NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Free for Children? Patient Cost-sharing and Healthcare Utilization

Toshiaki Iizuka, Hitoshi Shigeoka

NBER Working Paper No. 25306
Issued in November 2018
NBER Program(s):Children, Health Care, Health Economics, Public Economics

This study exploits over 5,000 variations in subsidy generosity across ages and municipalities in Japan to examine how children respond to healthcare prices. We find that free care significantly increases outpatient spending, with price elasticities considerably smaller than for adults. Price responses are substantially larger when small copayments are introduced, indicating more elastic demand around a zero price. We also find that increased utilization primarily reflects low-value and costly care: increased outpatient spending neither reduces subsequent hospitalization by “avoidable” conditions nor improves short- or medium-term health outcomes. By contrast, inappropriate use of antibiotics and costly after-hours visits increase.

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Document Object Identifier (DOI): 10.3386/w25306

 
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