Healthcare Economist August 12, 2024
One of the goals of cost sharing (e.g., copayments, deductibles) is to decrease moral hazard. In other words, if a good is free (or lower cost), you’ll consume more of it than if you had to pay for all of it out-of-pocket. One challenge in health care ours that prices are not transparent. How much your insurer is paying your hospital or doctor varies a lot depending on negotiated rates. Then how much you as a patient pay depends on the benefit design of your plan. In short, the link between the prices pay and behavior may be mitigated because these prices are unclear to consumers.
A paper by Anderson et al. (2024) (with the same title as this blog...
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