DP12908 Does the framing of patient cost-sharing incentives matter? The effects of deductibles vs. no-claim refunds

Author(s): Arthur Hayen, Tobias Klein, Martin Salm
Publication Date: May 2018
Keyword(s): framing, Health Insurance, loss aversion., Patient cost-sharing
JEL(s): D91, H51, I13
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12908

In light of increasing health care expenditures, patient cost-sharing schemes have emerged as one of the main policy tools to reduce medical spending. We show that the effect of patient cost-sharing schemes on health care expenditures is not only determined by the economic incentives they provide, but also by the way these economic incentives are framed. Patients react to changes in economic incentives almost twice as strongly under a deductible policy than under a no-claims refund policy. Our preferred explanation is that individuals are loss-averse and respond differently to both schemes because they perceive deductible payments as a loss and no-claim refunds as a gain.