Reductions in out-of-pocket prices and forward-looking moral hazard in health care demand

Little is known about how patients dynamically respond to a forthcoming reduction in health care out-of-pocket prices. Using a kinked Donut Regression Discontinuity design with kinks entering and exiting the donut, we evaluate a Swedish cost-sharing policy, where primary care out-of-pocket prices were eliminated at age 85. We find evidence of forward-looking moral hazard with older adults delaying primary care visits up to four months before the out-of-pocket elimi-nation and shifting these visits until shortly after. These health care delays are driven by non -urgent care: non-physician visits, planned visits and follow up visits. We find no evidence of severe negative health effects in the short-term as a result of the delay. Contrary to our finding of forward-looking behavior with respect to out-of-pocket prices, we do not find evidence of typical moral hazard, as we do not find a persistent increase in primary health care use after the copayment elimination.

Automated summary

A study on a Swedish cost-sharing policy reveals that older adults tend to delay primary care visits before the elimination of out-of-pocket prices and accelerate them shortly after. The delays mainly occur in non-urgent care such as non-physician visits, planned visits, and follow-up visits. However, there is no evidence of severe negative health effects in the short-term due to the delay, and no persistent increase in primary health care use after the copayment elimination.