Some Interim Results from a Controlled Trial of Cost Sharing in Health Insurance

TLDR

A controlled trial with 7,706 participants compares alternative health‑insurance policies. Interim results show that full coverage raises medical spending by about 50 % versus income‑related catastrophe insurance, increases use of ambulatory services and hospital admissions (though per‑admission costs and child admissions remain unchanged), and produces larger expenditure differences for adults than children, while it remains unclear whether higher use reflects overuse or lower use reflects underuse.

Abstract

A total of 7706 persons are participating in a controlled trial of alternative health-insurance policies. Interim results indicate that persons fully covered for medical services spend about 50 per cent more than do similar persons with income-related catastrophe insurance. Full coverage leads to more people using services and to more services per user. Both ambulatory services and hospital admissions increase. Once patients are admitted to the hospital, however, expenditures per admission do not differ significantly among the experimental insurance plans. In addition, hospital admissions for children do not vary by plan. The income-related cost sharing in the experimental plans affects expenditure by different income groups similarly, but adults' total expenditure varies more than children's. Sufficient data are not available on whether higher use by persons with free care reflects overuse, or whether lower use by those with income-related catastrophe coverage reflects underuse. Both may well be true.