Scholar
  48. Stoltzfus, J. T. (2012). Eight decades of discouragement: The history of health care cost containment in the USA. Forum for Health Economics & Policy, 15(3), 53–82.Google Scholar
  49. Swartz, K. (2007). Cost-sharing: Effects on spending and outcomes. American Economic Review, 26(3), 841–852.Google Scholar
  50. Van De Voorde, C., Van Doorslaer, E., & Schokkaert, E. (2001). Effects of cost sharing on physician utilization under favourable conditions for supplier-induced demand. Health Economics, 10(5), 457–471.PubMedCrossRefGoogle Scholar
  51. van Kleef, R., van de Ven, W., & van Vliet, R. (2009). Shifted deductibles for high risks: More effective in reducing moral hazard than traditional deductibles. Journal of Health Economics, 28(1), 198–209.PubMedCrossRefGoogle Scholar
  52. van Vliet, R. C. (2004). Deductibles and health care expenditures: Empirical estimates of price sensitivity based on administrative data. International Journal of Health Care Finance and Economics, 4(4), 283–305.PubMedCrossRefGoogle Scholar
  53. VFA (2011). The pharmaceutical market. VFA. www.vfa.de/en/statistics/pharmaceuticalmarket, last accessed on November 5, 2011.
  54. Wagner, G. G., Frick, J. R., & Schupp, J. (2007). The German Socio-Economic Panel study (SOEP)-evolution, scope and enhancements. Journal of Applied Social Science (Schmollers Jahrbuch), 127(1), 139–169.Google Scholar
  55. Wedig, G. J. (1988). Health status and the demand for health: Results on price elasticities. Journal of Health Economics, 7(2), 151–163.PubMedCrossRefGoogle Scholar
  56. Winkelmann, R. (2004). Health care reform and the number of doctor visits—an econometric analysis. Journal of Applied Econometrics, 19(4), 455–472.CrossRefGoogle Scholar
  57. Ziebarth, N. R. (2010). Estimating price elasticities of convalescent care programmes. The Economic Journal, 120(545), 816–844.CrossRefGoogle Scholar
  58. Ziebarth, N. R., & Karlsson, M. (2010). A natural experiment on sick pay cuts, sickness absence, and labor costs. Journal of Public Economics, 94(11–12), 1108–1122.CrossRefGoogle Scholar
  59. Ziebarth, N. R., & Karlsson, M. (2013). The effects of expanding the generosity of the statutory sickness insurance system. Journal of Applied Econometrics. forthcoming.Google Scholar
  60. Zweifel, P., Manning, W. G. (2000). Moral hazard and consumer incentives in health care. In: Culyer, A. J., Newhouse, J. P. (eds), Handbook of health economics (1 ed.), vol 1, Chapter 8, (pp. 409–459). Elsevier.Google Scholar

Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Department of Policy Analysis and Management (PAM)Cornell UniversityIthacaUSA

Personalised recommendations